July 15, 2020
GOVERNOR HOGAN: Good afternoon. Thank you all for being here. Joining me are Maryland Labor Secretary Tiffany Robinson and Special Agent Derek Pickle from the U.S. Department of Labor Office of the Inspector General.
We are here to announce that the state of Maryland has uncovered a massive sophisticated criminal enterprise involving widespread identity theft and coordinated fraudulent unemployment insurance claims in Maryland involving more than 47,500 fraudulent claims and totaling over $501 million. The state of Maryland exposing this illegal scheme and notifying the federal authorities has helped shed light on related fraudulent criminal activities in at least a dozen other states.
I want to congratulate Secretary Robinson and her team at the Maryland Department of Labor for their incredible efforts. After detecting an unusual increase in out of state federal pandemic unemployment assistance claims, the Maryland Department of Labor discovered these more than 47,500 fraudulent claims which were involving massive identity theft, attempting to utilize stolen identities and the personal information of innocent and unsuspecting individuals, which was apparently acquired from previous national data breaches.
Our Maryland Department of Labor immediately notified our federal partners, including Maryland U.S. attorney Robert Hur as well as the Office of the Inspector General at the U.S. Department of Labor, and we have been coordinating with them on this ongoing investigation. Yesterday I spoke with U.S. Attorney Hur and praised him for his actions. Thanks to the efforts of our Labor Department, not only did we identify the fraudulent identity theft here in Maryland and save the taxpayers a half billion dollars, we also helped the federal authorities uncover related illegal activity in states across the country.
I want to praise the Maryland Department of Labor, the Office of the Inspector General, and the U.S. attorney for their work.
I also want to assure the people of Maryland that the state of Maryland Department of Labor has not experienced any breach of our unemployment insurance information system, and Maryland claimants personal information has not been comprised in any way. Maryland was the first state in the nation to establish a comprehensive website with the capabilities of processing unemployment benefits for both regular unemployment claims and the CARES Act unemployment programs. That comprehensive website at the Maryland Department of Labor has helped us successfully process over $4.3 billion in federal unemployment insurance benefit payments to more than 489,000 Marylanders who desperately needed that assistance over the past few months.
In the Great Recession of 2008, it took 18 months to reach that number of claims here in Maryland, which now the department has had to handle in just the past few months. It is equal to the total number of claims in the previous three years in Maryland added together. The department has successfully processed 96.4% of all the claims in Maryland, and the percentage of cases that they are still working hard to help people resolve is down to 3.6%, which is, in fact, even lower than normal pre-pandemic processing levels. We’re committed to ensuring that all unemployed Marylanders get the help that they need and that they receive every single penny that they’re entitled to. Some had suggested that we compromise the integrity of these federal programs and that we just pay out the benefits regardless of whether it is a legal claim or whether or not an individual is eligible. That would have violated state and federal law, and it would exploit innocent taxpayers. The.
This criminal enterprise seeking to take advantage of a global pandemic to steal hundreds of millions, perhaps billions of dollars, from taxpayers is despicable. And we will continue to work with both the U.S. attorney and the U.S. Department of Labor Office of Inspector General on this ongoing investigation, both here in Maryland and in other states across the country to do whatever it takes to ensure that the perpetrators are apprehended and prosecuted to the fullest extent of the law.
Detecting and stopping this fraud ensures that money remains available in these funds for the tens of millions of deserving people all across America who actually need the help. And I can assure you that nothing is going to stop us from continuing to help struggling Marylanders get the assistance that they need during this crisis.
At this time I would like to turn it over to Secretary Tiffany Robinson from the Maryland Department of Labor to discuss her team’s efforts to identify and stop this fraud and how our innovative Maryland Labor website allowed us to uncover this massive criminal fraud scheme.
Secretary?
TIFFANY ROBINSON: Good afternoon. Thank you, Governor, for your leadership and your support through this investigation.
Since the beginning of the pandemic, our federal partners have consistently and strongly warned unemployment insurance programs about the prevalence of fraudulent and criminal activity. As states across the country continue to experience unprecedented volume of claims, fraudsters are capitalizing upon the hardships created by the pandemic and are targeting unemployment insurance programs due to the additional benefits offered by the CARES Act. The PUA program in particular allows individuals to self-certify that they are unemployed due to coronavirus, eliminating the checks and balance under the usual program and increasing the potential for fraud. A recent spike in criminal activity led the FBI to issue a national warning about fraud in the unemployment insurance system. Paying claims has been the highest priority. We have also been committed to ensure that both taxpayers and claimants are protected during these already difficult and uncertain times. Knowing that fraud was a real and ever-increasing threat, our department’s employees remained vigilant, and when our division of unemployment insurance recently detected an increase in out-of-state PUA claims, we were prepared, with a secure website and heightened security measures in place. Our department quickly detected, reported, and blocked payment to over 47,500 fraudulently filed out-of-state claims. The immediate action taken saved taxpayers over $501 million, the most significant unemployment cost savings in the country announced since the beginning of the pandemic. I am so proud of my team for working around the clock to allow our department to emerge as the victor rather than the victim of fraud. Our department will continue to coordinate with the U.S. attorney’s office and U.S. Department of Labor’s office of the inspector general to investigate and prosecute the criminal taking advantage of the PUA program by filing fraudulent claims with stolen identities. While U.S. attorney Robert Hur could not be here with us today, he stated “My office and the entire law enforcement community are committed to bringing justice to fraudsters who are preying on citizens during this unprecedented public health crisis by using their stolen personal information to fraudulently attempt to obtain unemployment benefits. We are grateful for our partnership with the state of Maryland in stopping unemployment fraud and believe that this joint federal state partnership will continue to bear fruit. We will work against this abuse and our outreach efforts to make the citizens aware. I urge citizens to remain vigilant and report suspicious activity.”
