How over $5B in Illinois unemployment benefits was wrongfully paid out

ByJason Knowles and Ann Pistone WLS logo
Friday, July 28, 2023
How over $5B in IL unemployment benefits was wrongfully paid out
IDES overpaid Illinois unemployment benefits by over $5B. Now state officials are looking into how that happened.

CHICAGO (WLS) -- A $5 billion loss: That's how much money should not have been paid out in unemployment benefits during the pandemic.

The ABC7 I-Team covered the issue starting in 2020.

A pandemic, new payment programs and short-staffing created a huge problem for the state's unemployment system. Now there are recommendations to improve it.

"It really explains why people who qualified for these benefits had a hard time getting them," said state Rep. LaShawn Ford, D-Chicago.

Ford said people in need may have lost out, while fraudsters cashed in.

He's reacting to the Illinois Auditor General's report that the Illinois Department of Employment Security overpaid benefits by more than $5 billion during the pandemic between 2020 and 2022.

System failures, fraud and erroneous payments allowed the fraud to happen, and the ABC7 I-Team covered the crisis throughout the pandemic.

"I really need it bad. I just had a baby, a newborn in March, and then my job ended due to COVID," one person said.

SEE ALSO: Illinois unemployment notices from IDES cause confusion, worry in those told they owe thousands

The auditor's report found the state weakened fraud controls, so they could handle the surge in claims. This caused $6 million to be paid to deceased individuals and $40 million paid to people in jail.

"That's a surprising revelation; I don't know how a person incarcerated could actually receive unemployment benefits when you had lots of people out here that earned the benefit," Ford said.

IDES responded, saying the auditor also acknowledged the challenge created when the Trump Administration "required each state to implement a poorly designed and brand new unemployment insurance program on their own, in record time with continuously changing federal guidance," and that the federal program lacked security measures of their system's design.

"This program was new; this program was created by the federal government, and they put this responsibility on Illinois to administer it. And they also said 'you don't have to do cross examinations,'" Ford said.

The auditor general recommends the state update its fraud prevention by identifying prisoners and verifying bank accounts.

"Just like we had this infrastructure plan for roads and bridges, we need to make sure we have a plan to protect taxpayers and have what you call an IT and infrastructure for systems at IDES and across the board to protect us from fraud and abuse," Ford said.

Ford said legislators are working with state agencies to protect all of their online systems, from fraudsters.

The report also states IDES should try to get those payments back, that should not have been made.