CBS 58 Investigates: Unemployment fraud

MILWAUKEE (CBS 58) –  A CBS 58 Investigation found Wisconsin consistently has to recover millions in improper payments.

In a busy pre-pandemic Milwaukee County court room, our cameras watched a judge weigh whether the state could move forward with unemployment fraud cases against three men.

DWD Fraud Investigator Scott Lange took the stand explaining key findings in each investigation.

“He repeatedly answered no, he was not working when in fact he was,” said Lange.

“They identified that he had quit employment,” said Lange.

“The last comment he made was 'I guess I just needed the money,'” said Lange.

The three are accused of lying to receive a total of over $10,000 in unemployment benefits. Their cases have been delayed until July.

Wisconsin’s unemployment insurance fraud report said it paid out $13.3 million it shouldn’t have last year -- $4.7 million to fraud and $8.6 million to people who got more than they should have. For context, that’s two percent of the nearly $410 million paid out last year.

It’s funded by employer taxes, so we have to be good stewards of that money,” said Unemployment Insurance Deputy Administrator Amy Banicki.

She said the state doesn’t just use the courts to after money it shouldn’t have sent. It can garnish benefit checks still being paid, and it can also disqualify people for future benefits. Those BAR fines have prevented people from collecting the extra $600 additional benefit provided by the federal government.

Each state has to conform to federal law as well,” said Banicki.

She said fraud staff have been shifted to clearing backlogged claims.

“Our whole focus right now is trying to get people who are eligible paid,” said Banicki.

But the agency is finding victims of identity theft. Crooks have been filing claims using stolen social security numbers across the nation. States like Washington, Florida, and Oklahoma have been hard hit, in part because of the rush to pay claims.

“We will continue to monitor potential fraud in both (unemployment insurance) and (pandemic unemployment assistance),” testified DWD Secretary Caleb Frostman at a May 27 hearing.

Banicki said the department has paid out $300,000 on over 1,000 claims it’s not questioning as fraud. She said the division stopped 1,500 attempts worth $5,000,000 and the work is just getting started.

“We may have a lot of fraud cases that we’ll be working on in a year or so,” said Banicki.

The state wants people who’ve had claims filed in their names because of a stolen identity to report the theft. Banicki said the state is working with the U.S. Department of Labor to build a case against the crime rings perpetrating many of the thefts.

Report a case here.

***Correction: A previous version of this story said federal data show 38 states do a better job than Wisconsin in getting accurate unemployment checks to their citizens. That sentence was based on this map. DWD said that is misleading, because the data includes a caution against ranking states. DWD also said if one data set was removed, Wisconsin's improper payment rate would be considerably lower.