The District said Monday that hundreds of city workers took nearly $2 million in fraudulent unemployment benefits, a scandal that roiled the D.C. government earlier this year and prompted widespread firings and criminal charges.

Lisa Mallory, the director of the D.C. Department of Employment Services, told the D.C. Council that her agency had detected $1.9 million in overpayments to District workers who collected unemployment benefits while on the city's payroll.

"This probe continues to be ongoing," said Mallory, who has credited access to a specialized database for the initial detection of the fraud.

D.C. jobless rate dips to 8.5 percent The District's unemployment rate slipped to 8.5 percent in October, continuing its steady trend downward. Lisa Mallory, who directs the D.C. Department of Employment Services, revealed the jobless rate during an appearance before city lawmakers on Monday -- one day before the federal government planned to release state unemployment rates from across the country. Although the Bureau of Labor Statistics has imposed tight restrictions on the release of pivotal economic indicators, an agency spokesman said Mallory violated no federal rules by disclosing the District's unemployment figure early. Mayoral spokesman Pedro Ribeiro said Mallory's comment was likely a slip of the tongue. "Sometimes, it's hard to contain yourself when you have good news," he said. The District's 8.5 percent October unemployment rate is a slight improvement from September's 8.7 percent jobless figure.

Mallory's department has referred 318 cases to the District's inspector general, some of which have resulted in civil lawsuits and criminal prosecutions. Other cases are pending.

"Many of these individuals did lose their employment," Mallory said. "There are several cases in front of the U.S. attorney, and those will take their course."

Pedro Ribeiro, a spokesman for Mayor Vincent Gray, said he did not know when the city's probe would conclude, but he said Gray remained committed to the investigation.

"We intend to move it until every case is closed," Ribeiro said. "They're going to settle, we're going to sue them, or they're going to go to jail."

The District has already managed to recoup about $1 million in the overpayments, Mallory said, with other employees already on payment plans.

The scandal has widened since the District first revealed the fraud in early February. At the time, D.C. officials said their internal review had implicated 130 current or former employees and appeared to have cost taxpayers $800,000.

But Mallory said the upgraded database has allowed authorities to expand their investigation and detect other fraudsters.

Prosecutors have secured plea agreements with some, and sentences have varied.

In August, a judge sentenced a former employee of the District's public school system to 45 days in jail for stealing $27,200 in benefits while employed.

The month before, though, a former Department of Consumer and Regulatory Affairs employee received a suspended jail sentence for accepting about $18,000 in fraudulent benefits.

ablinder@washingtonexaminer.com