Battling unemployment insurance fraud in New Jersey

A stunning number of people try to fraudulently obtain unemployment insurance benefits from the State of New Jersey every week. One legislator wants a law to really punish these scammers, while the state's labor commissioner weighs in on his department's successful battle against this type of fraud.

"We still have about 1,600 people a week, we figure, that are trying to commit fraud against the Department of Labor and get into the system and collect money that they're not entitled to," said Hal Wirths, commissioner of the New Jersey Department of Labor and Workforce Development.

A bill sponsored by Assemblywoman Amy Handlin (R-Red Bank) would tackle the issue of those who fraudulently received unemployment benefits, and would dramatically jack up the fines for those who are caught gaming the system.

"With my bill, they must repay those fraudulently obtained benefits in full before they can obtain any future, and the bill also vastly increases the fines for fraudulently obtaining benefits," Handlin said.

The measure would bring the fine to $250 for each offense or 50 percent of the amount falsely obtained, whichever is greater. Currently, the fine is the greater of either $20 or 25 percent of the fraudulent amount.

An offense is described in the bill as "each false statement or representation or failure to disclose a material fact, and each day of that failure or refusal shall constitute a separate offense."

"We want to have people saying to themselves, 'I won't even think about this because it would hurt me too much,'" Handlin said.

The success Wirths' department has had in fighting fraud cannot be overstated. When he took over, roughly 2,000 people a week were trying to scam the unemployment insurance system. He said his department goes after people who committed fraud decades ago.

"From April 2011 until today, we've stopped over $568 million from leaving the department and the UI Trust Fund," Wirths said. "That goes right back into the Fund, and what's so important about that is the UI Trust Fund was insolvent to the tune of $2.1 billion, and I'm proud to say these very aggressive fraud efforts have made the UI Trust fund sit solidly in the black. We have over $1.3 billion in the trust fund, and that triggers a $1 million tax cut for New Jersey employers."

Through cross-checking to see if newly hired people are still collecting benefits, the Labor Department has stopped roughly 385,000 claims from coming through from April 2011 through July 2015. New Jersey was the first in the nation to do cross-checking, and it is now required in all 50 states. In his first days on the job, there was a fraud case worth a couple of million dollars and Wirths said that was when his aggressive efforts began.

They haven't stopped.

"If anyone thinks they're going to commit fraud against the Department of Labor and get away with it, they're wrong," Wirths said.