RICHMOND, Va. -- The Virginia Employment Commission (VEC) began reviewing unemployment claims in June to look for ones that might be fraudulent, and now they believe they unknowingly paid $40 million to ineligible prisoners, while thousands of others who were eligible waited.
As an urgent economic crisis unfolded throughout the country, the VEC rushed to get benefits out to hundreds of thousands of Virginians who were suddenly out of work because of the COVID-19 pandemic.
Among those workers, people who did not traditionally qualify for unemployment but now did under the CARES Act: independent contractors, self employed people, and freelancers.
According to a federal complaint, these applicants had no wage history with the state, so the state had to trust what they wrote on their applications and paid them immediately.
The state started reviewing those claims in June for possible fraud, and in August the VEC heard from other states that prison inmates had fraudulently received benefits.
Now, according to the court filing, the VEC estimates it paid out $40 million in benefits to people who submitted claims on behalf of ineligible inmates.
"I don't understand how they could let somebody like that through, but yet they're going to flag somebody like us," Timothy Gladden said.
Gladden has been waiting since mid-December for an extension of his benefits.
"It aggravates the hell out of me, it really does," Gladden said.
Among the individuals who allegedly submitted fraudulent claims, a former inmate named 30-year-old Candice Pearce, who, according to investigators, fraudulently filed claims on behalf of five inmates that were approved by the VEC.
Pearce allegedly worked in cahoots with 35-year-old John Tierney, an inmate at River North State Correction Center in Independence, Virginia.
She is also accused of filing claims in her own name and in her mother’s name.
Pearce and Tierney were charged with fraud and conspiracy for allegedly getting approval and payment for nearly $75,000 in unemployment benefits.
A little over $51,000 of that money was to be paid to five ineligible Virginia inmates, according to an affidavit written by a special agent with the U.S. Department of Labor’s Office of Investigations-Labor Racketeering and Fraud.
The affidavit describes a series of recorded phone calls last summer between Tierney and Pearce, including one in which they discussed Pearce filing a claim in Tierney’s name. In another call, Tierney allegedly told Pearce that he found other inmates who want her to file claims for them, too. In another call, Tierney provided the dates of birth and social security numbers for several other inmates. The other inmates are not named in the affidavit.
We asked VEC spokeswoman Joyce Fogg how this happened considering the tens of thousands of Virginians who filed claims but were never paid because they had to wait months for their case to be adjudicated due to "issues" with their claims.
Fogg did not answer that question, but said in an email:
"The VEC has provided over $10.9 billion to more than 1.5 million hard-working Virginians impacted by this pandemic. The VEC assesses eligibility according to federal guidelines. The VEC works diligently to prevent and address suspected incidents of fraud, including flagging the use of multiple claimants with similar bank accounts, addresses, and/or e-mails."
Fogg added that the agency is taking fraud cases seriously and working to hold people accountable.