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A man holds a sign hoping for a little money in New Orleans after being laid off. 

An unexpected spike in unemployment claims in Louisiana appears to be a combination of a large number of unemployed workers moving from one program to another and criminals trying to game the system for jobless benefits, a state official said Monday.

Payment on more than 30,000 claims filed over the past two weeks for unemployment benefits were halted last week by the Louisiana Workforce Commission while the claims are being reviewed for validity. The state agency already has stopped more than 160,000 claims since the coronavirus pandemic-related lockdowns stripped workers of their jobs.

"We believe the vast majority of these suspicious claims that we've noticed over the last two weeks are PUA (Pandemic Unemployment Assistance) claims," said Ava Dejoie, secretary of the Louisiana Workforce Commission.

"Now, we're still going through the process," she said, but added, "I believe it's reasonable to say these are sophisticated operations, as are the vast majority of these large-scale criminal operations taking advantage during this most difficult time."

Gov. John Bel Edwards' office issued a statement Monday, saying the state agency is reviewing all the suspicious unemployment claims filed and is taking extra steps to ensure more security.

"The state has certainly seen an increase in people filing for unemployment in light of the COVID pandemic, and the Louisiana Workforce Commission has processed record numbers of valid claims for hard-working Louisianans who have found themselves without a job or with reduced work hours," Christina Stephens, spokesperson for the governor said in a recent email. "It’s a shame that some people or groups might choose to try to game the system during this time, but fighting fraud is a part of LWC’s work day in and day out and they are constantly improving their methods."

State officials are looking closely at new claims for Pandemic Unemployment Assistance, the federal program for self-employed independent contractors who work in the so-called gig economy.

Also, because the coronavirus pandemic has lingered for nearly nine months, some individuals are no longer eligible for state unemployment but do qualify for one of the federal programs so that could inflate the new claim data.

"As someone transitions from one (program) to another, that's a new claim even though they've been on unemployment," Dejoie said.

There were 39,500 new Pandemic Unemployment Assistance claims filed for the week ending Nov. 14, which is roughly three times the number of new applications filed for the week before that and the week after. But there was also a spike in first-time traditional unemployment claims of 43,618 for the week ending Nov. 14, compared to only about 10,000 one week before.

The state is not aware of any computer software glitches or cybersecurity breaches related to unemployment insurance claims or its programs, Dejoie said.

She noted there are seven different types of unemployment claims processed by the state agency in a system that's really designed to handle traditional state unemployment claims for employees of businesses that have paid into the unemployment trust fund and verify wages earned for former employees.

In the process for self-employed individuals, the state can request tax documentation, such as 1099 independent contractor forms, but for the initial determination of benefits individuals submit the information online.

Individuals must complete an automated test designed to tell computers and humans apart during the online process,  along with more background-check information to verify previous addresses or makes and models of vehicles owned by that person.

"A new claim filed doesn't mean the claim was paid; that means someone opened a claim and the process has started," Dejoie said. "If you get a monetary determination or if an employer receives a form of verifying employment, that does not mean at all that a claim is being paid. Even if a bank card is mailed out, it does not mean that the funds are necessarily loaded," she said.

Dozens of residents across the state have shared experiences of getting letters for unemployment benefits and even debit cards sent to their homes addressed to individuals they don't know for benefits they never requested. The agency encourages people receiving suspicious unemployment notices to file a complaint.

"We do request those additional forms, which is all part of the verification process," Dejoie said. "It's very important for individuals and employers to respond to these letters because it's how we catch fraud early on in the process."

"We are unable to tell someone once they have reported fraud what the circumstances were. We turn over cases to law enforcement," she said. "We also work with all of our financial institutions about any fraud rings and suspicious activity. An immediate stop for us is when one piece of information is wrong."

Even individuals mailed debit cards or wired money to bank accounts can have the money taken back. If fraud is discovered, criminal charges are filed, Dejoie said. Beyond that, the federal government has a program that collects any debts still owed.

The penalty for unemployment fraud is no less than 15% of the amount of money stolen by the individual, and states can also press criminal charges. The Louisiana Attorney General's office declined to comment on ongoing investigations but encouraged individuals to file criminal complaints with the agency about unemployment fraud after filing complaints with LWC.

Attorney General Jeff Landry said that lack of safeguards was the catalyst for unemployment system fraud after authorities arrested and charged two Louisiana residents with identity theft, money laundering and government benefits fraud. The pair was accused of using stolen identities of 25 people to siphon off $300,000 across several states. LWC worked with the Attorney General's office on the case, turning over the suspicious claim information.

The Louisiana Workforce Commission was allocated nearly $1.5 million to combat fraud targeting the PUA program, spending roughly 50% of the funds on new employees and the other half on new computer software.

Several other states have battled unemployment fraud in recent months.

In Illinois, there have been more than 212,000 fraudulent unemployment claims since March, the vast majority of which are tied to the federal program for independent contractors. In California, the state froze 350,000 unemployment claims as it sought to parse out fraud later discovered in a scheme involving inmates siphoning away $140 million in state funds. Michigan is dealing with nearly 99,000 claims, which still require identity verification, and some are expected to be fraudulent. In Kansas, the state has blocked 45,000 fake unemployment claims over the year. In Massachusetts, the state is dealing with a computer bot, which has been filing fake claims, and discovered there were at least 58,000 fraudulent claims as of July. In Washington state, there was a Nigerian fraud ring targeting the extra $600 in federal benefits for unemployment recipients several months ago.


Email Kristen Mosbrucker at kmosbrucker@theadvocate.com.