Ohio recovers $150M in fraud overpayments; can it recoup the rest?
Jul. 9—A team of state and federal law enforcement agents working to chase down fraud in Ohio's unemployment system has recovered about $150 million so far, according to David DeVillers, former U.S. attorney leading the effort, who gave an update Thursday.
The team worked with financial institutions to intercept fraudulent payments before they were cashed out or laundered by criminals, DeVillers said. Once that happens — especially since many of the players are international — it gets harder to get the money back.
Ohio Department of Job and Family Services officials estimate they paid out at least $464 million in fraudulent payments, mostly through the expanded unemployment program created during the pandemic for people who don't qualify for regular unemployment.
"We're going to do everything in our power to get as much of those fraudulent assets back to the people of the United States and to the people of Ohio," DeVillers said.
Meanwhile Ohioans who had false claims filed in their names say they are trapped in bureaucratic limbo.
Kent Baker said when he applied for unemployment after he was laid off from a Cincinnati medical courier company in April, he was told a claim was already open with his Social Security number. He did everything ODJFS asked, he said, but can't get an explanation on why his claim remains unpaid.
"I have spoken to agents 15 times, made over 100 calls, and submitted all requested documents," he said. "The frustrating part is just not getting any kind of reply."
ODJFS Director Matt Damschroder said that now that the state has stemmed fraud payouts and eliminated the claims backlog, they are working to improve the process to release flagged, nonfraudulent claims. "That is a high priority for us," he said.
Roughly 1.5 million claims have been flagged as potentially fraudulent or suspicious and needing further investigation, according to the state.
"Our unemployment program is in a much better position now than it was a year ago, and we will continue to make it as efficient, reliable and fraud-proof as possible, and we will recover all the funds that we possibly can," Damschroder said.
The inter-agency team, including members of the IRS, Secret Service, FBI, Ohio Attorney Generals' Office and local prosecutors, has streamlined investigations, DeVillers said. He predicts it will be a years-long effort involving civil forfeiture and eventual criminal charges.
Three Columbus residents were charged in March with illegally receiving unemployment money, along with drug charges, in federal court. Charges allege they applied for benefits for themselves and others.
Experts have estimated the amount lost to unemployment fraud nationally could be in the hundreds of billions of dollars, with much of the criminal efforts traced back to other countries such as Nigeria and Russia.
"Once it goes offshore, it makes it far more difficult," DeVillers said, noting it then involves working with foreign governments.
"But make no mistake, a lot of this is happening in the good old United States, too," he said.
Even if the criminals are based overseas, he said, they often have domestic partners who handle the mail and pick up government-issued debit cards.
"We have thousands of cards going to one location and someone's got to go pick those up, and that's good old Ohioans," DeVillers said.
In addition to fraud, ODJFS officials say they paid out nearly $2 billion in nonfraudulent overpayments since the beginning of the pandemic. Damschroder said the state agency will soon unveil a process for recipients to seek a waiver on paying the money back if they were overpaid through no fault of their own.
Over the past 68 weeks, the state has paid more than $12 billion in traditional unemployment to more than 1 million Ohioans, and $10.8 billion in expanded unemployment to more than 1.2 million Ohioans.
ODJFS on Thursday reported reduced filings for continued unemployment claims — both traditional and expanded unemployment — compared to the previous week.