I am grateful for that state by U.S. Attorney Hur and we appreciate our strong relationships with their office, the Office of the Inspector General, and our vendor, Bank of America. The Maryland Department of Labor has not experienced a breach of our unemployment insurance systems, and claimants’ personal information has not been compromised in any way. We have already taken a series of actions to even further enhance security, and we will continue to closely monitor our unemployment insurance system out of an abundance of caution to prevent any further fraud from occurring. If any Marylander believes that their information has been used to fraudulently file an unemployment insurance claim, they should contact our department’s division of unemployment insurance by emailing ui.fraud@maryland.gov or visit mdunemployment.com. Since the beginning of the pandemic, like every state, our department has faced a series of challenges. As the Governor mentioned, we have received more claims in just the last few months than in the past 3 years. We created a brand-new online application in a matter of weeks to administer three new CARES Act unemployment programs while navigating the ever-changing federal guidance directives. Our department has overcome these challenges and made significant progress in the processing and payment of claims, paying over $4.3 billion in benefits to claimants, and in the midst of it all, our team successfully blocked over half a billion dollars in fraudulent claims. We remain committed to helping Marylanders through this pandemic, which means ensuring that all eligible claimants get the benefits they deserve as quickly as possible, while also protecting the integrity of our system and your taxpayer dollars. We will continue to build upon this positive progress and will not stop until each and every customer has been served.
Now I would like to introduce special agent in charge Derek Pickle from the U.S. Department of Labor’s Office of Inspector General, who has been working alongside our department as we fight fraud.
Thank you.
DEREK PICKLE: Good afternoon. Thank you, Governor Hogan and Secretary Robinson for inviting me to be here today.
My name is Derek Pickle, special agent in charge of the Washington, D.C., region for the U.S. Department of Labor’s Office of Inspector General. The Office of Inspector General is the law enforcement agency primarily responsible for investigating fraud in the unemployment insurance program, and we take great pride in working with our law enforcement and state workforce agency partners to accomplish that mission.
Since the pandemic began, we have seen a dramatic increase in unemployment insurance fraud around the nation. To give you a sense of how that spike corresponds to our work, unemployment insurance fraud investigations historically made up 10% of our agency’s investigative workload. Today more than 50% of our investigative matters pertain to unemployment insurance, and that number continues to grow by the day. And that includes investigative matters in all 50 states.
Over the last many months the Office of Inspector General has prioritized working with our state and federal partners to combat fraud against the unemployment insurance program. A major focus of that work has involved the collection and analysis of unemployment claims data in order to identify fraud indicators to proactively address fraud and prevent the loss of taxpayers’ money to criminals exploiting the system for personal profit. Today’s announcement demonstrates the strength of our relationship with the state of Maryland and attorney’s office and also shows the possibility for our safe commitment to safeguarding taxpayer funds and the integrity of the unemployment insurance program.
In closing I personally wanted to commend Secretary Robinson and her team and her personnel to identify this fraud and bring it to our attention. We look forward to our continued accomplishments through that partnership. Thank you.
GOVERNOR HOGAN: Well, I want to thank the special agent Pickle for joining us here today, and again, I want to thank the U.S. Department of Labor Office of the Inspector General very much. I want to thank the U.S. attorney and our entire team at the Department of Labor.
Processing the sudden and unprecedented increase in employment claims while following complex federal regulations and guarding against fraud is certainly not an issue unique to the state of Maryland. The federal government and every state in America has had to overcome challenges to handle this recent overwhelming caseload.
Over the past few months, America has seen an unprecedented economic collapse never before seen in our lifetime. And Marylanders have not been immune to this national economic collapse. Here in Maryland, however, we were able to keep more than 70% of our state economy open throughout the entire crisis, without shutting down. And then with our safe, effective, and gradual Roadmap to Recovery, 62 days ago we were able to lift our stay-at-home order in Maryland, and 41 days ago we moved into stage 2 of the recovery plan. Maryland is open for business, with 98% of our economy open and able to operate in a safe way.
Because of these decisions and actions, our unemployment rate, while obviously considerably higher than it was before the pandemic, is much lower than the national rate, far better than most of the states in America, and is the very best among all the states in our region.
On Monday I led my 44th call with my fellow governors in just the past few months. It was our 29th call with either the President and/or Vice President. Yesterday we also convened the 20th meeting of our coronavirus recovery team of leading public health experts, doctors, scientists, and business and labor leaders, and we held another emergency meeting of my entire cabinet.
As we continue to navigate through both the health and economic crisis, our key health metrics in Maryland continue to remain low and stable. Our daily positivity rate dropped again today to 4.26%, and our 7-day positivity rate dropped again today to 4.49%, which is a more than 83% decrease since its peak 90 days ago on April 17 when we were at 26.91%.
