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Dozens of people in SW Va. have been indicted for unemployment fraud this year | Latest Headlines

New IdentityTheft Scam

As COVID-19 began spreading across the country last spring and schools, businesses and communities locked down and closed, inmates at one Southwest Virginia jail devised a plan to make some extra money in an illegal conspiracy to collect unemployment benefits, according to court records.

The scheme, based out of the Regional Jail in Duffield, is just one of several conspiracies involving unemployment fraud, and this one resulted in a half-million dollars going to ineligible conspirators, prosecutors said.

Since the beginning of the pandemic in 2020, the Virginia Employment Commission has paid approximately $12 billion in unemployment claims, according to a news release. The Associated Press reports that the VEC has admitted to paying more than $50 million in fraudulent claims, including to inmates ineligible to receive benefits.

“Unemployment insurance fraud is a national issue that every state is struggling with and Virginia is not immune,” VEC Commissioner Ellen Marie Hess said. “Fraud takes many forms, including identity theft, filing under false pretenses and on a larger scale, organized fraud conducted by malicious actors from across the globe.”

As a result of the pandemic, the government made it easier to file for claims, including self-certification and the lifting of other traditional requirements.

Twenty-four people have been indicted in connection with the scheme, which was headed by Leelyn Danielle Chytka, Greg Tackett and Jeff Tackett, according to federal prosecutors.

“Over the past year, Virginians have endured one of the worst pandemics our country has ever seen,” Acting U.S. Attorney Daniel Bubar said in a new release regarding Chytka’s plea agreement. “During this time, jobless claims in the commonwealth dramatically increased, as unemployment spiked. While some struggled to make ends meet, this defendant and her co-conspirators worked to defraud an unemployment system which exists as a safety net for those in need.”

Over the course of nine months, Chytka filed fraudulent claims for at least 37 individuals, with a total actual loss to the United States of at least $499,000, according to prosecutors.

In May 2020, Chytka developed the scheme to file fraudulent claims for pandemic unemployment benefits via the Virginia Employment Commission website, according to court records. The scheme was to submit claims for various individuals, including Chytka, Greg Tackett and Jeff Tackett, who were each ineligible to receive pandemic unemployment benefits, records show.

To file for benefits, the individuals made false statements about unemployment based on COVID-19, using a fictitious employer as the name of the last employer, and claiming that the applicant was actively seeking full-time employment.

Because pandemic unemployment benefits were paid on a weekly basis, the scheme was continuing. Chytka and the others agreed to file weekly recertifications for the claims they submitted.

At the time Chytka developed the scheme, court records say Jeff Tackett was incarcerated at the Regional Jail in Duffield and was not capable of accessing a computer system to file his own fraudulent claim. Inmates are ineligible to receive unemployment benefits.

Jeff Tackett provided all of his personal information required to file his claim to Chytka, who would then file on his behalf, court records state.

The scheme expanded and began to include other inmates — all ineligible to obtain benefits — at the Duffield facility. They also made claims for other friends and family members, court records show.

Jeff Tackett approached inmates at the jail and told them he had a way to make money by submitting claims for pandemic unemployment benefits on their behalf, prosecutors said in court records. Fifteen inmates, most of them in the same jail pod, are said to have provided their information to Tackett, who then passed it on to Chytka so she could file claims.

Some conspiracy members agreed that in exchange for filing claims, Chytka and others could keep a portion of the money. Some people gave them drugs. Others gave them money, according to court records.

Chytka and Greg Tackett used the address of a residence in Lebanon, where they lived, for all of the applications. Benefits were then sent to the address on pre-paid debit cards, records show. Thirty-nine pandemic unemployment benefit claims used the Lebanon address.

On 12 of the claims, they used the name “Walls,” which is Chytka’s maiden name, records show. Seventeen claims used Chytka’s cell phone number.

Chytka, who pleaded guilty to fraud charges in March, confessed to filing fraudulent claims during an interview with investigators while incarcerated at the Lincoln County Detention Center in North Carolina. She admitted to being employed at the time, but still filed for unemployment, records show. She received not less than $18,000 for her personal claim.

During the conspiracy, Chytka even attempted to start a business called “D&R Accounting” to facilitate the scheme. She wanted to make the scheme appear “legit,” court records show. She also planned to charge people a fee for her service of filing fraudulent claims.

To distribute benefits to inmate co-conspirators, Chytka occasionally sent money to the commissary accounts in jail, as directed by Jeff Tackett.

Chytka, who faces up to 48 years in prison, and Greg Tackett are awaiting sentencing in U.S. District Court in Abingdon. Jeffrey Tackett’s charges are still pending.

On March 13, 2020, President Donald Trump declared the ongoing COVID-19 pandemic an emergency under the Robert T. Stafford Disaster Relief and Emergency Act. Five days later, the president signed the Families First Coronavirus Response Act. The act provided flexibility for state unemployment insurance agencies and additional administrative funding to respond to the pandemic.

The COVID-19 Aid, Relief and Economic Security Act (CARES) was signed into law on March 27, 2020. The CARES Act expanded states’ ability to provide unemployment insurance for many workers impacted by COVID-19, including those ordinarily ineligible for unemployment benefits.

The CARES Act created three new unemployment insurance programs: Pandemic Unemployment Assistance (PUA), Federal Pandemic Unemployment Compensation (FPUC) and Pandemic Emergency Unemployment Compensation (PEUC). The states, including Virginia, administer the programs.

