Investigations, Recovery Rates of 124% Discourage Unemployment Insurance Fraud

Investigators at the Idaho Department of Labor say they hear every excuse in the book – from ridiculous to outright outrageous – when it comes to claimants who commit unemployment insurance fraud.

  • A claimant suggests a power surge is causing her computer to answer questions incorrectly on her unemployment insurance reports.
  • One claimant simply says he forgot he even has a job. And since he doesn’t remember his job he thinks the next logical step is to file for unemployment.
  • Another claimant suggests he lost his job due to drug use and that drug use is responsible for the errors the Department of Labor found when he filed a claim.

And while these examples may seem silly on the surface, the Idaho Department of Labor takes fraud seriously.

“We actively look for and we do a pretty good job of discovering instances of unemployment insurance fraud,” said Larry Ingram, bureau chief for the Idaho Department of Labor.

Last November, an Eagle man learned the hard way. Jesse David Aldape, 39, received a felony conviction after it was discovered he illegally obtained nearly $9,000 in unemployment insurance benefits. Aldape’s sentence included 45 days in a county jail, 100 days of community service and restitution in the amount of $8,903 to the Idaho Department of Labor.

Another example illustrates just how devastating unemployment insurance fraud can be: Once it was discovered a recent claimant and new employee continued to file for unemployment benefits after starting a new job, the employer terminated the new employee because he didn’t want an untrustworthy worker in his shop. The claimant then tried to file for unemployment, but was denied benefits for at least 52 weeks as a result of committing unemployment fraud.

“Too often, people need the money and think they will just pay us back,” said Josh McKenna, benefits bureau chief at the Idaho Department of Labor. “But it’s not that simple. We charge penalties and interest on top of the fraud. Plus, we deny them benefits for one year and until they pay us the overpayment, penalties and interest.”

That’s why McKenna emphasizes unemployment fraud is a significant issue – and the issues surrounding it are commonly misunderstood.                                                              

“We often hear people say they are entitled to unemployment benefits because they pay into it,” McKenna said. “But unemployment insurance taxes are not deducted from employee paychecks. Those taxes are actually paid by employers.”

Meanwhile, the department continues to vigorously use all of its resources to uncover fraud.

“There’s always plenty of work to do,” Ingram said. “Are we getting better with our data-mining activities? Yes, we are. We have a very aggressive and successful program for identifying fraud and recovering benefit overpayments,” he added. “We also have a high recovery rate.

Between July of 2015 and June of 2016 nearly $4.1 million of the $119 million paid in unemployment insurance benefits were improperly collected by claimants due to fraud and overpayments. Of that, Ingram’s team recovered 124 percent – or nearly $5.13 million, which includes some receivables from prior years.

Ingram emphasizes employers can play a key role in helping to reduce fraud.

“One of the biggest ways employers can help is by notifying the Labor Department in a timely manner whenever they hire someone new,” he said.

Jennifer Souza, a fraud investigator with Idaho Department of Labor, agrees.

“Our computer runs a cross-match against people who are claiming benefits,” Souza said. “It’s pretty hard not to get caught.”

At the same time, she said fraud is easy to prevent, and honesty is the best policy for people filing for unemployment insurance.

“From the time someone opens a claim to each week they file, they receive warnings and are asked very specific, simple and straightforward questions.”

McKenna agrees: “The best thing someone can do if they don’t know the answer or how to report correctly is to ask. Asking for help can prevent large overpayments and penalties that must be paid back to the department.”

Claim specialists can be reached at (208) 332-8942, by using a Click to Chat feature or by emailing. More information, including answers to frequently asked questions can be found at labor.idaho.gov/uifaqs.

The bottom line? Fraud is a preventable offense – and it benefits the whole state of Idaho when it doesn’t happen in the first place.

“It’s an important message,” Ingram said. “I’d much rather see prevention as opposed to punishment.”

Learn more about preventing or avoiding unemployment insurance fraud at http://labor.idaho.gov/dnn/idl/UnemploymentInsurance/UnemploymentBenefits/Fraud.aspx

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