Baltimore Man Sentenced for Large-Scale Unemployment Fraud Scheme

A Baltimore man has been sentenced to 54 months in prison for his involvement in a sophisticated unemployment insurance fraud scheme that exploited the personal information of numerous victims, including vulnerable individuals. The scheme, which ran from May 2020 to at least May 2021, resulted in financial losses exceeding $167,000 and exploited benefits intended to aid those impacted by the COVID-19 pandemic.

Duane Watts, 46, of Baltimore, Maryland, pleaded guilty to conspiracy to defraud and aggravated identity theft. He admitted to obtaining and using the personal identifying information of real individuals to submit fraudulent unemployment insurance claims to the Maryland Department of Labor. These claims were processed using expanded unemployment benefits authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 to provide emergency financial assistance. Watts and his co-conspirators then utilized debit cards loaded with these illicit funds for their personal gain, making multiple ATM withdrawals.

The prosecution revealed that the scheme had severe consequences for some victims. One vulnerable victim, whose identity was used in the fraud, subsequently lost their employment and was unable to access essential unemployment benefits due to the fraudulent claims filed in their name. Vulnerable victims in this context were identified as individuals with mental status or cognitive impairments, making them particularly susceptible to exploitation.

Watts’ sentence was handed down by U.S. District Judge Julie R. Rubin, who also ordered three years of supervised release to follow his prison term. This sentencing is part of a broader effort by the U.S. Attorney’s Office for the District of Maryland, in conjunction with the U.S. Department of Labor’s Office of Inspector General and the Federal Bureau of Investigation’s Baltimore Field Office, to investigate and prosecute COVID-19 fraud. The District of Maryland Strike Force, one of five established nationwide by the Department of Justice, is dedicated to identifying and prosecuting large-scale pandemic relief fraud.

Two co-defendants in the conspiracy, Tiia Woods and Devante Smith, have previously received sentences of 74 months and 57 months in prison, respectively, for their roles in the scheme. The CARES Act significantly expanded eligibility for unemployment insurance, allowing for benefits to be extended to self-employed workers and independent contractors who would not typically qualify. While intended to provide critical support during an unprecedented economic downturn, these expanded benefits also became a target for fraudulent actors.

The U.S. Department of Justice encourages anyone with information about alleged fraud involving COVID-19 relief funds to report it. Tips can be submitted by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or by completing the NCDF Web Complaint Form. The District of Maryland Strike Force continues to investigate and prosecute those who have stolen pandemic relief funds.

Article by Mel Anara, based upon information from the U.S. Attorney’s Office, District of Maryland

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