Labor department: Fraudsters took $290M in Kansas unemployment payments

TOPEKA, Kan. (KSNT) – Fraudsters made off with a combined $290 million in state and federal unemployment benefits for people in the state throughout 2020, the Kansas Department of Labor said Tuesday.

Following an in-depth analysis and IRS Form 1099-G reconciliation, KDOL has determined that from Jan. 1, 2020, through Dec. 31, 2020, about $140 million in fraudulent claim payments were made from the Kansas regular unemployment insurance program. Additionally, more than $150 million in fraudulent payments are attributed to federal benefits programs, for a total of $290 million. 

Kansas Department of Labor

For the nation, the U.S. Department of Labor said overall unemployment fraud has cost taxpayers $36 billion since the start of the pandemic alone, with California seeing a record high of $11.4 billion in fraudulent claims. Kansas Gov. Laura Kelly said the losses to fraudsters are part of why she made a call to action Monday to modernize the state’s unemployment computer systems.

“It’s stealing from taxpayers at the worst possible time and all attempts at fraud will be referred in the strongest possible manner to law enforcement,” Kelly said. “All 50 states have been overrun with coordinated, sophisticated criminal fraud attempts, and that’s why I wrote a letter with fellow governors, calling on Congress to provide funding to secure and modernize our systems.”

In addition to identifying the fraudulent claims, KDOL also said it referred over 50,300 cases of suspected fraud to federal authorities like the FBI and the U.S. Secret Service to investigate and potentially prosecute the fraudsters.

KDOL’s acting secretary Amber Shultz blamed the widespread fraudulent claims on Congress, who added additional federal unemployment aid for the state to dole out to claimants.

“Congress opened the door for this historic level of fraud when they created multiple new pandemic-related unemployment programs, and at the same time prohibited states from asking basic verification questions,” Shultz said. “It was not until the Continued Assistance Act was signed into law on Dec. 27, 2020 that states were able to take more aggressive action to verify claimant information in the federal programs.”  

KDOL did see an upgrade to its unemployment system that shut down its website for three days at the beginning of February. While many Kansans expressed difficulty with the website’s login and verification system after relaunching, the improvements also immediately began stopping a multitude of bot hacking attempts and fraudulent logins, according to KDOL. The number of state fraudulent attempts halted has risen to half a million, and the governor said Monday that the department has prevented costs around $22 billion related to unemployment fraud.

Kansas woman plans series of unemployment protests at state capitol

TOPEKA, Kan. (KSNT) — Frustrations continue to rise among some unemployed Kansans, who have gone months without receiving federal unemployment benefits.

Now, an Olathe woman has planned a series of protests, called “Kansans March,” to vent her concerns with the state’s labor department, KDOL.

“Our pleas have been ignored by KDOL officials and the Governor’s office for months,” Cassandra Dickerson, the organizer for the protest, said in a press release Tuesday. “This crisis is a state disaster within a pandemic disaster for Kansans. We deserve full transparency and facts by the Governor.”

The first march is planned to take place at the Kansas State Capitol on Friday.

Dickerson, a mother of three, has struggled to pay bills after going nearly two months without pay.

After hearing from other unemployed Kansans, struggling to make ends meet, she decided to take action.

“Who’s responsible for this? Why does the state of Kansas just get to do this to us, and there’s no discipline? There’s nothing,”​ Dickerson told Kansas’ Capitol Bureau.

While the state’s labor department has said that payments are going out every day, Dickerson said she’s seen more people in her circle that are still waiting for money.

The state’s unemployment office has been juggling a high volume of fraud and an outdated computer system while paying out claims. Recently, the department’s implemented a new security system to combat fraudulent login attempts.

A spokesperson for the state’s unemployment office, Jerry Grasso, said in an email Tuesday that the department has been transparent about the delay in payments, releasing an FAQ on federal benefits in the Continued Assistance Act on Monday.

“With our antiquated technology, we have been transparent that we would not be able to pay the new PEUC and PUA programs until quite possibly the end of February, and in fact, we will begin to pay PEUC out at the end of this week. We’ve put out press releases, updated Facebook, and done many interviews on the programs, the timelines, and the contact center.”

Kansas Department of Labor

Dickerson’s flyer for her planned series of unemployment protests set to take place at the Kansas State Capitol

However, Dickerson said lack of transparency is one of the driving forces behind the protest, along with thousands of Kansans not knowing when they’ll receive their next payment.

“We want to be told the truth but, more importantly, we need our UI payments issued so that we can pay rent and utilities, put food for our table, and meet the basic needs of our families,” she said.

In addition to the protests planned for Friday, February 19, two more are also expected to take place at 10 a.m., at the Kansas State Capitol on February 26 and March 5.

Kansas lawmakers hold final hearings on rework of unemployment system

KANSAS — Lawmakers in Topeka held their final day of hearings on a bill to revamp the state’s unemployment system.

Lawmakers heard from the Kansas Department of Labor, sharing their thoughts on the bill. But, amid the hearing, concerns of fraudulent activity in the state’s unemployment system took center stage.

The Kansas Department of Labor fielding questions from lawmakers hungry for answers on fraud and identity theft concerns that states are experiencing nationwide, and here in Kansas.

Rep. Kristey Williams, (R) Augusta, said, “We don’t understand how the mistake could have gotten that big.”

Rep. Stephanie Clayton, (D) Overland Park, said, “I really for one would be curious to see a lot of these workings, and to see it first-hand.”

Lawmakers held a hearing for a bill to make changes to the state’s unemployment system, like updating the state labor department’s computer system, and helping aid employers that are expecting increasing tax rates from jobless and fraudulent claims.

Brett Flaschbarth, KDOL Deputy Secretary, said, “Every time there is a sharp increase in unemployment claims, there is a sharp increase in fraud.”

A communication spokesperson for the department says they have not been breached, but the deputy secretary addressed concerns lawmakers mentioned about past fraud and identity theft in the hearing today.

Rep. Sean Tarwater, (R) Stilwell, said, “There’s been news reports with visual evidence of being able to type in social security numbers, and download self-populated information. Have you looked at getting the word out, or getting warning out?”

“The preliminary information we have from all of our security officials is that there was not an actual breach, such that would trigger broad reporting requirements,” said Flaschbarth.

While, the department says the issue’s been resolved, and there should be no impact to unemployment claimants going forward, some lawmakers fear for those that may have had their information accessed.

So, cracking down on fraud is one of the focal points for lawmakers as they work the bill. But, the fiscal note has been a concern. With some lawmakers receiving quotes of $700 million in estimates for how many fraudulent claims have been paid out.

“We are taking our time with the bill, we are involving all stakeholders, and I’m sure we will have a more solid fiscal note when it comes to that,” said Clayton.

Lawmakers say this bill is a long-term fix to these issues. Lawmakers plan to work the bill in committee next week. In the meantime, they’re asking for Kansans to reach out to them for help to get in contact with the department.