Washington state gets NY bank to pay $10M for its role in pandemic unemployment fraud

December 27, 2024 / 1:01 pm

caption: Washington state Governor-elect Bob Ferguson (at lectern) and the next attorney general, Nick Brown (left), give a press conference on their preparations for a second Trump presidency on Nov. 7, 2024.

Metropolitan Commercial Bank will reimburse Washington state $10 million in unemployment funds that were stolen during the pandemic, the state Attorney General’s office announced this week.

That brings the total amount of money that Washington has recovered from U.S. banks up to $52 million since 2020. The money has been recovered via a fraud recovery program.

Banks were sometimes used as part of the fraudulent schemes. Various actors took advantage of pandemic times. Washington state lost $647 million from identity theft and unemployment benefits fraud during the pandemic. Since then, state agencies have recovered $432.6 million in stolen funds from various sources, according to the AG’s office.

“More than four years ago, criminals targeted our state unemployment fund, and my office has not stopped working to recover what they stole,” Attorney General and Governor-elect Bob Ferguson said in a press release.

The latest recovery involved a non-bank financial technology company or “fintech” called MovoCash that used stolen identities to obtain unemployment funds and then transferred those funds through Metropolitan, which is based in New York.

Ferguson said the bank accepted more than $15 million in stolen unemployment funds. The AG’s office filed suit against Metropolitan claiming they did not do enough to prevent fraud, money laundering, and identification theft in connection with those fraudulent accounts.

Metropolitan served as the issuing bank for third-party prepaid or debit cart programs used by MovoCash. The bank accepted more than 3,700 fraudulent money transfers of Washington state unemployment benefits funds through Movo between April and July 2020, according to the AG’s office.

The state office initially recovered $732,000 from Metropolitan accounts using forfeiture laws to recover money frozen in accounts. Then the AG’s office sued Metropolitan for violating the state Consumer Protection Act.

To settle the suit, Metropolitan agreed to pay $9 million to the Employment Security Department and $1 million to the Attorney General’s office to cover investigation costs and fund future consumer protection activities.

“Washington has been a national leader on this effort. We were the first state to use forfeiture laws to recover stolen dollars that were frozen in accounts. Now we’re the first to resolve an investigation into a fintech company that the criminals used to move the money,” Ferguson said. “There is still more work ahead.”