Unemployment fraud on the rise

MOBILE, Ala. (WALA) - Since the rise in the Alabama unemployment rate, unemployment fraud has been on the rise. The Department of Industrial Relations has prosecuted 12 cases of unemployment fraud in the last 12 months.

Special Investigator William Chappelle is one of only six unemployment fraud investigators in the state. He deals with thousands of cases in Mobile and Baldwin County, and the department is getting convictions.

Wednesday, Quentin Jackson pleaded guilty in a Mobile courtroom. He was sentenced to 10 years in a state penitentiary.

"My job is to detect and prosecute and collect unemployment benefits that are overpaid,” said Chappelle.

Chappelle goes to court at least once a month. Right now, he has active cases in all of the counties he covers.

Chappelle said the majority of his cases start with people filing legitimate claims at the unemployment office but don't report it when they get a job.

Each week someone is claiming, that person has to submit a form online, in person or through the mail. It asks a series of questions, which Chappelle said he often doesn’t get a honest answer to.

"We ask them every single time. The first question is: During the previous week, did you perform work for pay? Typically, in my job I find the people will answer that question incorrectly,” said Chappelle.

Responsibility also rests with the employer. Under the New Hire Act, Alabama employers are to report all new hires.

"Not all employers are aware of that law. It’s been on the books for 15 years, but not all employers are aware of what they can do under the Alabama New Hire law,” said Chappelle.

Even some that do know don't care, but they should.

"Unemployment fraud overall hurts employers, hurts other people who need unemployment, and generally, what I'm finding that there is a large criminal element that uses this money to fund crime,” said Chappelle.

Employers pay a tax based on how many people they hire and fire.

“Employers pay a tax based on wages, and they suffer when someone files a claim for benefits because their tax rate goes up. When someone claims benefits fraudulently, we catch that, set it up as an overpayment, and that employer gets credit for it,” said Chappelle.

If businesses report new employees, it can reduce the amount they pay the state.

“It will eventually come back because your experience rating that your taxes are based on is based on how many people you hire and fire over the length of a year, so it will eventually hurt if you don’t report using the Alabama New Hire System. It can reduce how much money you have to pay the state in unemployment taxes,” said Chappelle.

Those taxes go into the state unemployment fund, which is in trouble. Chappelle said since 2008, Alabama has been borrowing money to pay out unemployment benefits.

"There is only a certain amount of money that we can pay out. When people claim benefits and they are not eligible, it will decrease the amount of benefits for other people. It also may decrease the amount of benefits that we can award,” said Chappelle.

Chappelle said the majority of people convicted of unemployment fraud get off with probation, but that doesn't mean it’s an insignificant matter.

Unemployment insurance ranks third in the most abused federal programs. Last year it cost taxpayers more than $17 billion.

For more information on how to report new hires, report fraud or file a legitimate claim, click here .