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February 06, 2012

DOES Announces Major Crackdown on Unemployment Fraud 

Probe Focused on D.C. Government Employees Who Illegally Collected Unemployment

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WASHINGTON, D.C.) – Mayor Vincent C. Gray and Department of Employment Services (DOES) Director Lisa Mallory today announced a major unemployment-insurance-fraud probe launched by DOES in cooperation with the Office of the Attorney General (OAG), the Office of the Inspector General (OIG) and the Department of Human Resources (DCHR).

In an effort to ferret out waste, fraud, and abuse, Director Mallory began a rigorous review of the District’s unemployment-insurance program upon becoming director last spring. Very quickly she identified serious concerns about the way the program had been administered over the last several years. These concerns were immediately relayed to the OIG, OAG, U.S. Attorney’s office and the U.S. Department of Labor, and DOES immediately launched an internal probe into the matter. The review found that about 130 current or former D.C. employees may have defrauded the government by collecting unemployment benefits while still working for the District.

Mayor Gray has asked the OAG to work with the agencies that employ the specific personnel in question to investigate immediately, and those who are alleged to have committed fraud will be placed on administrative leave pending resolution of that process. Any employees still on the D.C. government payroll who committed fraud will be terminated as soon as possible under District law.

“I commend Director Mallory for her tireless and courageous work to uncover this malfeasance,” said Mayor Gray. “Her efforts send a strong and clear message that we will not tolerate fraud in this government, but will root it out and hold people accountable.”

“We have taken many steps to improve the quality and integrity of the unemployment-insurance program,” said Director Mallory. “While more reform is still underway, many of our recent efforts are focused on detecting, recovering and deterring improper payments.”

The names of employees found to have defrauded the government will be referred to the U.S. Attorney for criminal prosecution, and OAG will seek to reclaim through civil actions money improperly paid to employees.

“It is unconscionable for anyone – and particularly District of Columbia employees, who should have high ethical standards – to be fraudulently collecting unemployment insurance to which they are not entitled,” said Attorney General Irv Nathan. “The OAG will be seeking to recover for the District’s treasury any money that was wrongfully taken by these individuals.”

New and updated controls and procedures have also been put in place to prevent fraud. An outside auditor, which has been procured already, will also conduct an in-depth audit and review of the unemployment-insurance program to highlight any additional weaknesses and to provide a clearer understanding of what enabled the apparent fraud.