$2 million in fraudulent unemployment benefits paid to prisoners

By Jamey Dunn

After three months of searching for inmates illegally collecting unemployment benefits, the Illinois Department of Employment Security had found nearly $2 million in fraud.

The IDES began comparing lists of individuals collecting unemployment insurance benefits with lists of inmates in Illinois county jails and state prisons. To be eligible for benefits, one must be able to work. So prisoners are generally not eligible for benefits.

The program is part of an overall effort by IDES to cut down on fraud both by benefit recipients and businesses trying to pay less into the unemployment insurance trust fund, which provides the money for benefits. The department has also stepped up its legal department with help from Attorney General Lisa Madigan’s office and created a new-hire directory to keep track of employment to ensure that it can quickly cut off benefits to recipients who find work.

IDES spokesman Greg Rivara said the state cuts off benefit if recipients showed up on the inmate list. The department checks to make sure the person does not have a legitimate reason for being on both lists. “A valid reason for example would be someone who is on work release or someone who had a really bad weekend,” he said. To get benefits, recipients must check in with the department every two weeks, either by phone or through a website and answer questions about their ability to work and whether they are looking for a job. So, Rivara said, those receiving benefits while they are in prison and unable to work would have to misrepresent their situation to keep getting checks. He said it is possible that in certain cases, someone besides the inmate was calling in pretending to be him or her, possibly even without the inmate’s knowledge.

The largest single case of fraud was $43,000, which was collected on behalf of an inmate in Cook County. Almost 300 Cook County inmates were linked to more than $700,000 in wrongful payments. Other counties with high levels of such fraud were Will, where IDES found more than $85,000 in wrongful payments, and Peoria, where IDES found more than $72,000 in wrongful payments. In total, more than 1,100 individuals received benefits while they were behind bars and unable to work.

Rivara said that in the future, the amount of benefits paid out in such cases would likely be much smaller. “Moving forward, we do not expect to find anything near that. In fact, we hope to stop payments before they are made.” Some of the individuals from the early months of the program had been incarcerated and collecting benefits since 2010. However, Rivara said many others had only collected a week of benefits. He added the state was able to cut people off quickly once they compared the lists. “There’s a slew of examples where, by looking at the dollar amounts, you can tell that they only got paid once.”

Rivara said the number is also inflated because unemployment benefits were extended in the wake of the recession. But as Illinois’ unemployment rate has dropped, so has the amount of time residents can remain on benefits. “Unless there is a dramatic change in the law, we’re really not going to see numbers like this again in the near future.”

IDES is working to recoup the benefits that were collected fraudulently. “We would expect that some of [them] will pay us back right away. We would expect that some of [them] will go into a payment plan, and we would expect that some of [them] are going to be just difficult.” For those who do not pay back the money, IDES can garnish their state and federal tax returns. Those who do not pay back the money will not be eligible for future unemployment benefits. Those who collected benefits while incarcerated and unable to work could be prosecuted. But Rivara said that the department plans to limit its pursuit of criminal charges to cases with high dollar amounts, obvious fraud or instances when people refuse to pay back the benefits they received. “So the person who made a poor decision because they were down on their luck and they owe us $100, the reasoning pattern for that case is going to be different for the individual ... who owes us tens of thousands of dollars, who has money in the bank and who is being belligerent.”

Rivara said the department cannot afford to pursue criminal charges in every case. However, he said that such fraud is not a victimless crime. “When people steal -- and this is stealing -- when people steal, it hurts the economy because it is affecting what businesses pay [into the unemployment insurance trust fund], and it's affecting decisions that businesses make,” he said. “There is a negative effect when people do this.”