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Kentucky's incarcerated population held hostage by identity theft

More than 4,500 false tax returns were filed in the U.S. in 2019, using inmates' Social Security numbers to claim more than $14 million in refunds.

LOUISVILLE, Ky. — Already behind bars, many incarcerated Kentuckians have become handcuffed again — this time by a system that has held a large part of the public prisoner since the pandemic began: unemployment.

Previous FOCUS reports on unemployment fraud have highlighted the problem, with an estimated tens of billions of dollars stolen since the COVID-19 pandemic started.

"Our government responded to pump dollars into these programs to help those individuals, and the unfortunate side effect of that is that it also put a spotlight on it for criminals," Jarrod Carnahan said.

Carnahan works at Appriss Insights, a Louisville-based business that provides insights and analytic solutions that support decisions for early response to people-based fraud and risk. Many of the identity thieves are overseas, operating as rings. They've been targeting everyone — including the prison population.

"Many of the identities that are being flagged is either synthetic or fraudulent are from inmates," Carnahan said.

The problem was already on the federal government's radar before the pandemic. In April, the Treasury Department released results of its audit of the prisoner population, which focused on stolen identities used to file bogus tax returns.

The report found that more than 4,500 false tax returns were filed in 2019, using inmates' Social Security numbers, which claimed more than $14 million in refunds.

"Really our prisoners and inmate population are victims of that crime more so than anyone else because they're sitting in an isolated location." Carnahan said.

Carnahan said inmates do not have the freedom or luxury of having total access to a computer to know their personal information, such as their Social Security number, has even been compromised. According to The Marshall Project, many who are incarcerated may not know their identity has been stolen until their release.

Fraudsters take what they can to create what's called a "synthetic identity."  

"They may have stolen a Social Security number from one place, and they'll pair that up with a first and last name from another, and they're able to create multiple forms of identity that at a surface level could appear to look legitimate," Carnahan said.

The Kentucky Office of Unemployment Insurance said it has received almost 50,000 reports of fraud through its website.

Although the office acknowledges that it is aware of the problem of identities being stolen from the incarcerated, it cannot say how many of the fraud reports are actually tied to those behind bars.

"We're really looking at a situation of good guys versus bad guys here," Carnahan said.

And in a case of ongoing unemployment fraud, the "bad guys" aren't the ones already locked up.

Kentucky Unemployment said people should report UI fraud online. If they do not have access to the web, and are victims of identity theft, they should ask someone such as a family member to complete the form.

"If incarcerated individuals discover they are victims of unemployment insurance identity fraud and they are unable to access the web, they can ask someone to complete the form for them," the office said. "If payments have been issued on those claims, they will need to complete and sign an affidavit certifying the claim was fraudulent and they did not receive any UI funds."

RELATED: The ups and downs in the journey for unemployment payments

RELATED: Get a job, get $1,500: Beshear announces incentive for Kentuckians to return to workforce

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