Federal report calls out Illinois Department of Employment Security for failing to disclose data on misspending

CHICAGO (CBS) -- The U.S. Department of Labor wants to know how much of your money was misspent by the State of Illinois, but the Illinois Department of Employment Security isn't sharing that information.

Thus, IDES has again been called out by the federal government in a scathing report just released Wednesday afternoon.

As CBS 2's Tara Molina reported, the report from the U.S. Department of Labor's Office of the Inspector General asking for immediate attention and action. It calls out Illinois and other states for failing to submit required information on the taxpayer dollars spent on federal programs created during the COVID-19 pandemic - included boosted and expanded unemployment benefits.

Those programs expired almost a year ago - last September - but the report details why the missing information is unacceptable.

The report says: "Without accurate state performance information, Congress and the (Employment & Training Administration) are not able to fully assess state activities and mitigate the risk of overpayments and fraud for future programs of a similar nature."

"This isn't hard," said Haywood Talcove, chief executive officer of LexisNexis risk solutions government division. "You got this much money, you spent this much money, and here's approximately how much was fraudulent?"

Talcove has kept a close eye on the unemployment fraud problem in Illinois - even testifying on it in the past. Now, the federal government says it never received Illinois' information on that very problem.

"The U.S. Department of Labor requires the state to file forms, and it turns out that the state of Illinois has not filed its forms relative to payments and fraud rates," he said.

He said IDES' failure to report required information is a serious problem.

"To me, that speaks volumes," he said. "Do they not know what's going on? Or do they care not to share what's going on? I would think that Governor Pritzker; that IDES, would want to know and make it better for the citizens of Illinois."

CBS 2 has been asking the state - repeatedly, for years - how much money, total, has been lost to fraudsters. They've never answered.

We know IDES told the Illinois Auditor General that pandemic-related identity theft fraud could total $2 billion. But they didn't report that to the federal government.

Instead, they told the feds about $15 million was paid to fraudsters – a drop in the bucket. They also reported paying out $0 for identity-theft-related fraud.

The government is still asking the state for information. Illinois is called out multiple times in the federal report.

So why can't Illinois fully comply, more than two years since COVID hit? And why should it?

"Not only do you owe it to the taxpayers, you owe it to the business community and you owe it to the citizens of the state of Illinois - because you're paying for it," Talcove said.

We asked IDES to confirm the data we obtained on overpayments and fraud – which specifically relates to the Illinois ETA 902P report on the state's Pandemic Unemployment Assistance program, which offered unemployment benefits to gig workers and others not typically covered by unemployment insurance.

All states were required to file ETA 902P forms monthly. Illinois failed to do so for several months, and even when they did file, a great deal of information was missing.

The data we obtained on Illinois ETA 902P reports are as follows:

• Overpayments:
• Total: $1,047,678.472 ($1 billion) involving 290,406 cases from Dec 2020 through April 2022
• $5M of that was from 2,100 cases reported in April
• Fraud: $15,447,486 involving 2,524 cases
• $208,521 from 37 cases reported in April 2022
• $0 was reported January thru June 2021 and prior to Dec 2020
• Overpayment recoveries:
• Total: $20,211,177 Jan 2021 thru April 2022
• Fraud: $57,733
• Waived Amt: $55,100,956
• Overpayments related to identity theft, including fraud:
• $0 for all reporting periods

• Compensated amount: $3,881,305,769 (May 2020 through April 2022)
• $967,727 for April 2022

The data also show Illinois is still two months behind on its monthly reporting. Every state near Illinois has managed to provide reports through June. Larger states – California and New York – have also filed through June and have provided much more information on overpayments and fraud than Illinois.

IDES did not respond to our requests for comment on any of this information Wednesday. On Thursday, while still not answering our specific questions, IDES released this statement:

"IDES fully supports the work of the United States Department of Labor Office of the Inspector General in its efforts to uncover pervasive fraud within the Trump administration federal unemployment insurance programs which lacked controls states nationwide needed to stop and prevent fraudulent activity. 

"The reporting period for federal CARES Act programs ends June 30, 2023.  IDES will continue to work with federal agencies to that date to submit all required information."

Meanwhile, the Illinois Attorney General's Task Force on Unemployment Insurance Benefits Fraud – which was launched 20 months ago to investigate fraud and recover taxpayer dollars – released this statement:

"We continue to work closely with the FBI, the Illinois Department of Labor, the Illinois Department of Employment Security and law enforcement agencies through the Attorney General's Task Force on Unemployment Insurance Benefits Fraud to evaluate allegations of unemployment insurance benefits fraud.  We are committed to preserving the integrity of the work taking place and will not comment on any specific investigation."

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