Audit reveals Illinois lost nearly $2 billion to COVID-19 unemployment fraud

Audit reveals Illinois lost nearly $2 billion to COVID-19 unemployment fraud

A state audit found the Illinois Department of Employment Security lost to fraud more than half of the $3.6 billion in federal COVID-19 dollars earmarked for out-of-work Illinoisans. The full scope of the unemployment fraud remains unknown.

The Illinois Department of Employment Security sent nearly $2 billion in unemployment benefits to crooks during the pandemic, losing more than half the federal dollars earmarked for out-of-work Illinoisans, according to a new audit.

The partial state report uncovered “unprecedent” levels of theft, showing the agency failed to “maintain accurate and complete” data on residents filing claims through the program. IDES previously admitted there were 212,000 false claims, but had refused to disclose the cost.

Auditors said this resulted in the vast majority of fraudsters being successful at stealing real Illinoisans’ identities and swiping their unemployment payments. In total, the department lost more than half of the $3.6 billion in pandemic funds promised to residents between July 2020 and June 2021.

Republican state lawmakers have decried the rampant fraud and blamed Gov. J.B. Pritzker for mismanaging the program rollout, which ranked seventh worst in the nation. IDES has attempted to downplay the losses.

IDES failures during the pandemic were widespread. It was months late in implementing a system to get federal dollars to the self-employed, allowed a data breach that exposed the private data of 32,483 unemployment applicants, made applicants wait months for benefits and at one point had a call backlog of 156,000 people awaiting help with their claims.

IDES administrators said they “stopped roughly $40 billion in fraudulent payments across state and federal programs” through the end of last year and have introduced new technologies to mitigate theft moving forward.

The department’s leaders contended in a four-page statement that the federal government was to blame. They said Illinois “sounded the alarm over insufficient and flawed federal guidance” from the start of the program in spring 2020.

“The fraudsters illicitly got federal money – not state – because the Trump administration designed a uniquely flawed system,” the agency statement read.

An early investigation by the Chicago Tribune showed the fraud in Illinois was exacerbated by IDES failing to follow federal recommendations or adopt free fraud-fighting tools.

An previous 2020 audit found the state paid out hundreds of claims to people older than 90 and younger than 14 in the early months. Some claims were paid out to newborn babies.

State Rep. Amy Elik said she and colleagues are calling for immediate hearings into IDES operations as a result of the audit.

“$2 billion dollars is a lot of money for the state to lose. The public needs to know how this happened and figure out a way, fast, to make sure this does not happen again,” Elik said. “This is why I am calling for immediate legislative hearings so we can hold IDES accountable and get our questions answered.”

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