Unemployment fraud cases can take months to detect

Credit: Eric Turner / KTVB

Unemployment fraud cases can take months to detect

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by Jamie Grey

Bio | Email | Follow: @KTVBJamieGrey

KTVB.COM

Posted on June 6, 2013 at 6:07 PM

Updated Friday, Dec 6 at 7:07 PM

BOISE -- There were more than 5,500 unemployment benefit fraud investigations launched in Idaho last year.

Thousands of fraud cases add up to millions each year

Around 40 percent of cases investigated by the state were determined to be fraudulent, with thousands of people illegally drawing millions of dollars. Officials say it can take months for the state to figure out if someone's doing this.

Currently, thousands of people use unemployment insurance benefits to keep afloat after losing a job, and most people do things the right way. They look for work every week and stop taking the benefit once they're steadily employed again.

But, unfortunately for Idaho taxpayers and businesses that pay into the program, thousands of others are doing things the wrong way  when it comes to unemployment benefits.

Some high-dollar cases criminally prosecuted

KTVB obtained court records of some recent cases that illustrate this problem. In some cases, inmates who legally aren't entitled to benefits have applied for and received money. The inmates get people outside of prison to make calls for them, and fill out weekly forms.

However, in most circumstances, unemployment benefit fraud is an issue of misreporting.

"What generally happens for most people is they tend not to report that they worked or they tend not to report what they made," said Tracey Rolfsen, the Deputy Attorney General for Idaho Department of Labor.

In Twin Falls, KTVB found one man who currently faces 18 counts of felony unemployment insurance fraud.

Prosecutors say he was hired for a job and making too much money to qualify, but in 18 weeks drew nearly $7,000 in benefits.

Why can fraud take so long to catch?

According to court documents, the issue was caught only after his new employer filed a required quarterly employment report.

"Unfortunately that information can be delayed 6 or 7 months, and that's how long it takes to discover that in fact someone has gone back to work and was still collecting benefits," said Bob Fick from Idaho Department of Labor.

Employers are supposed to file new hire reports within 20 days of hiring, which would show someone going back to work and ineligible for benefits, but as Fick explains, filing the report isn't priority for most businesses.

"There's no penalty for not reporting, and as a result, we have about 30% of the businesses in Idaho report their new hires as they occur," said Fick.

So now, 70% of businesses aren't filing as required, and Idaho's Department of Labor says the difference in filing a report and not filing a report, can add up to thousands of dollars per case.

Dept. of Labor: New hire reports could save thousands of dollars per case

For example, last year, the average case caught by employers filing new hire reports was hundreds of dollars. But if the department didn't catch it until a quarterly report, that amount was four times as high, making it harder for the department to get back.

"The larger the amount, the harder it is to recover," said Fick.

The Department of Labor has tried get a $25 penalty for businesses who don't file new hire reports, but the legislature rejected that idea last year.

The department can recover money by putting liens on property and bank accounts or intercepting tax refunds. Officials say more than half of over-payments are recovered.

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