Dr. Albert Aboulafia realized he was a victim of an identity theft scam when unemployment benefits started arriving in the mail, even though he hadn't filed.
Dr. Albert Aboulafia was pretty sure he was still employed, and quite busily, as an orthopedic oncologist and medical director of a cancer center.
And as far as J. Michael Brennan knew, he was still a principal attorney at Miles & Stockbridge.
But some weeks back, as thousands of actually jobless Marylanders struggled to apply for or receive unemployment benefits, they learned the state had approved claims made under their names and started payments.
“I knew I wasn’t unemployed,” Aboulafia said. “I knew I hadn’t applied for unemployment.”
A Bank of America debit card showed up in the mail at his home in early June, he said, with a letter from the Department of Labor detailing how to activate it and access his unemployment payment.
Meanwhile, Brennan said he received a call in late June or early July from his law firm’s human resources department, asking, “Did you file an unemployment claim?”
The state had informed the firm that Brennan’s application was approved effective March 22, and the first week’s payment had been made. Unlike Aboulafia, though, he did not receive a debit card.
Asked about cases such as Aboulafia’s and Brennan’s, Fallon E. Pearre, a labor department spokeswoman said in an email that “there is always some level of fraud in the unemployment system” but that staff works to root out improper applications.
The two cases appear not to be part of the “massive, sophisticated criminal enterprise” that Gov. Larry Hogan said the Labor Department had uncovered. He said Wednesday the agency discovered more than 47,500 fraudulent claims for more than $501 million in benefits.
Hogan said those claims came from out-of-state and were detected over the July 4th weekend, by which time the applications in Aboulafia and Brennan’s names apparently already had been processed.
Meanwhile, the department said the discovery of the 47,500 fraudulent claims led them to freeze the accounts of out-of-state applicants, adding to the frustration with Maryland’s Beacon One-Stop unemployment system. The account holders were required to provide additional verification documents.
As in other states, the sheer volume of people thrust out of work by the coronavirus pandemic and economic shutdown has strained Maryland’s unemployment insurance division. As of last week, 24,000 applicants still were awaiting resolution of issues with their claims, some having gone months without income. The department has received more than 624,000 applications since March, when the business shutdown and other closures began.
Aboulafia and Brennan said they couldn’t get through to the Labor Department to report the fraudulent claims.
Brennan said he and the human resources department “immediately started calling.” They left a voicemail on the labor department’s hotline for unemployment insurance fraud, but didn’t hear back. They asked colleagues for any contacts at the labor department, and emailed those officials but received no response.
Brennan said he’s left with multiple questions: Why did it take three months from when the first unemployment payment was made before the labor department notified Miles & Stockbridge? Are the payments still flowing? Was a debit card sent, and where? What else might someone do with his information?
He suspects his Social Security number was among those harvested over the years, as hackers have breached the security of everything from financial firms to government agencies to health care companies. Experts have estimated that half or even more of the nation’s Social Security numbers have been stolen.
“If you think how often in the past you had to provide it,” Brennan said, “it’s probably floating around out there.
“It makes you think, what else can you get with a Social Security number — a credit card, a bank loan? Or can you get into a bank account?”
Aboulafia said he could not get through to the labor department even to leave a message.
He said he called the Maryland Attorney General’s office, which advised him to file a police report. His attempt to file an online report to police in Baltimore County, where he lives, was rejected, but he was able to call it in.
Aboulafia wasn’t able to tell police the value of the card because he didn’t want to activate what was clearly a fraudulent claim. He wonders if the state makes weekly deposits to it, and if “the bad guy” has found a way to retrieve the money.
Pearre said the department does not issue regular payments without verifying unemployment claims with applicants’ employers. However, she said, the new Pandemic Unemployment Assistance, or PUA, that allows those previously ineligible for regular benefits — such as self-employed or gig workers — to “self-certify that they are unemployed due to the coronavirus.”
Pearre acknowledged this eliminates the usual “check and balance” provided by employers verifying claims, and increases the potential for fraud.
The department has released few details about what Hogan announced Wednesday, saying it led federal authorities to similar fraud in 12 other states. Pearre said labor staff “detected, reported, and blocked payment to the out-of-state claims just before the 4th of July weekend.
“Notifying federal authorities has helped shed light on related fraudulent criminal activities that have occurred in at least a dozen other states across the country,” she said.
That prompted the FBI to issue a national warning on July 6 about a spike in fraudulent unemployment claims, she said.
Pearre referred questions about which other states were involved to the federal Labor Department’s Office of the Inspector General, which sent its special agent-in-charge of the Washington region to appear at the announcement on Wednesday. The agent, Derek Pickle, commended the department for reporting the fraud. A spokesman for the office declined to provide further details.
An estimated 10% of unemployment payments are made fraudulently, then Labor Inspector General Scott S. Dahl testified before the U.S. Senate Finance Committee in June. He said that rate likely would increase with the expansion of the program due to the pandemic.
Dahl retired later in the month, although he has said it was unrelated to a disagreement over how PUA was administered. A report in Roll Call said Dahl’s office previously questioned the decision to rely on self-certification for PUA applicants, saying it makes the program “highly vulnerable” to fraud.