A New Jersey bank has agreed to return nearly $500,000 from accounts allegedly used during last year’s $650 million unemployment fraud in Washington, the state Attorney General’s Office said Friday.
But the money — $495,937.70 — coming from TD Bank represents only a fraction of what thieves originally transferred to the bank via fake unemployment claims filed in Washington state, AGO officials said.
Another $4.2 million that was wired into dozens of TD Bank accounts by the state Employment Security Department likely already had been withdrawn by scammers before bank officials grew suspicious and froze the accounts, AGO officials said. TD voluntarily returned another $1.3 million.
The partial recovery from TD Bank is the first under an intensive 15-month AGO investigation of 37 banks where scammers allegedly deposited unemployment benefits pilfered from Washington during the first chaotic months of pandemic layoffs.
The AGO’s investigation, which is separate from a federal effort that has already returned nearly $380 million to Washington state, is aimed at clawing back some of the roughly $270 million still outstanding.
“My legal team is using every tool in our toolbox to recover stolen dollars,” Attorney General Bob Ferguson said in a statement Friday. “Stay tuned because we’re not done.”
But if the outcome at TD Bank is any indication, the AOG investigation will probably only recover part of that outstanding money, due to withdrawals by scammers before banks froze the accounts, AGO officials said.
As of Friday evening, officials were unable to provide a figure for the total amount of unemployment benefits that ESD is known to have wired to suspect accounts at the 37 banks.
“TD takes fraud very seriously and we are cooperating fully with the state of Washington in this matter,” said a TD Bank spokesperson in an emailed response to questions Friday. “We have no further comment.”
The AGO launched its recovery investigation in July 2020 to supplement federal recovery efforts, which had focused largely on working with financial institutions to voluntarily return jobless benefits that had been identified as stolen from Washington. TD Bank, for example, had already voluntarily returned $1.3 million, AGO officials said.
The AGO recovery efforts, by contrast, focused on cases where banks needed to be compelled via court order to forfeit the funds. One reason for the differing state strategy is that Washington state forfeiture law allows for a faster recovery than federal forfeiture laws, AGO and federal officials said.
AGO investigators started by analyzing roughly 96,000 unemployment claims that ESD had already identified as fraudulent. The AGO then subpoenaed 37 banks that had received wire transfers from ESD on behalf of those suspect claims, and screened those accounts for further indicators of fraud.
These indicators included receiving unemployment benefits payments from multiple states; receiving payments in the names of multiple claimants; and mismatches between the name on the bank account and the names on the unemployment claims, AGO officials said.
On Thursday, King County Superior Court Judge Johanna Bender signed a forfeiture order directing TD Bank to “deliver” $495,937.70 to Washington, which AGO officials expect to happen in the next few weeks.
Others will follow, AGO officials said.
“There are banks out there from which we will recover significantly more money than we recovered from TD Bank,” said Assistant Attorney General Jeffrey Sprung, who led the AGO investigation.
AGO officials had no formal estimate for what they expect to recover from all accounts flagged as potentially fraudulent at all 37 banks. While around 30% of the funds sent to TD Bank will have been recovered, the ultimate percentage will depend in large part on how quickly individual banks were in freezing accounts once fraud was suspected.
Another unknown: The AGO will also ask the banks for information about accounts that received unemployment funds that the banks themselves had flagged independently as potentially fraudulent, but which may not have been included in the ESD’s list of suspect claims.
If those additional accounts also contain fraudulently obtained benefits, the state will push to have those funds forfeited, which could raise the total amount recovered — as well as the total amount stolen.
However, AGO officials declined to speculate on how much in additional unemployment benefits might be contained in those accounts.
AGO officials said they had few details about the individuals who filed the fraudulent claims or opened the bank accounts. However, they said the claims connected to the TD Bank accounts weren’t related to the cases of three individuals charged earlier this year by federal prosecutors, including two Nigerian citizens and a former ESD employee from Moses Lake.
In a statement Friday, ESD Commissioner Cami Feek said the agency “remains committed to retrieving every penny of stolen unemployment insurance funds possible. We greatly appreciate the tireless efforts of the attorney general’s office and other law enforcement agencies to hold these criminals to account and return these dollars to the program.”
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