Fraud of many types costly to Ohio taxpayers

Ohio is under an attack that costs innocent parties an unknown and obscene amount of money each year.

"I don't even want to guess," Keith Faber, Ohio's auditor, said. "Lots. Billions and billions."

Digital safety was one of the topics on everyone's minds when the state's top financial watchdog visited North Central Ohio on Wednesday.

Faber spoke at the Richland Area Chamber of Commerce and Ashland Main Street. The meetings were intended to help ensure everyone was living happy, high-quality lives.

Faber is up for reelection. On the Nov. 8 ballot, the Republican is being challenged by Democrat Taylor Sappington.

Tasked with scrutinizing state's governments

His job is a little less glamorous than those of the four other statewide elected officials, but in some ways it's the most important.

The mission of his office reads: "As Ohio's chief compliance officer, the auditor of state makes Ohio government more efficient, effective and transparent by placing checks and balances on state and local governments for taxpayers."

He has a staff of more than 800 who scrutinize the records of cities, counties, villages, townships, schools, state universities and public libraries as well as all state agencies, boards and commissions.

Sometimes, he finds criminals in the state's government and successfully prosecutes them, sending them to prison for lengthy periods of time.

Lengthy prison times for corrupt officials

"A lot of people don't know the auditor has a criminal division," Faber said. "We have men and women with badges and guns."

He has prosecuted 90 people "for lying, stealing and cheating" since he took office in January 2019.

One of them was former Pike County Sheriff Charles Reader, who in March 2021 was imprisoned for three years "for literally stealing from the evidence room."

Another was a former Clark County employee who was sentenced this year to seven years prison after he was convicted of stealing $1.8 million "by creating fake companies and invoicing payments."

"Those are the kinds of things we do," Faber said.

Unemployment fraud costly to Ohio taxpayers

An even greater threat to the Buckeye State, though, is a form of guerilla warfare against the financial wellbeing of individuals, companies, organizations and governments.

Unemployment fraud cases rose to prominence in his office over the summer of 2020, most of which he said were a biproduct of the COVID-19 pandemic. He said fake claims "were swamping the system."

Over the following year, "about $300 million" of unemployment claim fraud was uncovered statewide.

"We found out that, low and behold, they had known about fraud longer than they had told us," Faber said. "So we launched a massive fraud overpayments audit. Our audit revealed at the time − remember, we audit one year in arrears − found about $3.8 billion in fraud overpayments."

That number has since climbed to more than $6 billion in state money that has been paid out in fraudulent unemployment claims.

"A lot of that money, we're never going to see again," Faber said. "That money is gone."

Faber said measures put into place after the fraud was discovered have reduced new fake claims from about 100,000 to just a few hundred each week.

"The bad news is it cost our kids and grandkids," Faber said. "Largely all of this was underwritten by the federal government."

Nationally, he predicts as much as $200 billion has been stolen in recent years through unemployment fraud.

'Cyber fraud is going to grow'

Hackers are sometimes slowed but are never defeated. The state's auditor said everyone should be vigilant in their defenses regardless of whether they are on company time, doing volunteer work for a nonprofit, or handling personal accounts.

"Cyber fraud is going to grow," Faber said. "Everyone one of us is subject to cyber fraud and cyber attack every single day."

He encourages all entities in the state to increase their digital security, spend more time training anyone who handles accounts, and, if possible, get feedback from white-hat hackers who can help them identified any network vulnerabilities.

"It's not a question of if you're going to get hit, it's a question of when," Faber said.

He said he recently spoke to a government agency in Greene County that had been taken for $86,000.

"The port authority down there had been hacked," Faber explained. "The port authority sent an email to the county auditor asking them to redirect their support payment to a new bank account."

That email, though, had come from a fake address that included one letter more than the real one, and looked very legitimate.

"I would not have caught that," Faber admitted. "That $86,000 is gone."

The auditor recommends all such requests only be accepted after an in-person visit.

Another scammer cost a township fiscal officer his job after robbing taxpayers of $1.2 million.

That officer had been tricked into typing account information into "a dummy face screen." Thinking the system must be experiencing technical difficulty, he gave up and decided to try again later. By the time he realized that afternoon what had happened, the money was gone.

Faber's office helped that township recover all but $200,000 of what was taken. In one sense it was a win, but a lot of money was still stolen from the taxpayers.

"He didn't run for reelection," Faber said.

Cyber attacks can come in many forms, but most start with a fraudulent email. The auditor said everyone should be on guard at all times.

"Unless you know who sent you a link, don't open it," Faber said. "Go to a secure site and open it, if you need to. But if you don't know it, don't open it."

ztuggle@gannett.com

419-564-3508

Twitter: @zachtuggle

This article originally appeared on Ashland Times Gazette: Faber drives home point: Not being digitally secure is costly