NewsArizona News


Department of Economic Security trying to keep up with unemployment fraud as claims continue to rise

Arizona Department of Economic Security
Posted at 9:38 PM, Jun 10, 2020

PHOENIX — Since April more than $2 billion has been paid out to unemployed Arizonans.

The majority of recipients are hardworking individuals who, after being laid off due to the COVID-19 pandemic, were desperately in need of the money to cover rent or groceries.

The people looking to cash in on the crisis are banking on their unemployment fraud getting lost amid more than three million claims since March.

The reward is a couple of thousand dollars more in cash, but if caught, they face significant fines and even prison time.

"The PUA (Pandemic Unemployment Assistance) system doesn’t work with the UI (Unemployment Insurance) system, so they can’t cross-reference and check things back-and-forth between each other yet," said Josh Hoffner. "That’s a huge thing. That’s really easy to commit fraud when you can’t check both symptoms at one time."

Hoffner is a moderator on a Pandemic Unemployment Assistance Facebook page where he is in constant communication with its more than 3,000 members.

"A lot of them are asking... 'If I am on UI and I get the PUA [money], is it okay if I keep it?'" said Hoffner. "There was one about backdating, where one guy asked, 'How are they going to find out and is it okay to do?'"

The answer is no - unemployment insurance fraud is a felony. DES says it can result in prison time, though the vast majority of those convicted this year just received fines.

"No one else seems to think anything else is going to happen to them," said Hoffner.

The confidence of limited repercussions could be born from the fact that DES will likely have to prove the fraud was intentional and not the result of their problem-plagued systems.

"So many people clicked the wrong things... you can’t say who messed up on purpose and who messed up on a mistake," said Hoffner.

DES said in a statement that "approximately 10 percent of benefits issued are found to be the result of fraud."

Since COVID-19 began, the department has doubled its investigators. Monthly claims, though, have increased more than 1,000 percent.

In a statement, a spokesperson acknowledged that "clearly the increased volume of applications combined with the various programmatic changes enacted at both the state and federal levels require continued focus and attention to these areas. DES has strengthened its Unemployment Insurance program integrity and fraud detection efforts..."

"I said, 'you guys are taking money from people.' And one guy said, '[the check] had my name on it.' And I said, 'Well that was obviously a mistake because you’re not supposed to get it,'" said Hoffner.

While it may seem like a victimless crime, Hoffner believes "it hurts everybody and makes it harder for the people who don’t have their money to get it."

In their statement, DES officials said:

"It is a felony to misrepresent or fail to disclose facts or to make false statements in order to obtain or increase benefits. If you knowingly make a false statement or withhold information in order to collect unemployment insurance benefits to which you are not entitled, DES may take civil or criminal action against you. Criminal action may result in a fine and/or imprisonment. In addition, you will be required to repay the amount you received illegally as well as penalty amounts which are added to each week that was fraudulently claimed. DES typically finds that approximately 10% of benefits issued are found to be the result of fraud."