All You Need Is a Wig

Unemployment claim form on an office table.

On Dec. 8, 2021, Eric Jaklitsch was arrested at his home in New Jersey and was transported to the west coast, to be charged in Federal Court for a scheme to defraud the California Employment Development Department (EDD). To execute this scheme, Jaklitsch collected personally identifiable information (of numerous individuals (including names, birth dates, and Social Security numbers) and a wig.

In executing his alleged fraudulent scheme, prosecutors say that Jaklitsch submitted false photo ID’s to a private company that government agencies used to verify the identities of millions of Americans through facial recognition. This false information included images of fake driver’s licenses that contained photos of Jaklitsch and the names of the purported fraudulent claimants. The key to his verification?  A large, curly, orange wig, worn by Jaklitsch as a cover to his own image in the photos.

Once the wig images were verified, Jaklitsch filed the fraudulent unemployment insurance claims with EDD under the same identities. All were reported as jobs lost due to the coronavirus including jobs such as “Aqua Fitness Instructor,” “Children’s Zoo Caretaker” and “Chauffeur, Funeral Car.”

Jaklitsch allegedly filed 78 fraudulent claims unemployment insurance claims for $2.5 million in total. In the fraudulent unemployment insurance applications, Jaklitsch requested that the benefits be mailed to various addresses under his control, including his residence in New Jersey. EDD approved dozens of the fraudulent claims and mailed about $900,000 in EFT cards to Jalitsch.

The facial recognition software never flagged the image as false.  An internal investigation eventually identified Jaklitsch as a person conducting a fraud scheme and referred the case to federal law enforcement.

Shout out to the internal investigators who got the job done.

Today’s Fraud of the Day is based on an article, “Wig-Wearing Jersey Guy Scammed Facial-Recognition” published by The Daily beast on February 11, 2022

I—which gathers hordes of data from millions of Americans, including through facial recognition and phone records—managed to get duped by a guy in New Jersey. Federal prosecutors said a New Jersey man used a large, curly orange wig to verify fake driver’s licenses from multiple states, allowing him to obtain $900,000 in federal unemployment funds from California. The revelation is a slap in the face of the company—which was contracted by 10 federal agencies and whose facial-recognition software was dropped by the IRS this week. It would not comment to The Washington Post on how the suspect was able to exploit its software to claim the funds, but said “the tactics of fraudsters are constantly evolving” and it “uses extensive analytics and models to prevent identity theft.” The company valued itself last year at $1.5 billion, while the suspect—Eric Jaklitsch—is in custody in California on wire-fraud charges.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.