Maryland is facing heightened scrutiny following a state audit and several federal indictments that have uncovered extensive fraud within its unemployment program.
In the past five years, the state has disbursed nearly $1 billion in unemployment insurance benefits to individuals who weren’t eligible, according to a troubling audit from the Maryland Department of Labor. A significant portion of these funds remains unrecovered while federal charges persist against those involved in cases tied to identity theft and pandemic-related fraud.
Republican lawmakers argue that the extent of the issue has been apparent for years and criticize the administration of Democratic Governor Wes Moore for not taking adequate steps to tackle the problem. “We’ve got a department sitting on over $800 million in unpaid debts due to fraud, but it feels like the Department of Labor hasn’t prioritized recovering that money,” Republican state Senator Steven Arents remarked.
An audit report released early in January disclosed that Maryland did not “promptly pursue the recovery of claimants’ overpayments,” which amount to a staggering $807 million, and most of which is now deemed uncollectible.
The Maryland Department of Labor pointed out that overpayments can arise from factors like unreported wages, shifts in job availability, or fraud — the latter of which has notably surged during the COVID-19 pandemic. The audit also highlighted weaknesses in internal controls within the Department of Unemployment Insurance, suggesting that lacking procedures for reviewing claims allowed fraud to go unnoticed.
A recent federal lawsuit underlined the magnitude of the fraudulent activities happening in the state. On Tuesday, cousins Dekwee Waugh Tee and Daiwo Waugh Tee were indicted for allegedly attempting to claim around $550,000 in improper unemployment benefits while conducting a six-year identity theft operation.
In a related case, two men from Maryland, along with a co-conspirator from Virginia, were found guilty of stealing $300,000 by using stolen Social Security numbers to file for unemployment benefits. Additionally, a Nigerian national was convicted in November for fraudulently securing UI benefits in Maryland and California. Early this January, three residents of Baltimore also received prison sentences for stealing the identity of a mentally ill individual to claim over $167,000 in benefits. Another defendant similarly pleaded guilty in August for filing fraudulent unemployment claims across several states, leading to losses estimated between $550,000 and $1.5 million.
These schemes have come to light thanks to the Department of Justice’s Maryland Strike Force, which is dedicated to addressing large-scale fraud related to COVID-19 relief efforts originating from international criminal groups.
During the pandemic, when federal emergency programs increased unemployment eligibility, many of these scams emerged. Maryland Democrats are now attempting to attribute some of the blame to former Republican Governor Larry Hogan, who was in office from 2015 to 2023. “Roughly 90% of these overpayments happened under the previous administration,” stated Maryland Department of Labor spokesperson Dinah Winnick. The existing administration has been left to handle the fallout.
However, Republican state Senator Justin Ready contended that while many overpayments date back years, the current administration hasn’t done enough to follow up on them. “Look, these overpayments mostly occurred well before now. But if the previous governor is indeed at fault, wouldn’t you think the Moore administration would have openly disclosed the previous errors?”
In July 2020, amid the pandemic’s onset, the Hogan administration had uncovered a criminal network involved in over 47,500 fraudulent unemployment claims, totaling over $501 million. This exploitation relied on stolen identities and took advantage of loopholes in the federal Pandemic Unemployment Assistance program.
Maryland officials observed a surge in out-of-state claims, took action against fraud, and implemented measures to freeze accounts and alert federal authorities. By June 2021, the state had flagged the potential for 1.3 million fraudulent claims.
A report by the House Oversight Committee later noted that the state’s rapid response “helped expose related fraudulent conduct in other states.” However, some efforts to collect overpayments faced legal hurdles, delaying recovery efforts. Even after these barriers were lifted, audits indicated that the Moore administration still did not aggressively pursue an additional $33.6 million in overpayments.
Winnick shared that the department successfully recovered over $520 million in potentially fraudulent UI overpayments in 2025 and continues to work on further recoveries. Recently, the state has started sending out more than 180,000 letters to individuals, asking them to repay unemployment benefits deemed as overpayments. Maryland Labor Secretary Portia Wu emphasized this is part of a broader initiative to reclaim over $1.3 billion, much of which involves fraudulent claims.
Nonetheless, some recipients are expressing confusion, claiming they either never received unemployment benefits or suspect their identities were misappropriated. Both Arents and Ready have reported numerous concerned calls from their constituents regarding this issue. “I’m getting frantic calls from people who didn’t lose their jobs or did, but believed they followed all the proper protocols,” Ready mentioned.
The Department of Labor has reassured that individuals who fall victim to identity theft are not responsible for repaying related overpayments. However, there’s concern that losses to the UI Trust Fund — primarily financed through employer contributions — might lead to increased tax burdens for businesses in the future.
Arents noted that this ongoing fraud illustrates broader issues of oversight within the state’s governance, remarking, “It’s more than just one audit. We need accountability for these failures.” He referred to other recent audits that unveiled further systemic issues, including the Maryland Department of Social Services’ shortcomings in protecting vulnerable youths.
