The director of the Ohio Department of Jobs and Family Services recently announced the department is working with state and federal law enforcement to recover hundreds of millions of dollars in fraudulent unemployment claims and billions more in overpayments that are not fraudulent in nature.
From the beginning of the pandemic through May 2021, Ohio doled out $21 million in fraudulent claims through traditional unemployment and $444 million in fraudulent claims through Pandemic Unemployment Assistance (PUA). The latter is a federal program created in 2020 to allow workers not typically eligible for unemployment to collect benefits.
The state also paid $457 million in non-fraudulent overpayments through traditional unemployment and $1.7 billion in non-fraudulent overpayments through the PUA program, according to the state.
About $150 million worth of fraudulent PUA claims have been recovered so far, said David DeVillers, the former U.S. Attorney for the Southern District of Ohio. DeVillers leads the Cyber Fraud Law Enforcement Working Group, a partnership of public agencies, state and federal law enforcement agencies and private financial institutions formed to recover fraudulent PUA overpayments across the country.
These funds were recovered due to the department’s direct relationships with 50 banks and other financial institutions, which identified fraudulent activity and returned the ill-gotten funds without fear of liability. However, recovering the remainder of the fraudulent PUA money is not as easy, as it will have to be recovered through civil forfeiture (which could take months) and criminal forfeiture (which could take years), DeVillers said.
“This isn’t going to be months, it’s going to be years and years and years, it’s going to take us a while,” DeVillers said. “Our goal is within a year of now to get all of our investigative referrals into the federal system so they can start doing their investigations, but then it’s going to take another year or two to do the investigation and another year or two to prosecute those cases.”
“It’s a five year statute of limitations, for the most part, to get them indicted. But even if they’re indicted, within five years — and I think there’ll be a lot of people indicted in five years — then it’s still going to be another year before they go to trial. So this is going to be a long time,” he continued.
Though some people have been arrested in relation to PUA fraud, including three people in Columbus, the scale of the issue is much larger than just Ohio, DeVillers said. Millions of dollars in fraudulent claims must be recovered and returned to states from within the country and internationally.
Matt Damschroder, director of the Ohio Department of Job and Family Services (DJFS), said those who suspect they may be victims of fraud should get in touch with the agency and notify the FBI via its Internet Crime Complaint Center. Ohioans whose benefits were stolen by scammers will be eligible for replacement payments.
As for non-fraudulent overpayments, DJFS plans to send notifications to legitimate unemployment claimants who were simply overpaid due to employer or agency error. DJFS will also soon launch an online waiver program to help those who were overpaid to avoid paying costly repayments, and will begin verifying those claims later in the summer, Damschroder said.
Ohio House of Representatives Minority Leader Emilia Sykes, D-Akron, said in a statement that the delay in getting some Ohioans their unemployment benefits is evidence that the unemployment system needs reformed.
“Our unemployment system is broken. We saw that on full display when thousands of Ohioans waited weeks and even months during the height of the pandemic to receive the benefits they paid into,” she said. “With many Ohioans continuing to struggle to find work, make rent, or pay their bills, the last thing the state should do is pile on more burdens by forcing people to pay back overpayments they received through no fault of their own or be penalized due to a poor system that allowed fraud to run rampant.”
In February, House Democrats introduced a bill requiring DJFS to waive the collection of non-fraudulent unemployment benefit overpayments received by Ohioans.
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