In a June 17 letter signed by every Republican member of Wisconsin’s congressional delegation, legislators asked Gov. Tony Evers, a Democrat, to respond to reports of unemployment benefits claimed by fraudsters. They cited a May memo from the Secret Service warning against a “massive” scheme by a “well-organized Nigerian fraud ring exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment insurance programs.” That memo didn’t name Wisconsin as one of the states targeted by that specific scheme, but did note “it is extremely likely every state is vulnerable.”
A spokesperson with the state Department of Workforce Development, which oversees the unemployment system, said in a statement that “Wisconsin has been a national leader at detecting fraud.” The department has a variety of means to detect fraud and abuse, including but not limited to auditing employer records, comparing benefit claims to payroll records in Wisconsin and other states, exchange of information between agencies, complaints from employers and tips from the public,” wrote DWD communications specialist Tyler Tichenor.
Every year, states pursue some fraud cases against individuals who claimed funds they weren’t eligible for. What is new is the presence of large-scale scams by organized criminal syndicates, including those operating in other countries, to claim United States unemployment funds. In May, announcing a new federal Department of Justice task force on the issue, President Joe Biden said the issue was among the most serious oversight issues his administration had inherited from the administration of former President Donald Trump.
The unprecedented spike in new jobless claims in 2020 led to long backlogs and a skyrocketing total number of payments. But according to the DWD’s 2021 fraud report, both the number of cases of fraud and the total amount of fraudulently paid benefits actually declined in 2020. There were 4,734 fraud cases in 2019, and just 3,561 in 2020. It accounted for about $4.7 million in 2019 and $4.5 million in 2020, according to the department.
One interpretation of that data, said economist Noah Williams of the conservative Center for Research on the Wisconsin Economy at the University of Wisconsin-Madison, is that “fraud detection basically dropped to near zero” in 2020.
“We had a huge explosion in claims in 2020, but the actual cases in the state that were referred for fraud fell,” Williams said. “We don’t know how big the problem is, but … I wouldn’t have expected the absolute number of cases to fall.”
In a report Williams authored in May, he wrote Wisconsin “was one of the worst-performing states” by several metrics of measuring its unemployment insurance system.