Department officials say there are always people who attempt to defraud the state’s unemployment insurance system, designed to provide temporary income for unemployed workers. But they acknowledge that there has been an increase in the number of fraud cases.
Georgia recently teamed up with a handful of other states to crack down on unemployment fraud. Nationwide, it’s estimated that those fraudulently drawing unemployment payments who were never eligible for the program and who continue receiving checks after they return to work, swindled $17 billion in 2010.
Last year, the state discovered nearly $5 million in fraudulent payments. So far, it has recouped more than $1.4 million of that amount, Georgia Public Broadcasting reported.
“Anytime someone tries to defraud the unemployment insurance system we consider it to be a major program, whether it’s a case for $500 or $5,000; it’s important to prevent that to protect the solvency of the unemployment insurance trust fund,” said state Labor Department spokesman Sam Hall.
“We take every case seriously and if we catch someone trying to defraud the system, we are going to deal with them to the extent that the law allows.”
When the labor department suspects a fraud, it first attempts to make a repayment arrangement with the individual that includes a 10 percent penalty fee based on the fraud amount in question and an additional one percent fee of accrued interest on the unpaid balance.
If the individual is unresponsive, then the department pursues prosecution.
Under Georgia law, a fraud amount that is less than $4,000 is a misdemeanor and carries a fine up to $1,000 and/or up to 12 months in jail. More than $4,000 is considered a felony and carries a penalty of a $1,000 or more fine and/or up to five years in prison.
“People have gone to jail for committing unemployment insurance fraud,” Hall stated.
To date this year, 265 arrest warrants have been issued at the request of the labor department against fraud suspects.
Here in Cobb County, authorities charged Paulton Warren Johnson, 39, of Acworth, with felony false info-unemployment insurance for allegedly making a “false representation to obtain unemployment insurance benefits” to obtain $19,372 in benefits last July, a criminal warrant stated. He was released from the Cobb jail on a $5,000 bond.
Eric Von Mack, 47, of Marietta, was charged with the same crime after authorities accused him of fraudulently obtaining $3,310 in benefits in August, according to a criminal warrant. He was released from jail on a $1,000 bond.
“Most of the fraudulent claims are for receiving unemployment and failing to report earnings or they lie about their availability for the unemployment insurance when they certify each week for the unemployment check,” said Sheila Jones, the labor department’s benefit payment control manger.
It’s not uncommon for department investigators to get tips about fraud from suspects’ family, friends and coworkers. However, it mainly uses a system that cross checks wage records with unemployment benefit receipts. The funding for unemployment insurance benefits comes from taxes paid by employers.
“We’re continuously running cross matches between payroll taxes paid and unemployment insurance benefits paid, to see if there is a match for a period of time in which the social security number will show up in both reports,” Hall said.
“If that’s the case, then we know to look into it.”
Georgia, Ohio, Colorado, New Jersey and Utah have developed a web-based system to share unemployment insurance information with states, multistate employers and others to address. States were given a Sept. 30 deadline to submit plans to the federal government on how they plan to curb the costly problem of improper payments to people who have returned to work.