WASHINGTON COUNTY, Pa. — Washington County resident Bob Gilbert is one of the thousands of fraud victims in Pennsylvania whose unemployment compensation benefits were stolen last year.
“I just expected for money to start showing up. When it didn’t that’s what put up the red flag,” Gilbert told 11 Investigates.
Gilbert’s Pennsylvania Unemployment Compensation account was hacked in September of 2021 and his payments were diverted to a fraudulent bank account. Making matters worse, this year, he got a tax bill for nearly $20,000 he didn’t receive.
“I’m not paying taxes on what they say I’ve been paid, I won’t,” Gilbert said defiantly.
Taxed on money not received
When Gilbert got his 1099-G form from the government, which is supposed to show the amount of money he received in unemployment compensation, it showed he was paid $18,094 in 2021.
The only problem is he didn’t get that amount. Instead, he says he only got $2800, just five of the 26 payments he was supposed to receive.
“My money disappeared. My account was hacked and the money went into a different account,” he explained.
At first, Gilbert had no idea his account was hacked. It actually happened in September of 2021, two months before he was even approved to receive benefits. At the time, he was waiting for a determination letter from PA UC to say he qualified. It took five months and when he finally got the letter in November of 2021, he expected the money to follow. When it didn’t, he realized something was wrong.
“I went back to my dashboard (on his UC account) and found out that my bank account was changed,” Gilbert said.
What he discovered was on September 24, 2021 at 7:02 p.m., someone changed his banking information to a fraudulent account at JPMorgan Chase.
Recipients not notified accounts hacked
Gilbert, like so many others, had no idea his account was hacked.
As 11 Investigates first reported last year, we discovered several unemployment recipients had their accounts hacked in a suspected mass breach of the PA Unemployment Compensation System. Many didn’t realize it happened until seeing our reports.
“I received no correspondence related to that account change,” Michelle, whose account was also hacked, told 11 Investigates in January.
As we discovered, the PA Department of Labor and Industry (L & I) did not notify most recipients when their accounts were hacked, later citing an ongoing investigation. Only after our reporting did the state finally acknowledge a likely breach and offered all recipients free credit monitoring.
Gilbert was among those who didn’t realize he was likely part of the mass breach, until seeing our reports.
“Thank goodness for WPXI, honest to goodness,” he told 11 Investigates. “I wouldn’t know about it. I wouldn’t have known anything about it at all.”
What to do about it?
After getting a big tax bill on money he had yet to receive, Gilbert was frustrated again.
“I’m not going to pay it!” he said, emphatically.
He tried multiple times to call PA unemployment customer service to find out what to do, but kept getting a busy signal. Finally, he reached out to his state representative Tim O’Neal, (R) Washington County, for help.
“It’s obviously a huge issue and a huge headache that we have to figure out,” O’Neal told Channel 11.
O’Neal’s staff got through to L & I to get answers.
“I’ve been told you can feel comfortable filing your taxes on just the money you received,” O’Neal said.
He said his office was assured by the state that recipients would not get in trouble with the IRS for only paying taxes on the amount they received.
The IRS website does say “ONLY include income you received” on your taxes, but you do have to request an adjusted 1099-G form from the state and file a fraud claim.
Just this week, Gilbert finally got the remainder of the unemployment benefits he was owed, about $15,000, which he’ll have to pay taxes on next year.
For his taxes this year, he’s going to follow what the IRS website says and just report the benefits he received in 2021, but he’s still a little wary.
“I don’t trust anyone at this point!” he said, concerned that something will, once again, go wrong.
Fraud & delays cited in new report
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A new report by the Pennsylvania Independent Fiscal Office shows an estimated $570 million in traditional unemployment compensation dollars were stolen in the state, since the pandemic started through September of 2021. That amounts to an estimated fraud rate of nearly 7-percent. (WATCH THE VIDEO ABOVE FOR DETAILS).
Across all UC programs, both federal and state, the IFO report estimates fraud losses at more than 6 billion dollars, through the same period. That amounts to an estimated fraud rate of nearly 13-percent.
The report also validates the frustration so many unemployment recipients have expressed to 11 Investigates over delays in getting their benefits. It shows payment timeliness fell from 92% prior to the pandemic to 45% in the most recent quarter. That means fewer than half of all unemployment recipients got their benefits in a timely fashion.
It was even worse for claimants who were waiting for non-monetary decisions regarding eligibility—
Things like whether a claimant got severance pay or was unemployed through no fault of their own. In cases where L&I staff had to investigate an issue, getting benefits in a timely fashion fell from 77-percent to just 22-percent. As of October 2021, nearly 100,000 claimants were still waiting for a nonmonetary decision.
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