We did see a slight uptick in COVID hospitalizations today, but they are still down 73% from their peak 77 days ago on April 30. However, we are concerned that 40 states across America are experiencing spikes and increasing numbers, including states just across our borders. And we’re watching a few concerning trends in our state. The positivity rate among Marylanders under the age of 35 is now 83% higher than Marylanders who are 35 and older. And an increasing number of COVID-19 cases have been connected to noncompliance with public health requirements, particularly in bars and restaurants. Yesterday I sent a letter to county leaders urging them to enforce public health requirements in bars and restaurants across the state, reminding them that it was the responsibility of their local Health Departments, local liquor boards and inspectors, and local law enforcement agencies to work together to actively and aggressively enforce these critical public health measures.
Young people should avoid crowded bars, house parties, and large gatherings of any kind. You are not only putting yourselves at risk; you’re also risking the lives of your parents, your grandparents, and other vulnerable people in the community. Any Marylander who has been engaged in any type of risky behavior should immediately get tested for COVID-19.
We are also advising that Marylanders refrain from traveling to areas experiencing rapidly escalating numbers. Any Marylander who has traveled to or is returning from travel out of state, especially from those states that are experiencing spiking numbers, should immediately get tested.
I want to remind Marylanders that while our health metrics are continuing to slightly decline or plateau, this battle is not behind us. Not by a long shot. Only you can stop the spread of this virus. All Marylanders are still safer at home, and particularly older and more vulnerable populations. Low risk does not mean no risk. Outside activity is still much safer than inside activity. Employers should continue to encourage telework for their employees when possible. And individuals who can work from home should continue to do so. Marylanders should not use public transportation unless it’s absolutely necessary. Everyone should continue wearing masks in public areas, businesses, and on public transportation. Marylanders should continue practicing physical distancing, staying 6 feet apart whenever possible, and should continue avoiding all large gatherings.
Our economy is open, recovering, and doing better than many other states, but only you can keep Maryland open for business by continuing to follow the public health guidance.
While other states are beginning to experience serious testing shortages, here in Maryland we do not have that problem. Back at the end of April we laid out a long-term testing strategy. Last month the signature state lab we built at the University of Maryland Baltimore became fully operational. So we’re now able to handle our own large-scale testing, and unlike many other states, most other states, we have a substantial strategic stockpile of COVID-19 test kits that will keep us in good shape all the way through the fall, as the normal flu season begins and as the demand for COVID tests increases.
Finally today, I want to address a major issue that is on everyone’s minds: What action the state Board of Education will take regarding our schools. We all want our children to get back to school as soon as possible. But only if and when we can do it in a way that keeps our students and our teachers safe. Last month Dr. Karen Salmon, the state superintendent of schools, and the Maryland State Department of Education put out Maryland Together, Maryland’s recovery plan for education. Since that time, they have been meeting with county boards of education, local school superintendents, teachers, parents, and key stakeholders to collaborate on and develop detailed safe and effective recovery plans for all our Maryland schools. A few counties have already begun submitting their proposed plans. Other local jurisdictions are continuing to work to finalize theirs in order to meet the August 14 deadline.
Once all of that input is received, the State Department of Education will institute protocols that follow CDC guidance and take into account the input of public health experts and which provide for flexibility for our local school systems.
We cannot and should not rush this decision. It is absolutely critical that we get it right for our communities and for each and every one of our children and our teachers.
Dr. Karen Salmon, the state superintendent of the schools, will join us for a press conference next week in order to update us on the progress the State Department of Education is making and on the state’s education’s guidance.
In closing today, let me just say that this crisis has tested all of us in nearly every way imaginable, but with the help of Marylanders coming together, we have been leading the fight against this deadly pandemic by flattening the curve, by reopening our economy safely, and today by detecting criminals who are trying to exploit innocent people for their own gain. From the beginning we have all been in this together, and although this is far from over, and it will not be easy, we will get through this together and Maryland will come out of this stronger and better than ever before.
With that, I will be happy to take a few questions.
(Question off mic).
So the frozen accounts were all out of state that we stopped paying the debit cards. A few real people who really needed benefits got caught up in that because we had to put a hold on the payments, but the department is working diligently to process them as quickly as possible and I think very quickly we’ll have those resolved now that we’ve cleared up the 47,500 cases of fraud.
SPEAKER: Do you have the exact number?
GOVERNOR HOGAN: The total number of all the outstanding cases is only 3%, which is far less than our monthly average in a normal year.
(Question off mic).
In talking with Special Agent Pickle and U.S. Attorney Hur, there is no question that all 50 states and all the territories have been hit with serious cases of fraud, totaling billions and billions of dollars. The cases that are directly involved in this same thing that we’re involved in helping to uncover, that our information is helping in the investigation of, is 12 other states, a dozen other states.
(Question off mic).
We can’t give all the details of the ongoing investigation, but relatively recently, we caught the fraud. It just happened. July 4th weekend. We immediately notified federal authorities. Can’t give more detail than that because the investigation is still ongoing.
(Question off mic).
The federal government has put out warnings all across — has nothing to do with a subpoena, but they have put out warnings all across America talking about fraud.
(Question off mic) I saw that report actually. We’ll have Secretary Robinson follow up with you directly and I think we’ll have her call that person directly and get that case solved. Again, it’s 48,000 cases resolved with $3.8 billion. It’s enormous. It’s hard to talk to 389,000 — 489,000 people at the same time, even if you have hundreds of additional people you’ve hired. But both of us, the secretary and I said, any one person not getting the money that they deserve, we want to try to get to the bottom of. We’ve got it down to far less than what’s normal, but 3% of the people are still in process. We couldn’t deny all of those people or we’d have 100% compliance. But we’re work hard. The department is working day and night to try to get those people the help they need, and those folks that had their identity messed up, I think that will be resolved right away. It was just, this is all coming to a head in the last few days.
