Fake People Are Wasting Taxpayers' Real Money

Posted by Stephanie Mau

on February 6, 2015

What Happens When a Non-Existent Person Gets Fired From Their Job?

stock illustration person in boxAccording to the current situation in North Carolina, the punchline to this joke is… they still get unemployment benefits.

The state’s Division of Employment Security has been cracking down on their unemployment claims for the past year and a half, and their results have found that while there are more than 250,000 unemployed individuals in the state, the amount of fake unemployment claims filed by fraudsters may be making it seem like even more.

During their investigation, they found 105 fake employers and over 600 fake unemployment claims by “people” who “worked” for these “employers.” (Special emphasis on the air quotes.) This came to a grand total of $5.2 million in undeserved payments that the Division of Employment Security managed to put a stop to.

With their recent efforts to crack down on fraudulent claims, the company has managed to flag certain fake companies before they got their hands on any unemployment benefits. One such case was BH Hauling, which tried to file a claim with an address that actually belonged to a vacant lot in Raleigh, while another non-existent company they caught, Hall Trucking Service, claimed that they were located at what was in reality a shelter for troubled youth.

However, not every case was caught in time – for the two owners of Optimum Touch Lawn Care Services in Charlotte, a company that claimed to have 26 employees with a yearly revenue of $910,000, their short-lived scheme made them $194,000 before anyone caught on. How did they do it? By claiming that they had “laid off” some of their employees (that never existed in the first place), by using fake identities that they had stolen from others. Fortunately, the two owners have now been caught and pleaded guilty in federal court just last year.

Meanwhile, those who own actual businesses are more than just a little annoyed that fake businesses are gaming the system and essentially stealing from taxpayers. It’s a good thing that the state’s Division of Employment Security is finally opening their eyes to the fraud unfolding in front of them and stopping fraudsters in their tracks.

Put a Stop to Fraud and Avoid Wasting Your Company’s Earnings

Now that we’ve talked about how costly unemployment fraud can be, let’s talk about how costly fraud at your workplace can be. Last year, we told you that in cases where fraud was detected by accident, companies lost an average of $325,000. However, for cases where the fraud was revealed with a tip, it only cost the company $149,000.

That’s a lot of money that you could potentially save just by implementing an ethics reporting program—money that could mean protecting your hard-working employees from being the innocent victims of fraud.

Isn’t that enough reason to learn a little more about what a whistleblower culture means today?

eBook: 5 Steps to Create a Whistleblower Culture