Maryland officials discover massive unemployment insurance fraud scheme involving $501M, Governor says

Maryland officials are investigating what Governor Larry Hogan described as a massive unemployment insurance fraud scheme involving more than 47,500 phone claims and totaling more than $500 million.

Investigators discovered 10s of thousands of fraudulent claims that used stolen identities and personal information acquired from previous breaches.

FOX 5 was first to report on the report about the concern over unemployment fraud  

We spoke to a man who was the victim of unemployment fraud and people who suddenly lost their benefits.

Over July 4th weekend, claimants living out of state suddenly found their state-issued debit cards canceled and their claims frozen until they provided additional proof of identity that had to be reviewed.

FOX 5’s Lindsay Watts has been asking since Thursday how many people were impacted and when their claims would be reinstated.

“A few real people who really needed benefits got caught up in that because we had to put a hold on all those payments,” said Hogan. “But the department is working diligently to process that as quickly as possible. I think it will be very, very quickly and we will get those resolved.”

The Maryland Labor Dept. did not provide a number Thursday.

Download the FOX 5 DC News App for Local Breaking News and Weather

Matthew Smith is among the people impacted. He said he moved out of state and in with his parents when he lost his job.

“In the press conference today it was, like, very interesting to know about all the fraud claims, but they just kind of brushed over about the people who actually aren’t fraudulent and who’ve been affected by this,” said Smith.

He said he talked to the Labor Dept. about his frozen claim earlier in the day.

“I was on the phone for almost an hour just for them to tell me it could be up to 5 to 7 weeks to process this verification,” said Smith.

FOX 5 spoke to others impacted who said their claim has been cleared and their new debit card is in the mail.

RELATED: Coronavirus caused surge in online fraud, TransUnion finds

Hogan said the fraud investigation is still in its early stages. There was no information Thursday about whether suspects have been identified or arrests made.

This is just the latest hurdle when it comes to collecting unemployment benefits in Maryland. The backlog is over 22,000 and FOX 5 is still hearing every day from people waiting for help. Hogan said the backlog is 3.6 percent of all claims filed.

“We could deny all of those people and then we would have 100 percent compliance, but we’re working very hard even if they haven’t qualified yet or they’ve got some issue,” said Hogan. “I can tell you the department is working day and night to try to get those people the help they need.”