About 90 current District employees face dismissal and criminal prosecution after collecting unemployment benefits while on the government's payroll, the city announced Monday.

An additional 40 former D.C. workers are also facing the possibility of a criminal probe for their role in the scheme that cost taxpayers up to $800,000. "It is unconscionable for anyone -- and particularly District of Columbia employees, who should have high ethical standards -- to be fraudulently collecting unemployment insurance to which they are not entitled," D.C. Attorney General Irvin Nathan said in a statement.

Workers implicated in the citywide sweep were placed on leave while their employing agency investigates the findings of the joint probe by District and federal authorities, the city said. Current District employees who are ultimately found to have committed fraud will be fired, Mayor Vincent Gray's office said. Some of the workers allegedly raked in as much $20,000.

History of trouble
Monday's crackdown across District government agencies is the latest chapter in D.C.'s long history of corruption from within, though two of the city's most notorious episodes have occurred in the past four years.
> Former Councilman Harry Thomas Jr. is awaiting sentencing after pleading guilty in January to stealing more than $353,000 in public funds. Other Thomas associates have pleaded guilty for their roles in the scheme.
> The biggest swindle, though, concluded in 2008 when a federal judge sent Harriette Walters to prison for nearly 18 years after she admitted to stealing $48 million from the city's Office of Tax and Revenue.

Termination, though, may be the least of some employees' worries: The city said it would send the names of crooked employees to federal prosecutors.

The District, which employs about 32,000 people, will also seek to recover any money that employees fraudulently obtained.

Although city officials did not release a roster of employees under scrutiny, Lisa Mallory, the director of D.C.'s Department of Employment Services, said the scandal touched some of the District's most influential agencies and offices, including D.C. Public Schools, the District Department of Transportation and Mallory's own department.

The fraud also reached the Wilson Building, and one employee under investigation worked in the office of Council Chairman Kwame Brown. Karen Sibert, Brown's deputy chief of staff, declined to name the person, citing District policy.

Mallory said those who committed fraud engaged in specific actions to collect the unemployment compensation.

"Each week, the individuals have to certify that they are not receiving any other form of compensation," Mallory said. "It's not like this is automatic or they forgot or they didn't understand."

Gray said the city's internal investigation should serve as a warning to would-be cons.

"We will not tolerate fraud in this government, but will root it out and hold people accountable," Gray said in a written statement.

But Ward 2 Councilman Jack Evans, the longest-serving member of the D.C. Council, said fraud has deep roots in District government.

"The city has a problem with this. Some of it's money management, but some of it's this culture of, 'I can steal from the government, and I'm a government employee,'" Evans said. "It's just a culture that has to stop, and I'm not sure how you make that stop other than to set an example."

Examiner staff writer Liz Farmer contributed to this report.