By M.D. Kittle | Wisconsin Reporter

The latest data obtained by Wisconsin Reporter found 406 inmates scammed unemployment benefits, costing employers $435,975.

MADISON – Sometimes being an out-of-work prisoner pays off.

Wisconsin inmates continued to collect unemployment checks after an audit of the state Department of Workforce Development found scores of prisoners illegally cashing in.

But a DWD official says the agency has been much more aggressive over the past year curbing waste, fraud and abuse, and doing a better job of tracking fraud in the system.

In September 2011, an Unemployment Insurance Division audit found 236 inmates had received unemployment checks through August 2011, overpayments that cost employers $325,000.

Unemployment compensation programs are administered by the states and funded by payroll taxes that employers pay.

The latest data obtained by Wisconsin Reporter found 406 inmates scammed unemployment benefits, costing employers $435,975.

Another $23,705 in overpayments was made to 57 other inmates, apparently by mistake, according to DWD.

In 2011, Workforce Development launched a system to cross-match benefit records against Social Security Administration records for arrests, enabling monitors to identify prisoners drawing jobless benefits to which they were not entitled.

DWD spokesman John Dipko told Wisconsin Reporter that the cross-match search yielded 1,197 hits in 2011, all of which were investigated. He said almost 75 percent of the hits resulted in a potential unemployment insurance problem, accounting for $459,680 in fraudulent and non-fraudulent overpayments. That’s a 546 percent increase from the previous year’s tally of $84,159 in ineligible payments.

“Our aggressive approach to detect and prevent overpayments among incarcerated individuals is one of the many efforts (Unemployment Insurance) is pursuing to promote UI program integrity in Wisconsin,” Dipko said in an email.

The agency, too, Dipko said, has been reaching out to county jails, from where the majority of the fraudulent inmate claims come.

Inside/outside job

Lt. Blaine Prue, administrator at the 201-bed Chippewa County Jail, said the most recent case involved an inmate who signed his unemployment check over to a visiting friend.

“Our sergeant did a double-take, looked at what he was signing,” Prue said. “We did some double-checking and found out that he was not eligible and we turned the matter over to Workforce Development.”

Often, inmates have help from the outside.

Dodge County Chief Deputy Blaine Lauersdorf said the sheriff’s department turned over  to Workforce Development investigators phone records of an inmate bilking the system.

“(The inmate) was having someone from the outside instructing them how to file his claim,” the chief deputy said.

Like most county jail administrators who spoke to Wisconsin Reporter, Prue said Chippewa County may see one or two unemployment fraud cases per year.

Dipko said the number of inmate fraud cases picked up in 2010, after DWD implemented an education campaign focusing on monitoring inmate calls and reviewing mail, as well as routine security measures.

Errors in the system

Many times, however, the problem isn’t about fraud, but errors in the Unemployment Insurance system.

After last year’s audit, which was completed for the governor’s Commission on Fraud, Waste and Abuse, Dipko said less than half of the overpayments, on average, to Wisconsin’s jail and prison system inmates involved fraud.

Some inmates are eligible for unemployment benefits, including a portion of prisoners in work release – at least those approved to look for work – and individuals who are held in jail for 48 or fewer hours.

Inmates collecting unemployment checks represent a fraction of the fraudulent and non-fraudulent overpayments overall.

Last year’s audit found the amount of fraudulent overpayments soared from $4.72 million in 2007 to $37.45 million in 2010.

Some $41.4 million more were recorded as overpayment errors.

Wisconsin’s unemployment system posted an improper payment rate of nearly 15 percent.

Improper payments include underpaying and overpaying, as well as not paying eligible claimants.
Unemployment Insurance staff accounted for about 9 percent of the errors, with claimants and employer errors accounting for the remainder, the audit found.

Dipko said DWD’s aggressive approach to curtail waste, fraud and abuse resulted in the recovery of a record $87.6 million last year in unemployment benefit overpayments due to fraud, non-fraud (including agency errors), and delinquent employer taxes.

He said the UI Division has added 10 full-time positions to help in the fraud fight, and has increased the number of investigators in the field.