Federal report calls out Illinois for not reporting unemployment fraud

(The Center Square) – The federal government issued a scathing report on the Illinois Department of Employment Security’s failure to disclose misspending during the pandemic.

A report from the U.S. Department of Labor’s Office of the Inspector General highlights Illinois for failing to submit required information on the taxpayer dollars spent during the COVID-19 pandemic, including to fraudsters.

The Inspector General said it is important to obtain the information in order to prevent fraud in the future.

“Without accurate state performance information, Congress and the ETA (Employment & Training Administration) are not able to fully assess state activities and mitigate the risk of overpayments and fraud for future programs of a similar nature,” the report said.

A state audit released in June found nearly $2 billion dollars in federal money intended to assist unemployed Illinoisans during the pandemic was lost to fraudulent claims. The audit found that, of the $3.6 billion in unemployment claims paid out from July 2020 through June 2021, nearly $1.9 billion was found to be fraudulent.

The state audit found that IDES failed to implement general information technology controls over Pandemic Unemployment Assistance and failed to maintain accurate pandemic unemployment assistance claimant data.

Officials at IDES blamed insufficient and flawed federal guidance.

Haywood Talcove, the CEO of Lexis-Nexis Risk Solutions, said at the height of the pandemic, there were directions on how to swindle the agency, something IDES officials were oblivious to.

“On the ‘Dark Web’ explains how to get past the Illinois Department of Employment Security tools to get a benefit paid,” said Talcove. “They should know about that before I know about that.”

Illinois was one of a few states that borrowed to pay unemployment claims during the pandemic. The state paid down some of the $4.5 billion using federal COVID-19 relief dollars, but still carries a $1.8 billion balance with taxpayers covering the accrued interest.

A request for comment from IDES went unanswered.

Two bipartisan bills were signed into law Friday aimed at holding accountable people who commit fraud under pandemic relief programs.

The two new laws will extend the time period prosecutors have to prosecute people who committed fraud through the Paycheck Protection Program or COVID-19 Economic Injury Disaster Loan program, extending the statute of limitations for criminal and civil enforcement against a borrower to ten years.

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