Illinois State Rep. Amy Elik (R-Fosterburg) and others are calling for immediate hearings after an audit revealed that the Illinois Department of Employment Security (IDES) paid nearly $2 billion in fraudulent COVID-19 unemployment claims, which is more than half of the pandemic-related payouts.
“Two billion dollars is a lot of money for the state to lose,” Elik stated, “the public needs to know how this happened and figure out a way fast to make sure this does not happen again. This is why I am calling for immediate legislative hearings so we can hold IDES accountable and get our questions answered.”
According to a press release, the Pandemic Unemployment Assistance program (PUA) was created to help people not usually covered by unemployment insurance, like gig workers and those who are self employed. However, the audit shows that a majority of those funds went to the pockets of criminals engaging in fraud and identity theft.
Specifically, the audit states that $3.6 billion in Pandemic Unemployment Assistance funds were paid between July 2020 and June 2021. Nearly $1.9 billion of those funds were tied to fraud, which amounts to roughly 53 percent.
“The Department recognizes there are inherent risks within any unemployment insurance program,” the audit states. “Overpayments exist within any unemployment program resulting from the administrating department’s implementation process, claimant miscommunication or misunderstanding, and the due process that allows for employers and claimants to appeal decisions.”
“There is also an inherent risk of fraud,” it continues. “Unlike in regular UI, the PUA program does not provide for a database of earnings and wages to support the program, and consequently, there are unique and pervasive opportunities for fraud within PUA.”
Elik’s press release states that the IDES had previously been criticized for failing to make use of free resources to combat fraud before the start of the COVID-19 pandemic and for being slow to develop methods to prevent fraud.
“The unemployment agency was warned this could be a problem,” Elik stated, “it’s troubling this state agency didn’t do enough to safeguard this money which resulted in $2 billion being paid to fraudsters.”
It also appears that the fraudulent payments do not have to be paid back to the state.
The audit states that “the federal government has not required repayment of overpayments stemming from identity theft and fraud.”
During the 2021 fiscal year, the Unemployment Trust Fund reported a $3.29 billion decrease in its net trust fund balance “as a direct result of labor market disruption the state of Illinois experienced during the COVID-19 pandemic which began in March of 2020. As of June 30, 2021, the UTF net trust fund deficit balance was $2.97 billion.” Pritzker responded by signing a law that appropriated $2.7 billion from the State Coronavirus Urgent Remediation Emergency Fund to the IDES in March 2022.