THE INVESTIGATORS: LWC paid $6.2M in unemployment funds to prisoners, audit shows

THE INVESTIGATORS: LWC paid $6.2M in unemployment funds to prisoners, audit shows
(Source: WAFB)

BATON ROUGE, La. (WAFB) - An audit conducted by the Louisiana Legislative Auditor’s Office reveals the Louisiana Workforce Commission (LWC) paid millions of dollars in unemployment funds to prisoners.

The audit, released Monday shows the agency responsible for handling unemployment funds gave out more than $6 million in benefits to 1,195 incarcerated individuals who did not qualify for the program.

Those improper payments were made between January to November 2020. According to the findings, 92 inmates received only one week of benefits but more than a thousand inmates received more than one week of benefits. In response to the audit’s findings, LWC Secretary Ava Cates sent a letter to the temporary legislative auditor, acknowledging the improper payments. The following is part of that response.

Chris Magee ‚who took a lead role in uncovering the improper payments, calls it unfortunate. He says it allowed several prisoners to cash in at the state’s expense all while sitting behind bars.

“Whenever there are individuals who are incarcerated who should not qualify for the program who are receiving benefits, then there is an issue there,” said Magee.

WAFB’s Scottie Hunter asked the auditor how something like this could happen.

“We typically whenever we conduct these types of audits, look to see is there a process in place and then two, is that process working. In this case, there is a process in place,” said Magee. “LWC contracts with a vendor who they have run data matches to try to identify individuals who are incarcerated. The problem is, the data match was not working.”

The agency was hit last month in another audit, revealing they paid more than $400 million to folks who were not eligible for the program. Auditors are still combing through that previous problem as they now zero in on these new findings to nail down the scope of the fraud.

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Magee admits the improper payments could still be ongoing since the problem was not identified and because auditors have only been able to access a limited amount of information reported to the agency.

“We are somewhat blind right now to whether this issue extended past the scope of our audit and we’re going to look into that issue further and see whether that issue still exists,” said Magee.

The 9News Investigators requested an on camera interview with a representative from LWC, but that request was denied.

Instead, LWC issued the following statement Monday:

“The Louisiana Workforce Commission (LWC) works tirelessly to uphold the integrity of the state’s Unemployment Insurance (UI) system, a crucial safety-net for the hundreds of thousands of individuals who have lost their jobs as a result of the COVID-19 Pandemic and subsequent economic crisis. Sophisticated criminal enterprises have targeted the UI program, attempting to take advantage of agencies like the LWC who are already overwhelmed with the sheer volume of claims over the last 14 months.

‘We have zero-tolerance for criminals who exploit our systems at the expense of Louisianians,’ said LWC Secretary Ava Cates. ‘My team is committed to identifying and investigating those who take advantage of relief meant for people in need.’

To date, the LWC has turned over more than 35,000 cases of suspected fraud to law enforcement agencies across the state.

Both international and domestic criminals are capitalizing on the current vulnerability of state agencies like the LWC and filing fraudulent unemployment insurance claims using the stolen identities of real people. Incarcerated individuals have become a target of criminal groups, because they are unable to monitor breaches of their personal information. However, in many cases the incarcerated are also the perpetrators or co-conspirators responsible for filing fraudulent UI claims.

LWC cross-matches its benefit payments against a national incarceration data network hosted by Appriss, which pulls data from two thousand jails and DOC facilities. Appriss is also used by at least 15 other state workforce agencies to combat fraud. However, the information we receive from Appriss is only as reliable as the data it obtains from jails and DOC facilities. We are working with our vendor to determine why there was in issue cross-matching process which helps identify if individuals are eligible for benefits.

The potential overpayments found by the Louisiana Legislative Auditor (LLA) represent 0.0013, or 0.13%, of the approximately 900,000 individuals paid since the start of the pandemic and 0.0007, or 0.07%, of the more than $8.6 billion paid out for the same time period.

The LWC has already started addressing the concerns identified in the report and is putting in new safeguards and processes in place to prevent fraud. We will continue to work diligently and swiftly to identify and resolve these issues.”

“It is a smaller percentage of the dollars but the issue is any taxpayer dollars that are not spent appropriately are of interest to those taxpayers and we want to make sure as a state that the dollars are spent appropriately,” said Magee.

A spokesman for LWC said the priority now is to recoup some of that money. They also stress that some the inmates did receive payments but others may have had their identity stolen.

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