(Question off mic).
So this is a problem all across America. And in my discussions with the other governors and with the White House, it’s come up repeatedly. A number of other states, many other states, opened bars without restrictions. This happened in Florida and Arizona and Texas. They’re all closing bars because they’re out of control. They all believe it’s young people, without contact tracing. They have hundreds of thousands of people jamming into these places. We never opened the bars like that. Our bars were only supposed to be open for seated, distanced, capacity restricted. 90% of the restaurant owners and the bars were following the rules. People could go in, have dinner, get a drink, sit at the bar. Some of them were completely blatantly not following the rules. We’re really concerned about our small business owners. We’re concerned about those people who work in those restaurants. We want to get people back to work, get our economy running, and keep people safe. At this point we’re trying to crack down on the bad apples without killing the entire industry and causing more unemployment, but look, if this gets out of control, if people continue to not follow the rules, we’ll have to take another look. Right now we believe it’s a small percentage of the people, maybe 95% of the people are doing it right, both the businesses and individuals, and the ones who aren’t, we’re going to try to get our counties to enforce the rules that have been in place for months and people just aren’t listening to.
(Question off mic).
I think Special Agent Pickle, we’re not allowed to answer questions on the ongoing investigation.
(Question off mic).
Great question. I had the exact same questions. We don’t have an exact number. I’m sure some have slipped through that we didn’t catch, but I think we caught the bulk of it all and we’ll follow up and get to the bottom of any fraud cases that we were not able to get to. We don’t have a number on that.
It is obviously a coordinated, criminal enterprise, because this is not, you know, just random people in their basement that stole somebody’s identity. It’s 47,500 fraudulent identities in Maryland and 12 other states. It’s billions of dollars. It’s a large, sophisticated criminal enterprise. Because it’s an ongoing investigation, not only can I not say the answer; I don’t know the answer. But we know that there was a similar case that involved a Nigerian crime spree. Not to say this is connected. It could be international or organized crime in America. We just don’t know the answer. But it’s not just a random individual. It’s a very sophisticated, it appears as if, and we don’t know specifically where it came from, but we had a breach of the federal government system a while back in OPM, a breach of a number of banks. This was a huge cache of people’s identities. It did not come from here. We don’t know where it came from and we don’t know who is responsible yet.
(Question off mic).
The letters went out yesterday, but our team has been in communication with a number of the counties yesterday, and a number of people have already taken action. First of all, I also want to take a moment to praise the bar and Restaurant Association and many of the good operators. We had situations in Ocean City where five or six bars and restaurants immediately, voluntarily, shut down as soon as they had some of their workers test positive. They really did the right thing. That’s what we need everybody to do. A couple of places in Baltimore did the same thing. There were also a couple of instances around the state where people were flagrantly ignoring the rules. Montgomery County yesterday shut down two businesses and there are a couple of others. It just happened yesterday. But our team was in touch with everybody. I think they’re all in agreement that we need to do something about this and everybody will be working together.
(Question off mic).
The state police have been in communication with all of the county, sheriff departments, all the municipal governments, and sent out guidance. The county, the state police department is very small in comparison to the counties and city police departments and doesn’t have the capacity to do that. It really is the responsibility of the counties, and the reason we sent the letter yesterday, needs to be a coordinated response. What we were finding, one of the concerns we had from some of the local governments was, the Health Department, the local county Health Department, would say, well, it’s our responsibility but we’re busy doing testing and we don’t have people to go to the bars. The health inspector said, we don’t know those health rules. And the police department said, we don’t have a citation for these new regulations. So we told the county leaders, get your county law enforcement, your county Health Department, and county liquor boards together in one room and find a coordinated way to enforce this. We don’t care how you do it, but they’ve got to do it. It’s not the state police’s responsibility.
(Question off mic).
I understand completely the frustration on both sides, and I think Dr. Salmon understands the input from both sides.
I said the other day, the President was saying you must do this, you must do that, I said, we’re not going to be bullied into going one direction or the other, and I mean that, one direction or the other.
I do think many people would love to see the kids get back to school. I certainly would. But I also don’t want to send kids back to school if it will mean issues. So they’re looking at all the federal input, the CDC, our state plan that came out more than a month ago, one of the best and earliest in the country. And we’re working very collaboratively with all the county folks. We’re listening to everything. They’re going to make the right decisions. It may be some type of a hybrid. I don’t know. And I’m not pushing because the state Board of Education is an independent body. Dr. Salmon works for the state Board of Education. She serves in my cabinet, but she’s not appointed by me. And we want them to make the right decision for Maryland, for our kids, and for our teachers.
SPEAKER: Last question.
(Question off mic).
No, they didn’t rush the decision. The state plan required the counties to come up with a plan no later than August 14. As of yesterday, it was only Montgomery County and Frederick County who had come up with a proposed plan. I understand today Prince George’s came up with their proposed plan. I haven’t seen it, and I don’t think the state Board of Education has seen it yet, but like I said, we have plans all have to be in by August 14. I’m pushing to get that done faster because I don’t want to wait that long. Karen Salmon and the state board is working with all of them. I don’t think any final decisions have been made in any counties. It’s all going to work under the requirements of the state Board of Education.
Okay. Thank you very much.
