New report identifies unemployment fraud worth billions

A new report from the U.S. Department of Labor highlights the extent of unemployment insurance fraud during the COVID-19 pandemic across the country, including in Ohio — a problem that one of Ohio’s U.S. senators says more can and must do.

This month, the labor department’s inspector general released a report that found $45.6 billion in potentially fraudulent payments to people with Social Security numbers in various states that belonged to dead people, suspicious electronic records or federal inmates.

More than 1,000 people have been charged with unemployment fraud across the country, the agency said.

“This is a significant milestone with 1,000 people charged with crimes related to (unemployment) fraud, and the discovery of $45.6 billion in potentially fraudulent (unemployment) benefits underscores the scope of this problem,” said Inspector General Larry D. Turner.

“Hundreds of billions in pandemic funds have attracted fraudsters seeking to use the UI program, leading to historic levels of fraud and other improper payments.”

Officials with the Ohio Department of Job and Family Services said last month that more than $1.1 billion had been paid as a result of fraudulent overpayments as of the end of June. Much of that was in a temporary program created during the pandemic for people who don’t qualify for traditional unemployment.

State officials say they have recovered or prevented nearly $400 million in fraudulent payments and referred numerous investigative materials to federal law enforcement.

“Like the rest of the nation, Ohio has been hit hard by criminals trying to cheat unemployment during the pandemic,” said ODJFS spokeswoman Dasia Clemente.

“We’re in a much different place now because of our investment in anti-fraud technology,” Clemente said. “We have also made it a priority to better understand fraud and how best to work with financial institutions and law enforcement to document fraud and recover stolen funds.”

Several arrested in Ohio for unemployment fraud. State and federal officials say many of the criminals are overseas.

U.S. Sen. Rob Portman, D-Ohio, passed legislation in July backed exclusively by Republicans to encourage states to step up investigations into insurance fraud. Among other things, the Chase COVID Unemployment Fraud Act would allow states to keep 25% of any improper payments they collect and use that money for investigations and prosecutions, and to strengthen the integrity of the program.

At the time, total losses from unemployment fraud in the country were estimated at $163 billion.

“Billions of dollars spent to help American families have been stolen by individual criminals and transnational criminal organizations,” said Portman’s spokeswoman Megan Duggan.

Dugan said in addition to the legislation and calls for greater accountability from federal agencies, “(Portman) supports the ongoing efforts of federal, state and local officials to bring fraudsters and criminals to justice.”