Home Local News Fraught with fraud: Fraudulent unemployment claims being submitted in the name of people who never filed

Fraught with fraud: Fraudulent unemployment claims being submitted in the name of people who never filed

16 min read

Debra Hicks was surprised when she received a letter from the New Mexico Department of Workforce Services last month, asking her to confirm an application for unemployment insurance in her own name.

About a mile away, Beckey Waldrop has been inundated with letters from the department. She said she’s received probably 20 letters since mid April, requesting information to verify not one, but two claims for unemployment benefits connected to her Social Security number.

The problem is Hicks is CEO at Pettigrew and Associates in Hobbs, and Waldrop is co-owner of Miller Waldrop Furniture with her husband, Kent.

Both women told the News-Sun last week the problem of fraud is twofold: First, they still work at their respective businesses and, two, neither woman ever applied for benefits.

“I got like 10 letters in one day,” Waldrop said Friday. “I contacted someone at the state and they said I needed to fax the information and to tell them it wasn’t a valid claim.

“I did that,” she said. “I have never once heard from the state, so I have no idea if they’ve got my faxes. I continue to get forms from the state on these claims.”

And they are not alone. In mid-April, the Albuquerque Journal quoted a Workforce Services spokesperson saying the agency was aware of 646 cases of unemployment fraud in the state. According to the U.S. Department of Labor website, fraudulently filing for unemployment benefits is a growing problem across the country.

“It’s almost kind of a push from people doing nefarious activities,” Hobbs Police Chief John Ortolano said Thursday. “In the past two weeks, I’ve seen five reports. These types of scams ebb and flow, targeting different areas of the country.”

Workforce Services is reportedly working closely with the Social Security Administration to track fraud claims, Ortolano said, noting not everyone who suspects unemployment fraud reports it to HPD. He recommended people who suspect they’ve been a victim of unemployment insurance fraud contact the Social Security Administration office and monitor their credit reports for “suspicious activity.”

“The response should be two-fold: Report it to the police and we report to our federal partners,” Ortolano said. “As soon as you contact us, contact social security. Workforce is getting the information from Social Security.”

Penalties for unemployment insurance fraud include prosecution and possible imprisonment, repayment of erroneously-paid benefits plus fines and penalties, forfeit of income tax refunds in the future and being deemed ineligible for future unemployment benefits, according to information on the Workforce Services website. To report suspected fraud activity, email ed.verify@state.nm.us or call (505) 243-7283.

While scams of every stripe are nothing new, attempted unemployment insurance fraud increased during the past year due in part to the uptick in applications from people who lost their jobs during shutdowns related to the COVID-19 pandemic, Sen. David Gallegos, R-Eunice, told the News-Sun recently. As the numbers of people out of work increased almost exponentially, that left the department struggling under the sheer volume of claims, he said.

“It’s one of those things, you don’t know who’s going to be affected,” Gallegos said. “I have heard there’s been fraud and there are other issues. I wasn’t sure if they were using someone’s name or just a fictitious business” to attempt to defraud the system. People are just interested in getting the cash by whatever method.”

Sen. Gay Kernan, R-Hobbs, agreed, noting the problem is “just massive.” She told the News-Sun a friend of hers learned she had been targeted only when she received a pre-paid benefits card for unemployment insurance from the department.

Waldrop, too, received a debit card from Workforce Services, presumably with unemployment benefits, she said. She doesn’t know exactly how much money is accessible via the card. Waldrop hasn’t been comfortable trying to use it because she believes the money isn’t hers, she said.

It’s frustrating “not being able to get a hold of anybody from the state to talk about it,” Waldrop said. “The state sent me money, the taxpayer’s money, but I don’t know how much it is. They just don’t seem to care. I understand as a business person, they are super busy. But you’d think they’d care about this fraudulent activity, that they’d at least email me and say, ‘We’re on it.’ Something.”

After talking to the News-Sun on Thursday regarding the issue, Kernan said she contacted acting Workforce Solutions Cabinet Secretary Ricky Serna, the former deputy secretary who took over the post following the sudden resignation last month of then-Secretary Bill McCamley. No reason was given for McCamley’s abrupt departure from the post.

Serna confirmed Kernan’s characterization of the scope of the issue in New Mexico, she said.

“What started it was, during the pandemic, when they began paying self-employed individuals unemployment benefits, it was that program that was difficult to verify,” Kernan said. “That really is what generated the opportunity for fraudsters to come in and steal identities.”

Gallegos told the News-Sun his legislative staff was keeping him apprised of the situation, which he said goes beyond fraud and has been ongoing almost since the start of the pandemic.

“The whole Workforce Department has had issues from day one,” he said. “Whatever it was that hit it all at one time, we understood there was a lot of money out, a lot of different things that happened.

“Secretary McCamley — whether on his own accord or they let him go — for whatever reason, they changed leadership,” Gallegos said. “I don’t know if it’s McCamley’s fault, but something didn’t work during this whole COVID period. There’s been no checks and balances.”

The U.S. Department of Labor website reported the stolen identities being used currently probably are either bought or otherwise accessed “by organized crime rings … from past data breaches, the majority of which occurred in previous years and involved larger criminal efforts unrelated to unemployment.”

The New Mexico Department of Workforce Solutions did not reply to multiple phone calls and emails from the Hobbs News-Sun requesting specific information on the scope of the fraud, how the department verifies unemployment claims or what safeguards are in place to prevent people from applying for benefits in another person’s name.

Kernan said acting Secretary Serna told her that, while false benefit applications were being filed, most were being discovered and no money was actually being paid out to cover the fraudulent claims, which conservative estimates place in the 10s of millions of dollars.

And, while investigators from Workforce Solutions reportedly contacted Ker-nan’s friend quickly, Hicks, Waldrop and many others haven’t been as lucky.

Hicks said within days of receiving hers, the business also received a benefits verification request for another Pettigrew employee who hadn’t filed. Since that time, the department has been mum on information regarding the fraudulent claims and what their next steps need to be to resolve the issues.

“We called and did not receive an answer,” Hicks said. “We ended up emailing and asked what we could do. There’s been no information from Workforce Solutions. We haven’t had a lot of feedback.”

Hicks and Waldrop both said they’re frustrated with that lack of response from the state agency charged with administering — and verifying — unemployment insurance claims. Hicks was told all she could do was to file forms, stating she and the second employee at Pettigrew and Associates were still employed and the claims in their names were false.

“We don’t know how long it’s going to take to be resolved,” Hicks said. “Hopefully we will not be charged for the fraudulent unemployment claims. It shouldn’t take several months to get through this. This says to me the fraudulent activity that has gone against the businesses is not a priority to the governor or to the Department of Workforce Solutions.”

Waldrop agreed: “It’s going to be 10 years before (Workforce Services) have enough staff to do anything about it. The silence is the most frustrating. I’m beginning to feel it’s just ending up in a pile of papers and nobody is doing anything about it.”

Andy Brosig may be reached at reporter1@hobbsnews.com.

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