GOVERNOR HOGAN: Good afternoon. Thank you all for being here. Joining me are Maryland Labor Secretary Tiffany Robinson and Special Agent Derek Pickle from the U.S. Department of Labor Office of the Inspector General.
We are here to announce that the state of Maryland has uncovered a massive sophisticated criminal enterprise involving widespread identity theft and coordinated fraudulent unemployment insurance claims in Maryland involving more than 47,500 fraudulent claims and totaling over $501 million. The state of Maryland exposing this illegal scheme and notifying the federal authorities has helped shed light on related fraudulent criminal activities in at least a dozen other states.
I want to congratulate Secretary Robinson and her team at the Maryland Department of Labor for their incredible efforts. After detecting an unusual increase in out of state federal pandemic unemployment assistance claims, the Maryland Department of Labor discovered these more than 47,500 fraudulent claims which were involving massive identity theft, attempting to utilize stolen identities and the personal information of innocent and unsuspecting individuals, which was apparently acquired from previous national data breaches.
Our Maryland Department of Labor immediately notified our federal partners, including Maryland U.S. attorney Robert Hur as well as the Office of the Inspector General at the U.S. Department of Labor, and we have been coordinating with them on this ongoing investigation. Yesterday I spoke with U.S. Attorney Hur and praised him for his actions. Thanks to the efforts of our Labor Department, not only did we identify the fraudulent identity theft here in Maryland and save the taxpayers a half billion dollars, we also helped the federal authorities uncover related illegal activity in states across the country.
I want to praise the Maryland Department of Labor, the Office of the Inspector General, and the U.S. attorney for their work.
I also want to assure the people of Maryland that the state of Maryland Department of Labor has not experienced any breach of our unemployment insurance information system, and Maryland claimants personal information has not been comprised in any way. Maryland was the first state in the nation to establish a comprehensive website with the capabilities of processing unemployment benefits for both regular unemployment claims and the CARES Act unemployment programs. That comprehensive website at the Maryland Department of Labor has helped us successfully process over $4.3 billion in federal unemployment insurance benefit payments to more than 489,000 Marylanders who desperately needed that assistance over the past few months.
In the Great Recession of 2008, it took 18 months to reach that number of claims here in Maryland, which now the department has had to handle in just the past few months. It is equal to the total number of claims in the previous three years in Maryland added together. The department has successfully processed 96.4% of all the claims in Maryland, and the percentage of cases that they are still working hard to help people resolve is down to 3.6%, which is, in fact, even lower than normal pre-pandemic processing levels. We’re committed to ensuring that all unemployed Marylanders get the help that they need and that they receive every single penny that they’re entitled to. Some had suggested that we compromise the integrity of these federal programs and that we just pay out the benefits regardless of whether it is a legal claim or whether or not an individual is eligible. That would have violated state and federal law, and it would exploit innocent taxpayers. The.
This criminal enterprise seeking to take advantage of a global pandemic to steal hundreds of millions, perhaps billions of dollars, from taxpayers is despicable. And we will continue to work with both the U.S. attorney and the U.S. Department of Labor Office of Inspector General on this ongoing investigation, both here in Maryland and in other states across the country to do whatever it takes to ensure that the perpetrators are apprehended and prosecuted to the fullest extent of the law.
Detecting and stopping this fraud ensures that money remains available in these funds for the tens of millions of deserving people all across America who actually need the help. And I can assure you that nothing is going to stop us from continuing to help struggling Marylanders get the assistance that they need during this crisis.
At this time I would like to turn it over to Secretary Tiffany Robinson from the Maryland Department of Labor to discuss her team’s efforts to identify and stop this fraud and how our innovative Maryland Labor website allowed us to uncover this massive criminal fraud scheme.
Secretary?
TIFFANY ROBINSON: Good afternoon. Thank you, Governor, for your leadership and your support through this investigation.
Since the beginning of the pandemic, our federal partners have consistently and strongly warned unemployment insurance programs about the prevalence of fraudulent and criminal activity. As states across the country continue to experience unprecedented volume of claims, fraudsters are capitalizing upon the hardships created by the pandemic and are targeting unemployment insurance programs due to the additional benefits offered by the CARES Act. The PUA program in particular allows individuals to self-certify that they are unemployed due to coronavirus, eliminating the checks and balance under the usual program and increasing the potential for fraud. A recent spike in criminal activity led the FBI to issue a national warning about fraud in the unemployment insurance system. Paying claims has been the highest priority. We have also been committed to ensure that both taxpayers and claimants are protected during these already difficult and uncertain times. Knowing that fraud was a real and ever-increasing threat, our department’s employees remained vigilant, and when our division of unemployment insurance recently detected an increase in out-of-state PUA claims, we were prepared, with a secure website and heightened security measures in place. Our department quickly detected, reported, and blocked payment to over 47,500 fraudulently filed out-of-state claims. The immediate action taken saved taxpayers over $501 million, the most significant unemployment cost savings in the country announced since the beginning of the pandemic. I am so proud of my team for working around the clock to allow our department to emerge as the victor rather than the victim of fraud. Our department will continue to coordinate with the U.S. attorney’s office and U.S. Department of Labor’s office of the inspector general to investigate and prosecute the criminal taking advantage of the PUA program by filing fraudulent claims with stolen identities. While U.S. attorney Robert Hur could not be here with us today, he stated “My office and the entire law enforcement community are committed to bringing justice to fraudsters who are preying on citizens during this unprecedented public health crisis by using their stolen personal information to fraudulently attempt to obtain unemployment benefits. We are grateful for our partnership with the state of Maryland in stopping unemployment fraud and believe that this joint federal state partnership will continue to bear fruit. We will work against this abuse and our outreach efforts to make the citizens aware. I urge citizens to remain vigilant and report suspicious activity.”
