Report: NJ job claim fraud reaching $25M yearly

July 7, 2010 4:34:55 AM PDT
Tough economic times mean more unemployment claims for New Jersey to process - and that has meant a spike in fraudulent claims by people trying to exploit the system.

New Jersey has paid out nearly $100 million in unemployment claims since the beginning of 2006 to people who weren't entitled to them, according to a report in The Star-Ledger of Newark. State labor officials told the newspaper that because of the time and difficulty involved in finding violators, about one-third of fraudulent claims are never recovered.

The claims most commonly come from laid-off workers who fail to report new jobs or who work off the books without reporting income.

"Most people we talk to say, 'Yeah, I know I wasn't entitled to those benefits, but I really needed the money,"' Deputy Attorney General Scott Patterson, who oversees the prosecution of labor-fraud cases, told the newspaper.

Labor officials said bogus claims amounted to less than 1 percent of total claims paid out last year.

The number of fraudulent claims rose 40 percent between 2006 and 2008, then dipped last year. But bogus claims appear to have risen again in the first quarter of 2010, when $7.25 million was paid out.

The state's labor department relies on tips from the public and on a quarterly cross-check of records. In many cases, claimants repay the money after being notified by letter, but the department has the power to withhold wages or assets from property sales, according to Ron Marino, the department's assistant commissioner.

Other cases are referred to the state Attorney General's Office for prosecution and can take years to resolve. This spring, the department closed cases against a 53-year-old Burlington County woman and a 41-year-old Gloucester County man who collected their benefits between 2002 and 2006, before the current recession began.

Patterson said his department handles between 50 and 70 employment fraud-related indictments per year. Suspects usually are charged with third-degree theft by deception and fourth-degree falsification to authorities.

Some people who file bogus claims rationalize it by considering it a victimless crime, said Jef Henninger, a lawyer who has represented defendants in unemployment claim cases.

"It's one of those things where they hope they don't get caught," Henninger said. "All they know is today they're feeding their family."