Labor department: Fraudsters took $290M in Kansas unemployment payments

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TOPEKA, Kan. (KSNT) – Fraudsters made off with a combined $290 million in state and federal unemployment benefits for people in the state throughout 2020, the Kansas Department of Labor said Tuesday.

Following an in-depth analysis and IRS Form 1099-G reconciliation, KDOL has determined that from Jan. 1, 2020, through Dec. 31, 2020, about $140 million in fraudulent claim payments were made from the Kansas regular unemployment insurance program. Additionally, more than $150 million in fraudulent payments are attributed to federal benefits programs, for a total of $290 million. 

Kansas Department of Labor

For the nation, the U.S. Department of Labor said overall unemployment fraud has cost taxpayers $36 billion since the start of the pandemic alone, with California seeing a record high of $11.4 billion in fraudulent claims. Kansas Gov. Laura Kelly said the losses to fraudsters are part of why she made a call to action Monday to modernize the state’s unemployment computer systems.

“It’s stealing from taxpayers at the worst possible time and all attempts at fraud will be referred in the strongest possible manner to law enforcement,” Kelly said. “All 50 states have been overrun with coordinated, sophisticated criminal fraud attempts, and that’s why I wrote a letter with fellow governors, calling on Congress to provide funding to secure and modernize our systems.”

In addition to identifying the fraudulent claims, KDOL also said it referred over 50,300 cases of suspected fraud to federal authorities like the FBI and the U.S. Secret Service to investigate and potentially prosecute the fraudsters.

KDOL’s acting secretary Amber Shultz blamed the widespread fraudulent claims on Congress, who added additional federal unemployment aid for the state to dole out to claimants.

“Congress opened the door for this historic level of fraud when they created multiple new pandemic-related unemployment programs, and at the same time prohibited states from asking basic verification questions,” Shultz said. “It was not until the Continued Assistance Act was signed into law on Dec. 27, 2020 that states were able to take more aggressive action to verify claimant information in the federal programs.”  

KDOL did see an upgrade to its unemployment system that shut down its website for three days at the beginning of February. While many Kansans expressed difficulty with the website’s login and verification system after relaunching, the improvements also immediately began stopping a multitude of bot hacking attempts and fraudulent logins, according to KDOL. The number of state fraudulent attempts halted has risen to half a million, and the governor said Monday that the department has prevented costs around $22 billion related to unemployment fraud.

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