I am grateful for that state by U.S. Attorney Hur and we appreciate our strong relationships with their office, the Office of the Inspector General, and our vendor, Bank of America. The Maryland Department of Labor has not experienced a breach of our unemployment insurance systems, and claimants’ personal information has not been compromised in any way. We have already taken a series of actions to even further enhance security, and we will continue to closely monitor our unemployment insurance system out of an abundance of caution to prevent any further fraud from occurring. If any Marylander believes that their information has been used to fraudulently file an unemployment insurance claim, they should contact our department’s division of unemployment insurance by emailing ui.fraud@maryland.gov or visit mdunemployment.com. Since the beginning of the pandemic, like every state, our department has faced a series of challenges. As the Governor mentioned, we have received more claims in just the last few months than in the past 3 years. We created a brand-new online application in a matter of weeks to administer three new CARES Act unemployment programs while navigating the ever-changing federal guidance directives. Our department has overcome these challenges and made significant progress in the processing and payment of claims, paying over $4.3 billion in benefits to claimants, and in the midst of it all, our team successfully blocked over half a billion dollars in fraudulent claims. We remain committed to helping Marylanders through this pandemic, which means ensuring that all eligible claimants get the benefits they deserve as quickly as possible, while also protecting the integrity of our system and your taxpayer dollars. We will continue to build upon this positive progress and will not stop until each and every customer has been served.
Now I would like to introduce special agent in charge Derek Pickle from the U.S. Department of Labor’s Office of Inspector General, who has been working alongside our department as we fight fraud.
Thank you.
DEREK PICKLE: Good afternoon. Thank you, Governor Hogan and Secretary Robinson for inviting me to be here today.
My name is Derek Pickle, special agent in charge of the Washington, D.C., region for the U.S. Department of Labor’s Office of Inspector General. The Office of Inspector General is the law enforcement agency primarily responsible for investigating fraud in the unemployment insurance program, and we take great pride in working with our law enforcement and state workforce agency partners to accomplish that mission.
Since the pandemic began, we have seen a dramatic increase in unemployment insurance fraud around the nation. To give you a sense of how that spike corresponds to our work, unemployment insurance fraud investigations historically made up 10% of our agency’s investigative workload. Today more than 50% of our investigative matters pertain to unemployment insurance, and that number continues to grow by the day. And that includes investigative matters in all 50 states.
Over the last many months the Office of Inspector General has prioritized working with our state and federal partners to combat fraud against the unemployment insurance program. A major focus of that work has involved the collection and analysis of unemployment claims data in order to identify fraud indicators to proactively address fraud and prevent the loss of taxpayers’ money to criminals exploiting the system for personal profit. Today’s announcement demonstrates the strength of our relationship with the state of Maryland and attorney’s office and also shows the possibility for our safe commitment to safeguarding taxpayer funds and the integrity of the unemployment insurance program.
In closing I personally wanted to commend Secretary Robinson and her team and her personnel to identify this fraud and bring it to our attention. We look forward to our continued accomplishments through that partnership. Thank you.
GOVERNOR HOGAN: Well, I want to thank the special agent Pickle for joining us here today, and again, I want to thank the U.S. Department of Labor Office of the Inspector General very much. I want to thank the U.S. attorney and our entire team at the Department of Labor.
Processing the sudden and unprecedented increase in employment claims while following complex federal regulations and guarding against fraud is certainly not an issue unique to the state of Maryland. The federal government and every state in America has had to overcome challenges to handle this recent overwhelming caseload.
Over the past few months, America has seen an unprecedented economic collapse never before seen in our lifetime. And Marylanders have not been immune to this national economic collapse. Here in Maryland, however, we were able to keep more than 70% of our state economy open throughout the entire crisis, without shutting down. And then with our safe, effective, and gradual Roadmap to Recovery, 62 days ago we were able to lift our stay-at-home order in Maryland, and 41 days ago we moved into stage 2 of the recovery plan. Maryland is open for business, with 98% of our economy open and able to operate in a safe way.
Because of these decisions and actions, our unemployment rate, while obviously considerably higher than it was before the pandemic, is much lower than the national rate, far better than most of the states in America, and is the very best among all the states in our region.
On Monday I led my 44th call with my fellow governors in just the past few months. It was our 29th call with either the President and/or Vice President. Yesterday we also convened the 20th meeting of our coronavirus recovery team of leading public health experts, doctors, scientists, and business and labor leaders, and we held another emergency meeting of my entire cabinet.
As we continue to navigate through both the health and economic crisis, our key health metrics in Maryland continue to remain low and stable. Our daily positivity rate dropped again today to 4.26%, and our 7-day positivity rate dropped again today to 4.49%, which is a more than 83% decrease since its peak 90 days ago on April 17 when we were at 26.91%.
