“It’s appalling that Ohioans in need were victimized not only by a pandemic that ravaged our economy, but by criminals who took advantage of a system that was outdated, overwhelmed and ill-prepared for the onslaught of unemployment claims caused by COVID,” Faber said.
Using federal funding, ODJFS paid out skyrocketed claims during the COVID pandemic, which caused sudden and historic unemployment. Payments went from $900 million for the three years before the pandemic to $9.4 billion in 2020 and $14.2 billion in 2021.
Faber’s report found Ohio’s antiquated unemployment system was not equipped to handle this surge, and ODJFS officials were slow to acknowledge problems under the prior director who left in March.
Current ODJFS Director Matt Damschroder said Thursday that his agency has made changes to address many of the problems identified in the audit, and continues to do so, largely with help from a public-private partnership involving industry experts on claims processing and cyber security.
“ODJFS now uses a rigorous process involving cyber fraud defense reviews, investigatory protocols, front-end defenses and multi-factor authentication to verify claimants’ information,” he said.
“We continue to implement new strategies to improve the timeliness of claims processing and safeguarding federal and state taxpayer money.”
The state auditor’s report did specific analyses to find suspicious claims, such as those using the names of deceased or incarcerated individuals, or multiple individuals using the same bank accounts or mailing addresses.
Auditor’s office officials say they found:
- 85,944 potential instances where payment was sent to a name that was also in the incarceration file.
- 141,617 potential instances where payment was sent to a name that was reported deceased a week before the benefits were requested.
- 356 potential instances where abnormal names were used such as “Adidas” (54 instances), “Dummy” (150 instances), “Guess” (41 instances), and “Demon” (26 instances).
- 8,703 potential instances where an individual was paid more than $35,000.
The audit says the main issues that led to failures were an outdated system unprepared for such a huge surge of applications, lack of controls over new pandemic-related programs, relaxed verification requirements not requiring information from employers, and failure among ODJFS leadership to address overpayments early.
“The fact that the department neglected to acknowledge its failures until hundreds of millions of dollars in fraud and overpayments had been made, potentially delaying assistance from eligible and deserving Ohioans is more than disappointing,” Faber said, praising steps since taken by Damschroder.
Damschroder noted that the historic levels of fraud came amid unprecedented number of unemployment filings. He said the agency has received 6.6 million traditional and expanded unemployment claims since the beginning of the pandemic, and distributed $23.8 billion in benefits to more than 2.4 million claimants.
ODJFS was aware its system was outdated, he said, and had started the process of replacing it before the pandemic hit.
“Unfortunately the COVID-19 crisis highlighted the inadequacies of the current system and also slowed the implementation of its replacement due to pandemic-related priorities and serving claimants,” he said.
The state has begun the process of reimbursing people who had their unemployment accounts taken over and payments intercepted by fraudsters, Damschroder also said Thursday. So far they have received 158 requests for repayment funds for this reason, and approved 87, totaling $178,000.
Unemployment claims continued to fall last week, according to data released Thursday. For the week ending Oct. 23, Ohioans filed 7,044 new traditional unemployment claims and 42,410 continued claims, down 510 and 3,340 from the week before, respectively.
Staying with the story
The Dayton Daily News first broke news of massive unemployment fraud in Ohio in February, and continued to investigate possible causes and solutions since then. No other local media has dug into this issue to find out what’s really going on.
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