RICHMOND, Va. (AP) - The state agency that handles unemployment insurance in Virginia estimates it has paid out more than $40 million in benefits to individuals who submitted claims on behalf of inmates, according to a federal court filing.
The disclosure, which was first reported Friday by the Richmond Times-Dispatch, was made in a criminal complaint filed in federal court last month against two former Virginia inmates.
Candice Lee Pearce, 30, and John Paul Tierney, 35, are charged with fraud and conspiracy for allegedly getting approval and payment for nearly $75,000 in unemployment benefits. A little over $51,000 of that money was to be paid to five ineligible Virginia inmates, according to an affidavit written by a special agent with the U.S. Department of Labor’s Office of Investigations-Labor Racketeering and Fraud.
The complaint in the case describes a broader investigation into “an unemployment insurance fraud scheme wherein unemployment benefits in the millions of dollars were paid by the Virginia Employment Commission to applicants who were actually inmates being housed at correctional facilities in the Commonwealth of Virginia.”
The filing goes on to say that “VEC estimates it paid out over $40 million to individuals who submitted claims on the behalf of ineligible inmates.”
The agency, like others across the U.S., has dealt with an unprecedented surge in unemployment applications amid the pandemic and economic downturn, as well as evolving federal regulations and programs.
Other states are also facing questions about fraudulent payments and whether enough was done to prevent them.
An audit released last month in California found that state’s unemployment agency paid at least $810 million to prison inmates, more than double the amount previously thought. In total, the state auditor found that the agency paid out at least $10.4 billion in fraudulent claims due to “significant missteps and inaction.”
The $40 million figure contained in the criminal complaint in Pearce and Tierney's case might not be a full accounting of all fraudulent claims Virginia has were paid out.
In December, state officials told The Associated Press about 40,000 claims had been flagged for fraud.
A spokeswoman said at the time that some claims had been made in inmates' names and some in the names of dead people. In other cases, she described scammers using the addresses of other people and then trying to intercept mail from the VEC.
The VEC has not responded to recent questions from the AP about the latest number of claims flagged as potentially fraudulent or the total amount of money that may have been paid out for claims later found to be fraudulent. Once claims are flagged as potentially fraudulent, they are not paid out, the state has said.
VEC spokeswoman Joyce Fogg didn’t immediately respond to a request for comment Friday about the disclosures in the case against Pearce and Tierney.
The Times-Dispatch said a spokeswoman for VEC wrote in an email that the agency, “assesses eligibility according to federal guidelines. The VEC works diligently to prevent and address suspected incidents of fraud, including flagging the use of multiple claimants with similar bank accounts, addresses, and/or e-mails.”
Virginia's employment commission has faced persistent complaints from applicants unable to get basic questions answered about their claims and from lawmakers, who have been flooded with calls and emails from concerned constituents. It has been lagging other states in rolling out some programs and quickly reviewing certain claims.
Gov. Ralph Northam's administration has generally defended the work of the agency. The VEC has been hampered in its response by an antiquated filing system and the fact that because Virginia's economy has been relatively strong for years, its workforce in February had about half the number of workers it did during the Great Recession.
The criminal complaint said the VEC began reviewing claims around June to identify cases of fraud and that officials learned from other states in August that some inmates were receiving benefits.
Pearce is accused of filing an unemployment claim in Tierney’s name and in the names of four other inmates at the River North State Correctional Center. She’s also accused of filing claims in her own name and in her mother’s name.
The affidavit describes a series of recorded phone calls last summer between Tierney and Pearce, including one in which they discussed Pearce filing a claim in Tierney’s name. In another call, Tierney allegedly told Pearce that he found other inmates who want her to file claims for them, too. In another call, Tierney provided the dates of birth and social security numbers for several other inmates. The other inmates are not named in the affidavit.
Attempts to reach attorneys for Tierney and Pearce were not immediately successful.