The Pandemic Unemployment Assistance program provides up to 39 weeks of benefits for individuals who are self-employed, seeking part-time employment or otherwise did not qualify for unemployment insurance benefits. Coverage includes individuals who have exhausted all rights to regular unemployment insurance benefits or extended benefits under state or federal law, according to the U.S. Department of Labor.

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The second program, Pandemic Emergency Unemployment Compensation, is a state-federal program that provides up to 13 weeks of benefits to individuals who have exhausted regular unemployment insurance under state or federal law, have no rights to regular benefits under any other state or federal law, and are able to work, available for work, and actively seeking work.

Under this program, states, including Virginia and Tennessee, must offer flexibility in meeting the “actively seeking work” requirement if individuals are unable to search for work because of COVID-19, including because of illness, quarantine or movement restriction.

The third program, Federal Pandemic Unemployment Compensation, provides individuals who are collecting regular unemployment benefits with an additional $600 per week.

In total, more than $300 billion in federal funds for unemployment insurance were appropriated in 2020.

Individuals are only eligible for pandemic unemployment benefits if they are unemployed for reasons related to the COVID-19 pandemic and are otherwise available to work and are seeking employment.

Once an applicant is on the Virginia Employment Commission website, he or she is required to enter personally identifiable information including name, date of birth, Social Security number, email address, phone number and physical address. An applicant is then required to answer a series of questions to determine eligibility and payment amount. An applicant must then attest, under penalty of perjury, that the information provided in the claim application is true and accurate.

If approved, the applicant can choose whether to have the pandemic unemployment benefits deposited directly into a bank account of their choosing, or the funds can be loaded on a pre-paid debit card then shipped to the applicant.

In Virginia, the recipient receives an access code so they can recertify their unemployment status.

The Virginia Employment Commission reported that it obtained a list of about 39,000 inmates housed by the Virginia Department of Corrections and cross-matched the unemployment claims to people who were on the inmate list. The analysis revealed more than 6,000 claims filed on behalf of inmates in Virginia, totaling more than $85 million in paid claims.

Authorities have only recovered $43,000 from the Chytka conspiracy, court records show. As part of her plea agreement, Chytka will have to repay the remaining $456,000.

In May 2020, Travis Kilgore and Brittany McReynolds discovered they could make money by applying for pandemic unemployment benefits via the VEC website. The couple from St. Paul sought to obtain benefits even though they were not eligible to receive such benefits, court records show.

On May 25, 2020, the pair filed individual claims for benefits with the VEC from cell phones. The claims were processed and approved. The VEC then sent confirmation information to the pair via email and they elected to receive payments to their bank accounts. They then made weekly recertifications that they were unemployed — even though they were not eligible.

As a result, Kilgore was paid at least $18,162 and McReynolds was paid $17,562, records show.

The pair expanded their scheme, filing claims for 21 others. For most of the claims, they used fictitious addresses in Wise County for fictitious employers.

In exchange for filing claims, Kilgore and McReynolds received cash payments and illegal drugs, court records show. The pair’s scheme resulted in $182,474. The VEC recouped $18,004.

Kilgore and McReynolds pleaded guilty in April and face years in prison. Both have previously also been convicted on drug charges in Wise County.

In May, Virginia Gov. Ralph Northam directed the VEC to invest $20 million to expand the agency’s ability to process unemployment insurance claims. His directive requires the agency to add 300 new adjudication staffers, make immediate technology upgrades and complete a full modernization of the system by Oct. 1.

Northam said the state ranks sixth in the nation for the timely payment of benefits to eligible applicants. The governor’s action could speed up the resolution of cases flagged as potentially fraudulent or ineligible, Northam said. The cases represent about 4% of all claims.

If an individual’s initial claim is flagged for potential ineligibility or fraud, federal law requires the VEC to adjudicate the claim before proceeding with payment. Most individuals that are placed in the adjudication process are ultimately found ineligible for benefits — despite funds going to ineligible individuals.

While Chytka and others used the identities of real people, but fictitious employers, some scam artists have used stolen information and identities. Criminals have been seizing the opportunity created by the pandemic. Using data stolen from prior data breaches, they make a claim using someone else’s identity to access an increased pool of benefits.

The problem can lead victims, those who have had their information stolen, to have trouble getting their legitimate benefits. Experts say everyone should be on alert, the Associated Press reports.

“We are nowhere near the end of this particular fraud,” said Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit that helps victims of identity theft.

Anyone can be a victim, Velasquez said. Retired individuals may find out they are a victim when the Social Security Administration alerts them their benefits are being reduced.

Some homeowners have even found their address tied up in a scam after they put their home up for sale.

Velasquez urges everyone to be alert to any suspicious mail, phone calls, email or social media requests. These could be attempts to gather personal information or a sign of existing fraud.

It’s often difficult to know whether you are a victim.

People typically find out about the problem when they receive benefits-related paperwork in the mail, a call from their employer or when they try to file a legitimate claim for benefits and are denied. In some cases, a criminal may initiate the false claim, but the money itself is sent to the victim’s account or home. The fraudsters may also build on a legitimate claim by requesting further benefits and nabbing those.

States are required to mail out a 1099-G form, which reports income from unemployment benefits, the Associated Press said.

Source: on 2021-06-06 05:00:00

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