Fraud and Futility

Swindlers have been leeching off of unemployment insurance benefits for years. That’s been common knowledge ever since the Texas Workforce Commission began publicly documenting hundreds of instances of UI fraud since 2007. But the list of offenders is not completely exhaustive.


It turns out that prisoners have been receiving $3.4 million in unemployment benefits in the past four years, reported the TWC in February. The commission has identified 1,746 cases of such fraud.

The TWC specifies that unemployment insurance recipients must be available to work and actively seeking employment. But in this instance, incarcerated individuals—who fulfill neither of these requirements—are helping themselves to hard-earned dollars collected annually from Texas businesses.

It’s unclear how exactly prisoners are acquiring unemployment benefits. They may be requesting checks that they had been receiving prior to incarceration. Identity theft is also possible, as TWC has increasingly been distributing benefits via debit card.

So, who’s to blame?

We could always point at the criminals alone—but that leaves a whole lot out of the picture. A single overarching question floats to mind when surveying the boondoggle. Is the TWC truly doing everything in its power to prevent prisoners from illegally acquiring these benefits?

Litigation has been presented as an option. Out of the 1,746 instances of fraud, the TWC has only prosecuted once. However, the threat of prosecution has been an ineffective deterrent, and the total cost of prosecution would be greater than the amount lost to criminal fraudulence. Ultimately, litigation doesn’t tackle the root of the problem.

What the TWC needs is a more expansive data range. Currently, the commission is matching up lists of unemployment recipients with lists of state prison inmates. But bizarrely enough, the TWC has had no access to the information of prisoners on the city or county level, let alone the data of prisoners in other states.

This information is critical to the prevention of fraud. Without these lists, the TWC can unwittingly provide unemployment benefits to prisoners as if they were just law-abiding Texans searching for work. As it is, the TWC only knows that state prison inmates are ineligible. The door is wide open from there.

As of October 2012, the TWC has launched a new $450,000 program to eliminate unemployment fraud by acquiring comprehensive lists of prisoners. Still, the baffling question remains: how has a major government department responsible for the distribution of billions of dollars not obtained access to this critical information by now? There is no excuse for such negligence.

Once again, government incompetency has resulted in the massive waste of taxpayer dollars. Instead of reaching those Texans who seek employment, $3.4 million has landed in the hands of criminals. This could have been prevented long ago by greater stringency and a more expansive data range. The TWC has waited far too long to vigorously combat fraudulent activity.

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