A former employee of the state Employment Security Department will spend five years in federal prison for a fraud and kickback scheme that stole at least $360,000 in pandemic-related jobless benefits.

Reyes De La Cruz III, 48, of Moses Lake, was sentenced Friday in Tacoma by U.S. District Judge Robert Bryan. He pleaded guilty in June to felony counts of wire fraud, bribery and aggravated identity theft.

In a five-page handwritten letter to the court prior to sentencing, he apologized while blaming his actions in part on longstanding addictions and abuse suffered as a child.

The case was a stinging embarrassment for the ESD, which could no longer solely blame sophisticated foreign criminals for a massive fraud scheme in 2020 that siphoned off $650 million in pandemic benefits and paralyzed the claims system just as hundreds of thousands of out-of-work Washingtonians were desperately seeking aid. 

“Mr. De La Cruz’s betrayal of public trust is particularly egregious, since he was hired to help people survive during a time of national crisis,” U.S. Attorney Nick Brown said in a statement announcing the sentencing. “Instead, through multiple acts of demanding bribes, falsifying records, stealing identities – he stole from the public to line his own pockets.”

The case is also a reminder of the more than two years it has taken state and federal officials to investigate the 2020 fraud, build legal cases against suspects and track down the tens of millions of dollars in stolen benefits that may remain unrecovered.


On Monday, Abidemi Rufai, 45, of Lekki, Nigeria, one of the first suspects charged in the fraud, will be sentenced on charges that he used stolen Social Security numbers and other personal data to file $350,763 in fake claims for pandemic unemployment benefits in spring of 2020.

De La Cruz was hired by ESD in April 2020 to help handle an unprecedented surge in unemployment claims as the COVID-19 pandemic swept the country. He had previously worked for the agency between 1996 and 2003.

Working from his home, De La Cruz used his access to the ESD claims database to game the system and, in at least 10 instances steered, benefits to friends, family and acquaintances, often in exchange for bribes, according to prosecutors.

With an insider’s knowledge of the claims process, De La Cruz engineered fraudulent claims designed to bypass safeguards. In return for arranging those large benefit payments, he also brazenly demanded compensation.

He spelled out the quid pro quo in Facebook messages obtained by federal investigators. “So I am doing this and helping you guys get a big amount of money… So I am asking for a percentage of the benefits. I help you, you help me,” he wrote to one acquaintance, seeking a $2,000 cut of the $10,000 in benefits he’d helped approve.

These kickbacks, which ranged from $500-$6,500, may have totaled nearly $21,000, according to a statement Friday by the U.S. attorney.


De La Cruz also stole personal information of at least four friends and family members and filed fraudulent claims in their names, arranging for the benefits to be paid to debit cards sent to mailboxes to which he had accessed, according to prosecutors.

In all, De La Cruz fraudulently distributed at least $360,000 in benefits and pocketed at least $130,000 for himself, prosecutors charged. He was fired in October of 2020 and arrested last September.

Washington was among the first states to be hit by a wave of fraud targeting various pandemic relief programs. In March, the U.S. Department of Labor estimated $163 billion in “overpayments” related to pandemic unemployment programs. Much of that was blamed on criminals who exploited the river of cash that governments were sending to unemployed workers.

But De La Cruz’s case may have highlighted vulnerabilities in the way that cash was distributed. A December 2021 state auditor’s report concluded that De La Cruz’s fraudulent activities were made easier by ESD’s lax oversight and weak internal controls, which “were inadequate to detect and prevent occupational misappropriation and safeguard public resources.”

De La Cruz initially faced a 20-count indictment, which was reduced to three counts as part of the plea agreement.

Federal prosecutors sought a sentence of more than six years, arguing in a sentencing memo that De La Cruz’s actions were “not merely a lapse in judgment” but a continuation of his “unending pattern of criminal behavior” over 20 years, including previous convictions for harassment, theft, assault and domestic violence.


A significant sentence was also warranted to deter other public employees “from exploiting their employment for personal gain, particularly when our public institutions are vulnerable during crisis,” wrote Assistant U.S. Attorneys Cindy Chang and Seth Wilkinson in their sentencing recommendation memo.

De La Cruz, who faces three years of supervised release after completing his prison term, was also ordered to pay restitution to the state of $360,000, according to prosecutors. Individuals who received benefits though his scheme will be required to repay the funds, said Emily Langlie, a spokesperson for the U.S. Attorney’s Office.

During De La Cruz’s sentencing, Corey Endo, his federal public defender, asked for a more lenient sentence of two and a half years, pointing to his history of post-traumatic stress disorder and substance use disorder.

Early in the COVID-19 pandemic, De La Cruz worked for ESD from home, smoking heroin, using methamphetamine and sleeping only three or four hours a day, Endo noted in his sentencing recommendation.

“Looking back, he is not sure how he survived this period of time, and credits his arrest with saving his life,” Endo wrote.

“I am sorry for all of the hurt I have caused, the damage of the trust instilled in me by the state employees, the victims, the victims families and my family as well,” De La Cruz wrote in his letter to the court.


Washington has recovered around $395 million, or more than 60% of the $650 million in stolen pandemic unemployment funds, according to an earlier ESD report — but much of the rest may now be beyond the reach of investigators. 

Much of the recovery occurred soon after the fraud was discovered in May 2020, thanks to fraud detection systems at more than 75 financial institutions where criminals directed an unwitting ESD to wire stolen funds into tens of thousands of accounts.

These ranged from JPMorgan Chase, the largest U.S. bank, which reportedly was sent $42.5 million in stolen ESD funds, to Washington’s own Boeing Employees Credit Union, which was sent nearly $1.2 million.

Even KeyBank, the Cleveland-based bank that handles ESD’s financial transfers to other financial institutions, apparently wired itself more than $18.3 million in allegedly stolen ESD benefits, according to state records.

In some cases, however, financial institutions froze suspect accounts but, owing to uncertainties over where the money came from (accounts were often used for funds stolen from multiple states), have declined to return the funds without a court order.

That has required the Washington state Attorney General’s Office to file dozens of so-called forfeiture claims. 

Earlier this month, for example, the AGO sued to recover nearly $580,000 in suspect benefits reportedly in accounts at U.S. Bank. As of May 25, the AG had recovered nearly $21 million via forfeiture actions, according to agency officials.

Coverage of the pandemic’s economic impacts is partially underwritten by Microsoft Philanthropies. The Seattle Times maintains editorial control over this and all its coverage.