Ferguson has now recovered $18.8M in stolen funds using forfeiture strategy

OLYMPIA — Attorney General Bob Ferguson today announced that his office recovered another $6.6 million stolen as part of a massive fraud perpetrated against states across the country. The money had been deposited by fraudsters into JPMorgan Chase Bank accounts, and a King County Superior Court judge ordered JPMorgan Chase Bank to return the stolen funds to Washington state.

Ferguson’s Complex Litigation Division has now used forfeiture laws to recover $18.8 million stolen from the Employment Security Department. Essentially, the Attorney General is recovering stolen money sitting in accounts at banks and other institutions such as PayPal. While multiple states suffered substantial losses, Attorney General Ferguson remains the only state attorney general to exercise state asset forfeiture powers to recover these taxpayer dollars.

During the pandemic, sophisticated fraud rings used identity data harvested from data breaches to steal billions of dollars from at least 11 states, including Washington. While the exact extent of the fraud is still unknown, a recent watchdog report estimated it totaled at least $163 billion nationwide.

Attorney General Ferguson initiated a unique investigation searching for bank accounts where fraudsters had not yet withdrawn all stolen funds, and launched a legal effort to reclaim these funds for the state. To date, financial institutions across the country have cooperated with the Attorney General’s investigation. The Attorney General’s Office anticipates additional recoveries from other financial institutions in the months ahead. The recovered resources go back to the state unemployment system.

This action is wholly separate from the multi-agency federal law enforcement task force investigation resulting in multiple arrests of Nigerian citizens allegedly connected to the fraud. Ferguson’s office has been assisting federal efforts, while also searching for additional ways to use its authority.

“We are targeting stolen funds sitting in bank accounts before fraudsters can withdraw them,” Ferguson said. “We are the only state employing this strategy, and we are having success. We will continue to use every tool in our toolbox to recover stolen funds for Washingtonians.”

A new approach

The Attorney General’s Office used data from the Employment Security Department and subpoenaed more than 35 banks and credit unions across the country to identify accounts with balances of $1,000 or more that bore red flags, or indicators of fraud. The office also sought information from PayPal, because the service can be used to deposit unemployment payments, similar to a bank.

Red flags included:

• Accounts that received unemployment benefit payments from multiple states;
• Accounts that received deposits of unemployment benefits to multiple people; or
• A mismatch between the personal information of the account holder and the person who supposedly applied for the benefits deposited in the account.

The office is using the Attorney General’s asset forfeiture authority to reclaim stolen funds identified with this process, making Washington the first state in the nation to do so.

Assistant Attorney General Jeff Sprung in the Complex Litigation Division is leading this effort, along with Assistant Attorneys General Spencer Coates, Cristina Sepe, Nick Quijas, Robert Staley, and Paul Crisalli, paralegal Sara Cearley, legal assistant Victoria Johnson, investigator Rick Barry and legal intern Nick Mendolia.

To assist in the investigation, Ferguson’s office retained former FBI Agent Gregory Coleman, the case agent responsible for all aspects of the “Wolf of Wall Street” investigation.

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Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.

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Brionna Aho, Communications Director, (360) 753-2727; Brionna.aho@atg.wa.gov

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