AZDES Estimates It Paid Over $4.4 Billion In Fraudulent Federal CARES Act Unemployment Benefits

money drain

This week, the Arizona Auditor General released its Special COVID-19 Funding Report which presents information on the amounts, intended purposes, and recipients of the allocations.

According to the report, federal acts from March 2020 through March 2021 resulted in $74.9 billion of federal COVID-19 monies allocated to Arizona through October 2021.

Audit Findings:

• The Department of Economic Security (DES) did not put all critical identity verification or other anti-fraud measures in place before paying federal CARES Act unemployment insurance (UI) benefits and reported it paid over $1.6 billion in fraudulent identity theft claims out of the $5.1 billion in claims it had paid as of June 30, 2020. As of October 4, 2021, DES estimated it paid $2.8 billion in fraudulent claims after June 30, 2020, through the end of its paying federal CARES Act UI benefits on September 4, 2021, for a total of $4.4 billion of fraudulent claims paid.

• DES paid claimants an estimated $57 million of COVID-19 UI benefits that exceeded the minimum weekly benefit but has not yet determined whether claimants were qualified for them as required; therefore, it does not know how much in potential overpayments it may have paid and would need to recover and then return to the federal government.

• DES was required to comply with certain federal requirements when it administered the State’s federal CARES Act UI programs. DES did not fully comply with some of these requirements when it reported incorrect financial information totaling over $100 million to the federal government, inappropriately requested and received a net total of $191 million in federal monies before it needed monies to pay claimants, and did not establish a process for billing and recovering any amounts it overpaid to claimants. Further information regarding this noncompliance is explained in our federal findings 2020-103, 2020-104, and 2020-105 in the Single Audit Report.

About ADI Staff Reporter 13045 Articles
Under the leadership of Editor-in -Chief Huey Freeman, our team of staff reporters bring accurate,timely, and complete news coverage.