RICHMOND, VA (WWBT) -
Tens of thousands of Virginians "fudged" information on their applications for unemployment benefits and got paid. The Virginia Employment Commission overpaid unemployment benefits by more than $450 million over three years.
Employers like Lisa McSherry, who owns Lex's of Carytown, saw their unemployment taxes double when the recession threw scores of people out of work. So McSherry was pretty angry that a U.S. Department of Labor report shows Virginia overpaid unemployment benefits by 17.7 percent, about $457 million, from July 2008 through June 2011.
"I'm outraged," said McSherry. "I can't believe that over 17 percent of funds have been distributed to individuals that don't deserve them."
So we went straight to VEC Unemployment Insurance Director Bill Walton to see what's going on.
"Initially,your reaction is 'Wow, someone is not minding the store,'" explained Walton. "But these numbers of improperly paid benefits are not the result of agency error, but the result of individuals not complying with the eligibility requirements."
The Labor Department report breaks it down: 62 percent of overpayments are due to people who say they're looking for work but really aren't. 12 percent are not accurately reporting how they left their last job. And another 12 percent still apply for checks after returning to work.
The VEC has always checked random applications for accuracy. But now, Walton says, they're cracking down. 20 additional investigators check things like whether an applicant really sent that resume to the company they said they did. And they speeded up their access to the National Directory of New Hires. Employers must report new hires on this web based database.
Walton said, through a crosscheck, if the VEC sees a new hire is still collecting unemployment benefits, the VEC can stop payments faster.
"What we've done recently is built in a tool that will access that state directory quicker. So instead of a three to four week period, it's may be a one to two week period," said Walton.
Walton said they've already reduced overpayments from 17.7 percent last year to 14 percent so far this year, and they do work to get the money back.
"50 percent right now is what we're hitting," Walton told us was the VEC's current recovery rate. "It's fluctuated, 40 percent to 70 percent in any given year."
But those numbers aren't enough to please tax-paying business owner Lisa McSherry.
"This is an outrage. It needs to be corrected. And if the agency is not handling it appropriately, and if they can't, it needs to be outsourced," said McSherry.
People caught lying on unemployment applications have to pay the money back, and can face fines and jail time.
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