Wisconsin Inmates Collect $616K in Unemployment Benefits

Published July 12, 2013

Who says you can’t collect unemployment in prison?

The law.

But that didn’t stop hundreds of Wisconsin inmates from cashing in on hundreds of thousands of dollars in illegal unemployment payments, according to information obtained by Wisconsin Reporter through an open records request.

There were 593 cases of “overpayments,” or jobless benefits paid in the names of Wisconsin prisoners between July 2012 and July 2013—to the tune of $616,248, according to state Department of Workforce Development records.

That’s more than double the amount uncovered in an audit in 2011, which found the Unemployment Insurance Division paid out $291,248 to inmates, according to DWD spokesman John Dipko.

Better Fraud Detection

Dipko said the numbers are rising because of collaboration between agencies in targeting fraud.

“We believe the primary reason is we are getting better at tracking down cases through our aggressive approach, stronger relationships with correctional officials, and more effective use of the tools at our disposal to track down cases,” he said in a follow-up email to Wisconsin Reporter.

The latest numbers also may cover a slightly longer period, Dipko said.

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

The Unemployment Insurance Division uses an inmate cross-match system initiated in 2011 to match records with Social Security Administration records for incarceration.

“The monthly run helps identify individuals who were collecting UI (Unemployment Insurance) benefits while incarcerated,” Dipko said. “While the information obtained via this cross match is about three months old, it provides the opportunity for recovery of benefits that were wrongfully claimed.”

Dipko said DWD receives alerts from officials who become aware of inmates receiving UI benefits. It’s part of an ongoing approach that includes “actively monitoring” media reports of criminal activity to determine whether the subjects are filing for unemployment benefits and, if so, “immediately suspending payments and investigating.”

But the system isn’t fraud-proof.

Families In On It

Gov. Scott Walker recently signed into law Act 36, which is supposed to strengthen the Unemployment Insurance Division’s ability to hold all UI claimants accountable for sharing their PIN information in fraud cases. Unemployment officials say much of the fraud is committed when a family member or friend reports an unemployment claim on behalf of the convict. Pocketing unemployment on behalf of an inmate is illegal.

“Should an inmate share his or her PIN with a spouse, significant other, mother, or other family member or friend while incarcerated and fraud occurs, we will be able to hold the inmate responsible for the overpayment,” Dipko said of the new law. “That is a change from current law and should continue to support our fraud detection and recovery efforts.”

The Unemployment Insurance Division has added 10 investigators, compared to one under Gov. Jim Doyle’s administration, to “aggressively pursue and recover overpayments and fraudulent claims,” Dipko said.

With more resources and sharper teeth in laws uncovering more unemployment fraud, officials wonder whether there may have been more fraud previously that went undetected and whether there is more fraud currently than is being reported. The answer to both questions appears to be, probably.

Millions Back to State

Dipko could not provide recovery figures for unemployment benefits paid to inmates, but he noted the Unemployment Insurance Bureau of Tax and Accounting collected more than $25.2 million in fraudulent overpayments and more than $24.9 million in non-fraud overpayments (mistakes made by UI or glitches in the system) in 2012.

The UI division attempts to recover fraud and other overpayments through levies, warrants, and tax-refund intercepts.

There are instances in which inmates could be eligible for unemployment benefits. Inmates held at county jails for a short time such as 48-hour holds, or who are permitted to leave jail and look for work and are considered able and available to work, could legally be eligible for Unemployment Insurance, if they are unemployed, Dipko said.

State Rep. Samantha Kerkman (R-Randall), co-chair of the Joint Legislative Audit Committee, said the increase in discovery of overpayments to inmates underscores the importance of agencies cross-checking beneficiaries of public assistance programs.

M. D. Kittle ([email protected]) writes for WisconsinReporter.com, where this article first appeared. Reprinted with permission.