New Jersey handed out $245 million in fraudulent payments under a supplemental program created to bolster unemployment benefits for people who lost their jobs because of the coronavirus pandemic, a government watchdog said.
New Jersey had the fourth highest amount of fraudulent benefits among the 19 states reviewed, according to a report by the Department of Homeland Security inspector general.
Fraud in the program, which offered an added $300 per week payment to the unemployed, occurred because the Federal Emergency Management Agency (FEMA), assigned to oversee the program, did not take steps to ensure that the funds were properly disbursed to eligible individuals, the report said.
FEMA officials acknowledged the problem in the program, which was established by executive order by then-President Donald Trump in August 2020. Officials said the agency has built internal controls to prevent a repeat.
Overall, the inspector general found, more than $3.7 billion in improper payments were made to 2.3 million recipients. The report found 140,766 people in New Jersey got the extra payments improperly.
Officials from the state’s Labor Department were not immediately available for comment.
Last, week, in a different report, the federal government’s overall estimate of pandemic-era unemployment benefits that were fraudulently distributed jumped to $45.6 billion, up from a previous estimate of $16 billion. People who filed for unemployment in multiple states, were in prison or were dead were among those who received fraudulent payments, the U.S. Labor Department’s Office of the Inspector General, said in a statement.
The state Labor Department didn’t immediately provide details on how much of the fraudulent benefits were attributed to New Jersey.
Massive enhancements to the unemployment program came from both the $3.1 trillion pandemic relief legislation passed under Trump and the $1.9 trillion relief package passed under President Joe Biden.
The FEMA program, called the Lost Wages Assistance program, was created by Trump with an executive order in August 2020 before supporters and guests at his Bedminster golf club. The program was designed to provide supplemental payments over and above regular unemployment insurance for those who lost their jobs or were furloughed during the coronavirus pandemic.
FEMA set up the new program in 11 days, and handed out the money to states to disburse through their own unemployment insurance offices.
The report said FEMA acted “without developing and implementing clear guidance for the program or verifying and monitoring...controls to ensure they prevented and mitigated improper payments.”
The state offices, meanwhile, “did not have sufficient controls to prevent fraudulent activities or overpayments, and they relied on self-certifications,” it said.
“Despite repeated warnings from the Department of Labor and our office that self-certifications are not reliably accurate and may lead to improper payments, FEMA did not require controls to mitigate the unreliability of self-certifications to determine claimants’ eligibility,” the report said.
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Jonathan D. Salant may be reached at jsalant@njadvancemedia.com.
Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on Twitter at @KPMueller.
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