We did see a slight uptick in COVID hospitalizations today, but they are still down 73% from their peak 77 days ago on April 30. However, we are concerned that 40 states across America are experiencing spikes and increasing numbers, including states just across our borders. And we’re watching a few concerning trends in our state. The positivity rate among Marylanders under the age of 35 is now 83% higher than Marylanders who are 35 and older. And an increasing number of COVID-19 cases have been connected to noncompliance with public health requirements, particularly in bars and restaurants. Yesterday I sent a letter to county leaders urging them to enforce public health requirements in bars and restaurants across the state, reminding them that it was the responsibility of their local Health Departments, local liquor boards and inspectors, and local law enforcement agencies to work together to actively and aggressively enforce these critical public health measures.
Young people should avoid crowded bars, house parties, and large gatherings of any kind. You are not only putting yourselves at risk; you’re also risking the lives of your parents, your grandparents, and other vulnerable people in the community. Any Marylander who has been engaged in any type of risky behavior should immediately get tested for COVID-19.
We are also advising that Marylanders refrain from traveling to areas experiencing rapidly escalating numbers. Any Marylander who has traveled to or is returning from travel out of state, especially from those states that are experiencing spiking numbers, should immediately get tested.
I want to remind Marylanders that while our health metrics are continuing to slightly decline or plateau, this battle is not behind us. Not by a long shot. Only you can stop the spread of this virus. All Marylanders are still safer at home, and particularly older and more vulnerable populations. Low risk does not mean no risk. Outside activity is still much safer than inside activity. Employers should continue to encourage telework for their employees when possible. And individuals who can work from home should continue to do so. Marylanders should not use public transportation unless it’s absolutely necessary. Everyone should continue wearing masks in public areas, businesses, and on public transportation. Marylanders should continue practicing physical distancing, staying 6 feet apart whenever possible, and should continue avoiding all large gatherings.
Our economy is open, recovering, and doing better than many other states, but only you can keep Maryland open for business by continuing to follow the public health guidance.
While other states are beginning to experience serious testing shortages, here in Maryland we do not have that problem. Back at the end of April we laid out a long-term testing strategy. Last month the signature state lab we built at the University of Maryland Baltimore became fully operational. So we’re now able to handle our own large-scale testing, and unlike many other states, most other states, we have a substantial strategic stockpile of COVID-19 test kits that will keep us in good shape all the way through the fall, as the normal flu season begins and as the demand for COVID tests increases.
Finally today, I want to address a major issue that is on everyone’s minds: What action the state Board of Education will take regarding our schools. We all want our children to get back to school as soon as possible. But only if and when we can do it in a way that keeps our students and our teachers safe. Last month Dr. Karen Salmon, the state superintendent of schools, and the Maryland State Department of Education put out Maryland Together, Maryland’s recovery plan for education. Since that time, they have been meeting with county boards of education, local school superintendents, teachers, parents, and key stakeholders to collaborate on and develop detailed safe and effective recovery plans for all our Maryland schools. A few counties have already begun submitting their proposed plans. Other local jurisdictions are continuing to work to finalize theirs in order to meet the August 14 deadline.
Once all of that input is received, the State Department of Education will institute protocols that follow CDC guidance and take into account the input of public health experts and which provide for flexibility for our local school systems.
We cannot and should not rush this decision. It is absolutely critical that we get it right for our communities and for each and every one of our children and our teachers.
Dr. Karen Salmon, the state superintendent of the schools, will join us for a press conference next week in order to update us on the progress the State Department of Education is making and on the state’s education’s guidance.
In closing today, let me just say that this crisis has tested all of us in nearly every way imaginable, but with the help of Marylanders coming together, we have been leading the fight against this deadly pandemic by flattening the curve, by reopening our economy safely, and today by detecting criminals who are trying to exploit innocent people for their own gain. From the beginning we have all been in this together, and although this is far from over, and it will not be easy, we will get through this together and Maryland will come out of this stronger and better than ever before.
With that, I will be happy to take a few questions.
(Question off mic).
So the frozen accounts were all out of state that we stopped paying the debit cards. A few real people who really needed benefits got caught up in that because we had to put a hold on the payments, but the department is working diligently to process them as quickly as possible and I think very quickly we’ll have those resolved now that we’ve cleared up the 47,500 cases of fraud.
SPEAKER: Do you have the exact number?
GOVERNOR HOGAN: The total number of all the outstanding cases is only 3%, which is far less than our monthly average in a normal year.
(Question off mic).
In talking with Special Agent Pickle and U.S. Attorney Hur, there is no question that all 50 states and all the territories have been hit with serious cases of fraud, totaling billions and billions of dollars. The cases that are directly involved in this same thing that we’re involved in helping to uncover, that our information is helping in the investigation of, is 12 other states, a dozen other states.
(Question off mic).
We can’t give all the details of the ongoing investigation, but relatively recently, we caught the fraud. It just happened. July 4th weekend. We immediately notified federal authorities. Can’t give more detail than that because the investigation is still ongoing.
(Question off mic).
The federal government has put out warnings all across — has nothing to do with a subpoena, but they have put out warnings all across America talking about fraud.
(Question off mic) I saw that report actually. We’ll have Secretary Robinson follow up with you directly and I think we’ll have her call that person directly and get that case solved. Again, it’s 48,000 cases resolved with $3.8 billion. It’s enormous. It’s hard to talk to 389,000 — 489,000 people at the same time, even if you have hundreds of additional people you’ve hired. But both of us, the secretary and I said, any one person not getting the money that they deserve, we want to try to get to the bottom of. We’ve got it down to far less than what’s normal, but 3% of the people are still in process. We couldn’t deny all of those people or we’d have 100% compliance. But we’re work hard. The department is working day and night to try to get those people the help they need, and those folks that had their identity messed up, I think that will be resolved right away. It was just, this is all coming to a head in the last few days.
