Budget would up unemployment fraud penalties

Gov. Scott Walker’s proposed budget would increase the penalties unemployment recipients must pay if they use fraud to obtain more from the system than they are entitled to.

Unemployment claimants who now are found guilty of fraudulently obtaining jobless benefits can be made to pay a surcharge equal to 15 percent of the overpayments. Walker’s budget, which was introduced Feb. 3 and will be debated over the next several months, would increase that amount to 40 percent.

The proposal also would increase the penalties imposed on those found guilty of defrauding the state’s unemployment-insurance system. Now, the greatest penalty is a charge of $500 or 90 days of imprisonment.

Walker’s budget would increase the maximum penalties to $25,000 and 10 years in prison. Those penalties, associated with Class G felonies, would be imposed on those who received more than $10,000 worth of unemployment benefits.

On the other end of the spectrum, those who use fraud to get $2,500 or less in benefits would be subject to a misdemeanor carrying a $10,000 fine at the most and nine months in prison.

A state audit released in December found that the Wisconsin Department of Workforce Development overpaid nearly $168 million in unemployment benefits in the three years leading up to June 30. The report found that only 9.5 percent of the overpayments resulted from claimants’ intentionally providing inaccurate information, but those accounted for $86.3 million of the dollar figure.

State officials have taken various steps in recent years meant to conserve money in the state’s unemployment-insurance fund, which went more than $1 billion in the red during the recent recession. At a hearing Tuesday on Walker’s proposed budget, state Rep. Chris Taylor, D-Madison, noted that the DWD has appealed a large number of cases in which an administrative law judge had found that proving there was an intent to mislead is essential to any attempt to prove fraud occurred.

What, she said, have those legal actions cost taxpayers?

Reggie Newson, DWD secretary, said he could not answer the question immediately. He said state officials are trying to do everything they can to protect the unemployment fund and that he would try to provide a cost figure to Taylor at a later date.