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The U.S. Inspector General’s office is investigating what could be a multi-state unemployment insurance fraud scheme that resulted in Massachusetts paying out at least $280,000 in fraudulent claims since March, according to state officials. The Executive Office of Labor and Workforce Development became aware of the suspicious patterns within the past two weeks, and officials say benefit payments obtained fraudulently have been stopped. An additional 500 claims were blocked before payments started, preventing $9.3 million in costs to the state had they gone undetected. “I don’t know if they know it’s one individual or one entity but there are patterns that suggest it might be contained. These things are serious, but we also feel we have identified it and we expended very little before we were able to cut them off at the knees,” Labor and Workforce Development Secretary Rachel Kaprielian said. The Inspector General’s investigation involves claims made in Massachusetts, as well as Kansas, Nevada, New York, Texas, Florida and New Mexico, a state labor official said. In Massachusetts, just fewer than 600 fraudulent claims tied to the investigation have been made since March out of a total of 61,000 new claims filed with the state. “We are notifying the effected residents that erroneous claims have been filed in their name and are preparing guidance for employers to alert us to potentially fraudulent claims. We count on them to help us verify,” said Ann Dufresne, spokeswoman for the Executive Office of Labor and Workforce Development. The scheme, according to Dufresne, involved perpetrators stealing the identities of Massachusetts residents and using their personal information to make claims for benefits, which can be collected for up to 30 weeks. Kaprielian stressed that the department is unaware of any data breach within the state’s unemployment insurance system database that could have exposed the personal information of residents lawfully collecting benefits. She also said it appears the claims may have been originating from outside Massachusetts, but cannot be certain at this time. The state is working closely with the Inspector General and the other states involved so that whoever is responsible can be identified and prosecuted, officials said. “We definitely have the gate up, but every now and again we have to be vigilant because they can get trickier or clever,” Kaprielian said. “The integrity of the system is key to its success and I feel confident saying this is a system with integrity.” The office uses a fraud detection program called AWARE that can be used to track electronic patterns within claims filed with the department that could point to potential fraud. Since the program was launched in November, the administration has uncovered and shut down other schemes that Dufresne said saved taxpayers $24.6 million. Kaprielian said she believes the system works, even in this case when fraudulent claims were being filed as far back as March. “It’s hard to tell on a onesie-twosie fraud. You need to see a pattern developing,” the secretary said. “But just because we’ve stopped this one doesn’t mean we can relax. The cyber world is always changing and we have to be ready for the next step.”
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