JACKSONVILLE, FL — A Yulee woman has been sentenced to more than five years in federal prison after prosecutors said she helped carry out a pandemic unemployment fraud scheme that stretched across at least 40 states. Cheryl Galloway, 67, received a 71-month sentence, along with three years of supervised release.
A federal judge also ordered her to pay $454,624.20 in restitution and $96,119 in criminal forfeiture after her conviction for conspiracy to commit mail fraud. Prosecutors said the case involved false unemployment applications, fraudulent benefit claims and debit cards sent through the U.S. Mail.
How the unemployment scheme worked across dozens of states
Court documents and testimony said Galloway and others electronically submitted fake unemployment applications to state agencies over a two-year period. The applications falsely claimed the applicants had been financially affected in those states, while also misstating other material facts needed to qualify for benefits.
Investigators said the group sought pandemic unemployment money in at least 40 states. The scheme brought in about $480,000 in benefits that the defendants were not entitled to receive, and they also tried to collect more through additional fraudulent filings.
Debit cards and mail fraud tied the case together
Some of the unemployment benefits were issued on debit cards that were mailed to Galloway, according to prosecutors. That detail helped support the mail fraud charge that was central to the federal case.
The government said the benefit cards were part of a wider effort to use the pandemic-era unemployment system for personal gain. The filings were not limited to one state or one agency, which made the conduct broad in scope and difficult for states to detect quickly.
Co-defendant had already been sentenced in the same case
Galloway was not the only person sentenced in the investigation. Her co-defendant, Ricki Johnson, 42, of Trenton, South Carolina, had previously received a 54-month federal prison sentence and three years of supervised release.
Johnson was also ordered to pay $104,632 in restitution after pleading guilty to mail fraud. The earlier sentence showed that federal prosecutors had already tied another participant to the same benefit-fraud operation.
Federal officials say taxpayer-funded benefits must be protected
U.S. Attorney Heap said the sentence reflects a commitment to protect taxpayer-funded benefits from people trying to steal them. He said federal investigators and prosecutors will continue working together to identify fraud cases and hold defendants accountable.
Anthony P. D’Esposito, inspector general for the U.S. Department of Labor, said the fraud drained tax dollars and betrayed working Americans who depend on unemployment programs when they need them most. He said his office and the Justice Department will keep pursuing people who defraud benefits systems.
CARES Act expansion created a larger target for fraud
Congress authorized expanded unemployment insurance funding in March 2020 through the Coronavirus Aid, Relief and Economic Security Act. The law broadened eligibility and added emergency support as the pandemic spread, creating a fast-moving system that investigators later said attracted criminals.
The Labor Department’s Office of Inspector General investigates people who try to steal unemployment benefits. Officials said those protections are meant to guard federal and state funds as long-running fraud cases continue to surface from the pandemic period.
People with information about attempted unemployment insurance fraud can contact the Labor Department inspector general’s hotline or call the U.S. Attorney’s Office in Georgia at (912) 652-4422.