(Question off mic).
So this is a problem all across America. And in my discussions with the other governors and with the White House, it’s come up repeatedly. A number of other states, many other states, opened bars without restrictions. This happened in Florida and Arizona and Texas. They’re all closing bars because they’re out of control. They all believe it’s young people, without contact tracing. They have hundreds of thousands of people jamming into these places. We never opened the bars like that. Our bars were only supposed to be open for seated, distanced, capacity restricted. 90% of the restaurant owners and the bars were following the rules. People could go in, have dinner, get a drink, sit at the bar. Some of them were completely blatantly not following the rules. We’re really concerned about our small business owners. We’re concerned about those people who work in those restaurants. We want to get people back to work, get our economy running, and keep people safe. At this point we’re trying to crack down on the bad apples without killing the entire industry and causing more unemployment, but look, if this gets out of control, if people continue to not follow the rules, we’ll have to take another look. Right now we believe it’s a small percentage of the people, maybe 95% of the people are doing it right, both the businesses and individuals, and the ones who aren’t, we’re going to try to get our counties to enforce the rules that have been in place for months and people just aren’t listening to.
(Question off mic).
I think Special Agent Pickle, we’re not allowed to answer questions on the ongoing investigation.
(Question off mic).
Great question. I had the exact same questions. We don’t have an exact number. I’m sure some have slipped through that we didn’t catch, but I think we caught the bulk of it all and we’ll follow up and get to the bottom of any fraud cases that we were not able to get to. We don’t have a number on that.
It is obviously a coordinated, criminal enterprise, because this is not, you know, just random people in their basement that stole somebody’s identity. It’s 47,500 fraudulent identities in Maryland and 12 other states. It’s billions of dollars. It’s a large, sophisticated criminal enterprise. Because it’s an ongoing investigation, not only can I not say the answer; I don’t know the answer. But we know that there was a similar case that involved a Nigerian crime spree. Not to say this is connected. It could be international or organized crime in America. We just don’t know the answer. But it’s not just a random individual. It’s a very sophisticated, it appears as if, and we don’t know specifically where it came from, but we had a breach of the federal government system a while back in OPM, a breach of a number of banks. This was a huge cache of people’s identities. It did not come from here. We don’t know where it came from and we don’t know who is responsible yet.
(Question off mic).
The letters went out yesterday, but our team has been in communication with a number of the counties yesterday, and a number of people have already taken action. First of all, I also want to take a moment to praise the bar and Restaurant Association and many of the good operators. We had situations in Ocean City where five or six bars and restaurants immediately, voluntarily, shut down as soon as they had some of their workers test positive. They really did the right thing. That’s what we need everybody to do. A couple of places in Baltimore did the same thing. There were also a couple of instances around the state where people were flagrantly ignoring the rules. Montgomery County yesterday shut down two businesses and there are a couple of others. It just happened yesterday. But our team was in touch with everybody. I think they’re all in agreement that we need to do something about this and everybody will be working together.
(Question off mic).
The state police have been in communication with all of the county, sheriff departments, all the municipal governments, and sent out guidance. The county, the state police department is very small in comparison to the counties and city police departments and doesn’t have the capacity to do that. It really is the responsibility of the counties, and the reason we sent the letter yesterday, needs to be a coordinated response. What we were finding, one of the concerns we had from some of the local governments was, the Health Department, the local county Health Department, would say, well, it’s our responsibility but we’re busy doing testing and we don’t have people to go to the bars. The health inspector said, we don’t know those health rules. And the police department said, we don’t have a citation for these new regulations. So we told the county leaders, get your county law enforcement, your county Health Department, and county liquor boards together in one room and find a coordinated way to enforce this. We don’t care how you do it, but they’ve got to do it. It’s not the state police’s responsibility.
(Question off mic).
I understand completely the frustration on both sides, and I think Dr. Salmon understands the input from both sides.
I said the other day, the President was saying you must do this, you must do that, I said, we’re not going to be bullied into going one direction or the other, and I mean that, one direction or the other.
I do think many people would love to see the kids get back to school. I certainly would. But I also don’t want to send kids back to school if it will mean issues. So they’re looking at all the federal input, the CDC, our state plan that came out more than a month ago, one of the best and earliest in the country. And we’re working very collaboratively with all the county folks. We’re listening to everything. They’re going to make the right decisions. It may be some type of a hybrid. I don’t know. And I’m not pushing because the state Board of Education is an independent body. Dr. Salmon works for the state Board of Education. She serves in my cabinet, but she’s not appointed by me. And we want them to make the right decision for Maryland, for our kids, and for our teachers.
SPEAKER: Last question.
(Question off mic).
No, they didn’t rush the decision. The state plan required the counties to come up with a plan no later than August 14. As of yesterday, it was only Montgomery County and Frederick County who had come up with a proposed plan. I understand today Prince George’s came up with their proposed plan. I haven’t seen it, and I don’t think the state Board of Education has seen it yet, but like I said, we have plans all have to be in by August 14. I’m pushing to get that done faster because I don’t want to wait that long. Karen Salmon and the state board is working with all of them. I don’t think any final decisions have been made in any counties. It’s all going to work under the requirements of the state Board of Education.
Okay. Thank you very much.