New York officials launching probe into reports of fraud in state unemployment system

(The Center Square) – The New York State Comptroller’s Office has initiated an investigation into concerns about the prevalence of fraud in the state’s unemployment program.

Representatives from both Comptroller Thomas DiNapoli’s office and the State Department of Labor told The Center Square that the unemployment system has been reviewed in the past. However, this inquiry takes place as the state digs out of the COVID-19 pandemic, which led to a significant and sudden increase in claims starting more than a year ago.

Federal lawmakers also expanded eligibility for unemployment and boosted benefits to help families make ends meet while they were laid off or furloughed from the jobs.

The DOL said it has processed $81.3 billion in benefits to more than 4.6 million New Yorkers. It also said it has stopped more than 1.1 million claims since the pandemic started, protecting more than $12.3 billion in benefits.

“The (current) audit was initiated based on our assessment of the risk which includes complaints, large increases in payments, new programs and criteria and changes to the IT,” said Office of the State Comptroller Press Secretary Mark Johnson said.

New York is far from alone in being targeted by scammers. Numerous other states have reported their systems have been hacked or defrauded by individuals or groups seeking money.

Last month, the state of Kentucky shut down its system for days in order to implement a more rigid security system that uses an eight-digit personal identification number instead of a previously used four-digit PIN.

In March, Ohio officials awarded a $1.4 million contract to Google Analytics to help identify and combat fraud.

In New York, Department of Labor Commissioner Roberta Reardon said in a statement to The Center Square that officials there are using artificial intelligence and applications like ID.me to combat fraud.

Still, the state needs people to assist, she added.

“While our investigators are always one step ahead of stopping these criminals who are attempting to steal unemployment benefits that provide a lifeline to New Yorkers, we also need the public’s help in reporting anything that looks suspicious,” Reardon said. “We are urging them to refer to the tips in this release to protect themselves against fraud and to help us in our efforts to catch these fraudsters.”

Republican lawmakers, though, this week called on the state to do more. State Sen. George Borrello, R-Sunset Bay, said during a Tuesday news conference that he has asked for how much the state has paid out in fraudulent claims – not just what it’s blocked. He said he has yet to get an answer on how much the state has paid out in claims determined to be fraudulent.

A spokesperson for the Department of Labor told The Center Square on Friday that that number cannot be identified as fraudulent cases are identified daily. While the state initiates recovery efforts and remains committed recouping those funds, it can take months to do so.

Borrello and other GOP Senate members are calling for a number of measures in a review of the unemployment program.

Specifically, they want to see a complete audit of the unemployment program’s IT systems, an “accurate and honest” assessment of how much fraud has occurred and what steps are being done to recoup those funds.

At the same time, Republican senators want the state to forgive those who received overpayments and to match the federal government in making the first $10,200 in unemployment benefits tax exempt.

The lawmakers also have raised concerns about small businesses seeing their premiums rise significantly even though the Legislature took efforts to keep businesses from having pandemic-related unemployment from affecting their payments.

The payments have risen as the state finds the unemployment program $10 billion in the red.

“New York is supposed to be one of the technology capitals of the world, and over one year after the pandemic first began, there is absolutely no excuse for these ongoing problems to continue plaguing those we serve,” state Sen. Sue Serino, R-Hyde Park, said. “This is bureaucracy at its absolute worst.”

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