An report from State Auditor Mary Mosiman finds Iowa Workforce Development paid out more than $909,000 in unemployment benefits that should not have been paid. Mosiman says her office started investigating at the request of the former IWD director.
“She was letting us know about an internal investigation that they were doing regarding improper disbursement issued as a result of fictitious employer scheme carried out between February 2013 and January 2015,” Mosiman says. “Then, while this review was taking place, a separate concern was identified. So, we have two different concerns going on here.”
The second issue involved a telephone system malfunction which occurred on March 8, 2014.
She says first were able to dig deeper into the fake businesses. “We did verify there were a total 20 fictitious employer accounts. And we verified that the total loss for that situation was a little over $97,000,” Mosiman says. Mosiman says the telephone issue came to light in a legislative hearing, and her office found it was a bigger problem that originally thought.
“IWD had identified a total of 448 claimants for a dollar amount of a little over $96,000s. But, once we came in and started our review, we identified an additional 410 claimants for a total of 858 claimants, and a dollar total of a little over $184,000,” Mosiman explains. So the total loss of from the telephone system malfunction was around $723,000.
The State Auditor says her report includes several recommendations for strengthening the controls at IWD and ensuring this doesn’t happen again. “Just knowing that there is this type of situation that can take place, it is very important — not just in Iowa, but in any state — to make sure as things like this are set up that you have things set up to identify potential red flags,” according to Mosiman. Mosiman says federal and state law enforcement has been made aware of the fake businesses which collected the unemployment.
Teresa Wahlert was the director of IWD when the fake companies and the phone issue came up. She retired in January of 2015 after he reappointment to the job looked to be in trouble in the Iowa Senate.
Mosiman’s full report: IWD State Audit PDF