Unemployment-fraud reports running rampant in central Ohio

Stephen Borgna
ThisWeek group
This is an example of a 1099-G tax form. More than 100,000 people across the state have reported receiving a 1099-G despite never opening an unemployment claim, a phenomenon that is part of recent widespread identity-fraud activity, according to central Ohio police departments and state agencies.

With tax season in full swing, Ohioans are preparing their forms for filing or might already have filed.

For many, those forms include a 1099-G from the Ohio Department of Job and Family Services if they lost their job or were furloughed during the COVID-19 coronavirus pandemic and received unemployment assistance.

However, thousands of people across the state have reported receiving a 1099-G despite never opening an unemployment claim, a phenomenon that is part of recent widespread identity-fraud activity, according to central Ohio police departments and state agencies.

The rash of recent identity-fraud reports involve fraudsters – likely from outside the U.S. – filing for unemployment benefits in another person’s name to receive fraudulent compensation.

Related story:Fraud continues to run rampant in new Ohio unemployment claims

Patterns have emerged from community to community over the past several weeks.

For example, from Jan. 26 to Feb. 5, the Delaware Police Department took 17 reports from residents who said their identities had been used to file fraudulent unemployment claims. Another seven reports were filed over two days: Feb. 8 and 9.

From Feb. 18 to 22, the Columbus Division of Police recorded five reports of Clintonville residents learning their identity had been used to file fraudulent unemployment claims:  

From Feb. 3 to 8, the Gahanna Division of Police received five reports of fraudulent unemployment claims being filed in residents’ names.

And from Feb. 1 to 18, the New Albany Police Department recorded 25 reports involving identity theft, with most of them involving the discovery of fraudulent unemployment claims after victims had received 1099-G tax forms.

“The vast majority are unemployment-related,” New Albany police Chief Greg Jones said. “As we’ve seen in New Albany, central Ohio and the state and across the country, there are certain people that are taking advantage of the increased unemployment claims and are filing unemployment claims for people often who are already currently employed and are taking advantage of the current work climate.”

New Albany police Sgt. Joel Strahler said the volume of identity-fraud reports the department has received the past few months has increased notably.

“Usually, we don’t see these types of numbers of identity theft,” he said. “This is a new large-scale breach of information that’s happened somewhere where obviously bad guys are taking advantage of the situation, and I think it’s so large-scale that it’s not just in New Albany and it’s not just in the surrounding communities in central Ohio, but it’s statewide and nationwide."

Worthington Division of Police Chief Robert Ware said unemployment-related complaints recorded by his department have increased significantly since December.

He said the police division received 10 identity-fraud reports in December, with seven of them unemployment-related, and 19 overall in January, with 16 unemployment-related.

In February, city spokesperson Anne Brown said, the total increased dramatically, with the police division recording 42 unemployment-related fraud complaints.

“We were pretty consistently in single digits every month for identity theft of all kinds until December,” Ware said. “In December, we more than doubled our normal rate. January, it doubled again, and in February, (we were) on track to potentially triple our regular rate.” 

Strahler said these cases don’t appear to discriminate compared to past fraud trends that targeted the elderly or certain demographics. Even Gov. Mike DeWine reported an unemployment claim filed in his name in January.

Strahler cited a case where an executor to an estate reported that an unemployment claim had been filed in the name of the deceased person, but that person had died more than five years ago.

Local investigation into identity fraud varies on a case-by-case basis. Officials said when a police department takes an initial report, it’s sometimes a matter of just following the money. 

“Generally speaking, we have a relatively good rate of solving these cases just by following the leads because eventually somebody somewhere is going to get caught on camera trying to get cash money out of a bank or ATM or something like that,” Strahler said.

“It really depends on the sophistication of the operation,” Ware said. “At some point somewhere, that money’s potentially going into an account somewhere.”

Police departments work with state and federal agencies, such as the Ohio Department of Job and Family Services, to investigate and seek resolutions to these cases.

But often after initial investigation, a police department finds the case is outside its capabilities, and it is forwarded to ODJFS or the Ohio Attorney General’s Office, both of which have additional resources, according to Ware, “especially if it’s in international or cross-state jurisdictions.”

"When they come in at the volume that they come in, that really overwhelms the local capacity, especially for a small suburban agency,” Ware said.

When contacted regarding an interview for this story, the Ohio Attorney General’s Office referred ThisWeek to ODJFS regarding investigation and prevention methods for unemployment-fraud reports.

For the recent spate of claims, ODJFS spokesman Tom Betti said, state and federal agencies suspect international actors are the culprits, though they are not sure of their identities.

“We do not know where it’s coming from," Betti said. "We can tell you it’s not coming from any of the systems within the state of Ohio. Our computer systems at ODJFS have not been breached.

"It would be reasonable to surmise that all of the major data breaches we have seen in the last few years is somehow connected to this, and these criminals have been waiting for an opportunity – such as a pandemic – where the state and federal government is trying to help people in need on a massive scale. And they chose this time to strike.”

In February, DeWine called these suspected actors “international gangsters” when addressing the delay in unemployment payments due to ongoing fraud investigations. 

Betti said investigations are in process, but he could not provide specifics and declined to comment on the agency's detection methods, though he said ODJFS is coordinating with the U.S. Department of Labor as part of broader investigations with various federal agencies and the U.S. Attorney General’s Office.

Betti said the ODJFS has flagged hundreds of thousands of claims because of suspected fraud, and the investigation of those claims is ongoing. He said Ohio has been defrauded approximately $330 million from unemployment-related identity fraud from April to December 2020, with that figure potentially increasing as investigations continue.

Much of the fraud activity from the past year can be attributed to the federal Pandemic Unemployment Assistance program that went into effect in May 2020, Betti said. The program provides unemployment assistance to people who normally wouldn’t qualify for regular unemployment, such as contractors, consultants, artists and small-business owners.

The traditional unemployment system requires a confirmation from the applicant’s former employer, which the new program lacks.

“This is why the PUA space was rife with fraudulent claims,” Betti said.

But Betti said ODJFS officials also have observed a spike in fraud with the traditional program in recent months.

“This is a brand-new phenomenon for us,” he said. “Before it was primarily the PUA; now we’re seeing it in both.” 

Residents are asked to file a report with their local police departments and file a report with ODJFS if they receive an unemployment-related 1099-G unexpectedly. 

To file a report online, go to unemploymenthelp.ohio.gov, click "Report Identity Theft," select "ID Theft: What to do – Individuals" and follow the steps.

Victims also may report fraud to the Federal Trade Commission.

Betti said it is important for victims to file a report because their Social Security numbers and other personal information might be compromised and because ODJFS might need to issue a corrected 1099-G form so they don’t have future tax problems.

“It probably won’t affect their taxes this year, but if they don’t take this action, it’s eventually going to affect their taxes,” Betti said.

sborgna@thisweeknews.com

@ThisWeekSteve