Philadelphia inmates fraudulently receive thousands in unemployment

Over 1,000 inmates in Philadelphia received almost $350 a week in unemployment insurance, despite being ineligible to receive any benefits whatsoever.

In Philadelphia, crime pays — even behind bars.

An investigation by Philly.com revealed that 1,162 Philadelphia prisoners (13 percent of the city's prison population) received $344 a week on average in unemployment claims before a state agency discovered the scam and shut it down last month.

Prisoners are ineligible for unemployment benefits because they cannot actively pursue an outside vocation.

The Philly cons carried on the scheme for an average of 18 weeks, raking in over $7 million for themselves. Across Pennsylvania, the total could be much higher, as the same record-keeping loophole allowed all 34,500 county inmates in the state — not just Philly jailbirds — to collect unemployment checks.

In Pennsylvania state penitentiaries, there's a system in place to ensure that convicts don't receive state benefits like unemployment. Since 1997, when new inmates arrive at state facilities, state corrections officials match their Social Security numbers with the Pennsylvania Department of Labor and Industry to stop any benefits.

But this due diligence was never applied at the county level until last month.

City prison officials told Philadelphia Daily News columnist John Baer that they were unsure why a system hadn’t been established earlier to cross-check inmate records. The Pennsylvania Department of Labor and Industry and the Pennsylvania Department of Corrections also told Baer that they had no answer as to why thousands of ineligible men and women received benefit checks — millions of dollars that can never been recovered.

For inmates, receiving the checks was alarmingly simple. All they had to do was apply for unemployment insurance, which they or a surrogate renewed every two weeks over the phone. The convicts themselves never had to appear in front of a state official to confirm their status.

Prevention would have been easier if the unemployment checks came in the mail, because corrections officers open all prisoner mail, but Labor and Industry officials estimate that only 2 percent of unemployment recipients receive their money by parcel. The other 98 percent sign up for direct deposit. Under this system, inmates have unemployment insurance dropped into a personal account without anyone batting an eye.

Now, with a new cross-reference system in place, state officials say they saved $6 million in January alone, the Morning Call reports. Originally they thought they'd only save $12 million for the entire year.

Pennsylvania isn't the only state dealing with glaring holes in its prison and labor record-keeping systems. According to The Huffington Post, Illinois and Arizona recently dismantled schemes where prisoners bilked the states for upwards of $1 million per month in unemployment benefits.

In both states, like in Pennsylvania, the fraud was disturbingly simple. When direct deposits weren't issued in Arizona, family members would deposit them into the inmates' prison accounts. According to Tucson Weekly, prison protocols only called for officials determine the validity of the check. Once the check was confirmed, the Arizona Department of Corrections had no ability to block it from entering an inmate's account. The Arizona Department of Economy Security, who issued the checks, had no way of knowing the recipients were incarcerated before the state assembled a data sharing system last month.

In Arizona and Illinois, attorney generals are attempting to recover the fraudulent benefits by offsetting future benefits and in some cases, seizing federal and state tax returns. Arizona state attorneys said they will prosecute those who collected enough benefits to constitute criminal unemployment fraud.

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