COLUMBUS, Ohio - The office of Ohio Auditor of state, Keith Faber released an audit of the Ohio Department of Jobs and Family Services (ODJFS) focusing on fraud in the state's unemployment system.

Auditors noted changes to the federal requirements and lack of controls led to vulnerabilities in the system allowing for $475 million to be paid to criminals while another $3.3 billion in overpayments were made.

This public interest audit was launched after ODJFS initially failed to disclose the risk of magnitude of ongoing fraud within the unemployment system.

The increased risk and lack of controls resulted in the inability to obtain reasonable assurance about the accuracy and completeness of reported amounts within the state's June 30, 2020 financial statements and led to the Auditor of State's office issuing a modified state opinion in regard to Ohio's financial outlook.

The statement is as follows:

"It's appalling that Ohioans in need were victimized not only by a pandemic that ravaged our economy, but by criminals who took advantage of a system that was outdated, overwhelmed and ill-prepared for the onslaught of unemployment claims caused by COVID. The fact that the department neglected to acknowledge its failures until hundreds of millions of dollars in fraud and overpayments had been made, potentially delaying assistance for eligible, deserving Ohioans is more than disappointing. Fortunately, upon his appointment, Director Damschroder demanded transparency and efficiency and pursued the necessary assistance to address the weaknesses in the system and pursue the necessary procedures to protect Ohio's unemployment dollars."

According to the audit:

-26% of all unemployment benefits for the fiscal year ended June 2021 were potentially paid as overpayments to fraud accounts. Before 2020, fraud and overpayments were around 3.5% of total payouts.

-Benefit payments were below $900 million for the three fiscal years prior to the pandemic; after the pandemic, benefits rose $9.4 billion in 2020 and $14.2 billion in 2021.

-With over $3.8 billion identified in fraud and overpayments, that equates to $673 for every Ohioan in the labor force. Governor DeWine and the General Assembly utilized ARP funds to reimburse the federal government for the cost of this program.

Auditors performed a series of 12 data analysis queries utilizing Ohio Job Insurance (OJI) and the Unemployment Framework for Automated Claim & Tax Services (uFACTS) benefit claims paid data.

Significant results included payments made to deceased individuals and incarcerated individuals, SSNs associated with four or more bank accounts, unique bank account and routing number combinations associated with multiple individuals and addresses associated with five or more individuals.

Other findings include:

-85,944 potential instances where the payment was sent to a name that was also in the incarceration file

-141,617 potential instances where the payment was sent to a name that was reported deceased a week before the benefits were requested

-356 potential instances where abnormal names were used such as "Adidas" (54 instances) "Dummy" (150 instances) "Guess" (41 instances) and "Demon" (26 instances)

-8,703 potential instances where an individual was paid more than $35,000