Labor Department paid out almost $300 million in fraud claims

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The Kansas Labor Department revealed Tuesday afternoon that it paid out almost $300 million unemployment fraud claims during 2020.

The agency, which has been under intense pressure to disclose how much it paid out in fraud claims, reported that it paid out about $140 million in fraud claims from its regular unemployment program.

It paid out more than $150 million in fraudulent payments attributed to federal benefits programs, for a total of $290 million paid during 2020.

“Fraud is unacceptable and will not be tolerated,” Gov. Laura Kelly said in a statement.

“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,” she 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.”

The number reported by the Labor Department came in well less than a $700 milllion figure that a television station reported based on an unnamed consultant who had met with legislators.

The agency revealed the fraud payment numbers less than 24 hours before legislative auditors were expected to meet with lawmakers to discuss their findings of an audit into fraud in the state’s unemployment system.

The agency also has referred more than 50,000 cases of alleged fraud to federal law enforcement partners for investigation and possible criminal prosecution.

The agency is actively working with the FBI, the U.S. Secret Service, U.S. Department of Labor’s Office of Inspector General and the U.S. Attorney’s office.

The $300 million makes up about 11% of the $2.7 billion paid out in regular unemployment and the federal pandemic programs since last March 15.

House Speaker Ron Ryckman Jr. accused the governor of mishandling the pandemic.

“That’s $290 million that should have gone to Kansans who are out of work and waiting for benefits,” Ryckman said in a statement.

“That’s $290 million that should’ve gone toward mental health services, our first responders and the small businesses that have been strained for nearly a year due to the governor’s handling of the pandemic,” he said.

The CEO of ID.me, an identity verification company, estimates the losses nationally for fraudulent unemployment claims at close to $200 billion, half of what has been paid out overall nationally.

Ohio paid more than $330 million in fraudulent pandemic unemployment assistance claims from April through December last year.

The number could be significantly higher since half of Ohio’s 1.4 million applicants for pandemic unemployment assistance – benefits for self-employed workers, freelancers and independent contractors – have been marked as fraudulent.

Colorado estimates it lost $10 million because of unemployment fraud but potentially stopped $7 billion in fraudulent claims.

Meanwhile, California estimates that it has suffered $11 billion in losses from unemployment fraud, or roughly 10% of the $114 billion in total claims paid out.

California Gov. Gavin Newsom has come under criticism after an audit revealed that the state’s unemployment agency did nothing to prevent the payout of fraudulent unemployment claims although there was indications of a problem.