Hawaii pays $15.8M for potentially fraudulent jobless claims

HONOLULU — The state said Thursday it paid $15.8 million in benefits for potentially fraudulent jobless claims under a U.S. government program providing funds to independent contractors and self-employed individuals unable to work because of the coronavirus pandemic.

State Department of Labor and Industrial Relations spokesman William Knustman said the agency reversed the payments in cases where the money had not yet been withdrawn from accounts they had been deposited in. It was turning over information on the potentially fraudulent claims to the state attorney general and the U.S. Department of Labor for prosecution.

The agency blocked another $76.6 million in potentially fraudulent payments for claims made under the program, called Pandemic Unemployment Assistance or PUA.

The department said 5,989 people reported that they were victims of identity theft after they received a letter regarding their eligibility for benefits under this program.

Knustman said he did not have figures for the number of fraudulent claims filed under the unemployment insurance program that covers employees. He said fraud under this program was more minimal because eligibility requirements are more strict.

Washington state was among the first to be targeted by these types of fraudulent claims during the pandemic. In May, it said it paid out hundreds of millions of dollars in fake claims. Much of it apparently went to a West African fraud ring using identities stolen in prior data breaches, such as the massive 2017 Equifax breach.

Hawaii has received 238,438 unemployment claims since March 1. Nearly 70,000 of those were found to be invalid. It has processed and paid 93% of the valid claims to date.

The state’s unemployment rate stood at 22.6% in May, the second highest in the country after Nevada’s.