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Fraudulent claims were substantial in unemployment insurance audit, Kentucky State Auditor says

Auditor Mike Harmon said last year's issues included 'auto-pay' and other problems with Kentucky's Office of Unemployment Insurance.

LOUISVILLE, Ky. — Kentucky State Auditor Mike Harmon says his office has identified continuing issues in the unemployment system after a statewide audit during 2021.

A press release from Harmon's office said he found 19 issues. Of those, nine were related to Kentucky's Office of Unemployment Insurance (OUI) and the Unemployment Insurance (UI) system.

Harmon said last year's issues included problems created by the "auto-pay" system as well as IT security concerns. While improvements had been made, fraudulent claims had been confirmed in 2021.

“OUI failed to fully implement controls to detect fraudulent activity, which resulted in many claimants receiving payments before OUI flagged them as potentially fraudulent and stopped further payments,” said Harmon.

Of the samples the auditors chose, 54 people said they worked for the Labor Cabinet. Thirteen of those had fraudulent payments of more than $20,000 the release states.

Over 28,000 people from out-of-state filed for UI payments for a total of $195 million. Auditors randomly selected 34 of those claims and found that 15 of them were fraudulent. One of the fraudulent claimants received more than $30,000 before the claim was stopped.

Harmon said the OUI took action like it was supposed to, but only after the claim was "inappropriately paid" for around two weeks. 

"While OUI utilized software and tools to detect fraud, clearly a concerning number of fraudulent claimants received payments," he said.

You can review the whole report here.

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