Attorney General Bob Ferguson announced a significant development in his initiative to recover unemployment funds stolen during the COVID-19 pandemic. Metropolitan Commercial Bank will pay $10 million to Washington state as part of this effort, bringing the total recovered through this program to over $52 million from banks nationwide.
Ferguson's investigation is now focusing on non-bank financial technology companies involved in the fraudulent transfers. "More than four years ago, criminals targeted our state unemployment fund, and my office has not stopped working to recover what they stole," said Ferguson. The initiative aims to identify fintech companies used by criminals to facilitate illegal transfers, contravening the Consumer Protection Act.
In 2020, Metropolitan Commercial Bank was linked to accepting over $15 million in stolen funds through MovoCash Inc., a fintech company it sponsored. Criminals exploited Movo accounts for these transactions without adequate anti-fraud measures in place at the bank.
This case marks a pioneering effort by any state attorney general against fintech entities and their sponsoring banks for recovering pandemic-related stolen funds. During an earlier phase of the investigation, Ferguson retrieved $42 million from 26 financial institutions using asset forfeiture powers.
Metropolitan Commercial Bank served as an issuing bank for digital banking programs run by fintech firms like Movo. In early 2020, more than 3,700 fraudulent money transfers were processed through these programs before regulators intervened.
To avoid litigation, Metropolitan agreed to pay an additional $9 million as restitution and another $1 million towards investigative costs. The bank also committed to maintaining stringent anti-money laundering policies.
The Attorney General's Office will continue supporting federal investigations into similar fraud cases. So far, Washington state agencies have recouped over $432.6 million out of an estimated $647 million lost due to fraud during the pandemic—a recovery rate higher than many other states such as California and Arizona.
Washington was among the first states targeted in a large-scale imposter fraud attack that affected numerous government programs nationwide. A federal report estimates up to $135 billion may have been lost across these programs due to fraud.
Following the initial wave of thefts, Ferguson initiated efforts to trace and reclaim unwithdrawn stolen funds from various financial institutions with notable success compared to other states.
The Employment Security Department played a critical role by pausing benefit payments shortly after detecting fraudulent activities and collaborating with banks for fund recovery.
The Attorney General’s Office employed data analysis and legal actions against banks holding suspicious accounts identified through red flags during its investigation's first phase—contributing significantly towards preserving unemployment benefits for legitimate claimants and taxpayers alike.
Special Assistant Attorney General Jeff Sprung leads this ongoing effort alongside a dedicated team within the Attorney General’s Office who have been instrumental in advancing these initiatives effectively.