Audit report shows state is rife with unemployment fraud | Free news

More than $590 million has been wasted since the pandemic, White says

A new report released by Mississippi’s state auditor cites historic rates of unemployment fraud.

Auditor Shad White’s report shows the state spent more than $590 million in unemployment benefits during the COVID-19 pandemic. The fraud shown in Mississippi is also seen across the country, according to the US Department of Justice, which called it “unprecedented”.







Shad White

Shad White


“The response to the pandemic has resulted in a historic waste of taxpayers’ money. Some of that money is just gone forever,” said White, a native of Sandersville. “But my office is using fraud as an opportunity to use new audit tools, such as advanced data analytics, that will hopefully pay dividends in the future.” Claims for unemployment benefits totaled $2.1 billion in 2020, a significant 3,500 percent increase from $59.6 million in 2019.

According to the report, one reason for the increase in fraud and improper spending is that the Mississippi Department of Employment Security has changed its fraud prevention systems. MDES is responsible for administering the state’s unemployment assistance programs.

The system change eliminated the need to verify a Social Security number when claims are approved, and also eliminated the one-week waiting period for claims, increased the weekly benefit from $40 to $200, and changed the requirement that applicants demonstrate separation from all employers.

To audit the data, the auditor’s office contracted with an analytics firm and federal agencies to assist in the investigation. Over the past two years, they have been arrested twice for fraud. They took place at the end of 2022.

The report shows that the COVID-19 response programs have led to the theft, embezzlement or misuse of huge sums of tax dollars. Unemployment benefits have become one of the biggest drivers of this misspending during the pandemic, the report said. The United States Department of Labor’s inspector general estimates that more than $191 billion in unemployment compensation has been lost largely to fraud.

The auditor estimated that at least $590 million was spent in fiscal years 2021 and 2022 in Mississippi alone. White’s staff investigates and works to identify fraudulent unemployment claims.

In total, the federal government has spent at least $4.17 trillion on COVID relief. That money mostly went to stimulus checks ($858 billion), business loan programs like the Payroll Protection Program, or PPP ($828 billion), and unemployment benefits ($690 billion).

As unemployment claims increased by 300 percent, so did incorrect payments. In fiscal year 2020, the known overpayment rose from $118 million to $473 million.

“The massive loss of money from the Mississippi unemployment fund is, in part, the result of MDES bypassing or altering its own internal controls that were designed to prevent money from being misused or stolen,” the report said. “MDES made payments to people who never lost income or wages, whose identity was stolen, or who were actually incarcerated. Some payments were even made to international criminals.”

To recover or resolve these fraudulent overpayment issues, the auditor’s office is exploring solutions not previously used in Mississippi in hopes of recovering taxpayer money and holding people accountable.

State Sen. Jeremy England, who previously served as the Senate’s vice chairman of economic and labor development, said he held several hearings on overpayments of unemployment benefits during his tenure and was in close contact with MDES.

In reviewing the report, England said he was glad to see the auditor’s office doing a deeper dive. However, he thinks it’s unfair to point to the agency for the unprecedented timing.

England said MDES was the “hardest hit” agency in 2020 with a significant increase in demands due to mandatory shutdowns. To cope with this surge, MDES opened new call centers staffed mainly by volunteers who were repurposed as corporate employees.

“After the shutdown, the state faced a sudden surge in unemployment claims, and MDES took on a big role in dealing with that surge,” he said. “It would be unfair to point the finger at that agency now, given what they were dealing with at the time.”

England said he has helped many people across the state contact MDES for help during outages. He recalls that these newly unemployed were struggling to feed their families and pay the bills as a result of the pandemic.

The claims made in 2020 were made by hard-working Mississippians who would rather work than claim unemployment benefits, England said. He said nominal numbers don’t tell the whole story without proper context.

“I hope his (Auditor State’s) office will be able to identify those who were intent on stealing public money at a time when it was most needed, and I hope we will see claims and prosecutions against the most egregious fraudsters very soon.” – said England. .

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