Ohio unemployment overhaul on hold by Department of Job and Family Services after indictment

Jessie Balmert, Cincinnati Enquirer
·2 min read
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An overhaul of Ohio's unemployment system is on hold following the indictment of two Sagitec partners.
An overhaul of Ohio's unemployment system is on hold following the indictment of two Sagitec partners.

Federal investigators say two executives from the company that Ohio hired to overhaul its unemployment compensation system stole trade secrets from their former employer.

The news prompted the Ohio Department of Job and Family Services to put the state's unemployment fixes on hold for now.

In 2018, Ohio awarded Minnesota-based Sagitec Solutions an $86 million contract to update the state's unemployment compensation system. The overhaul was planned before Gov. Mike DeWine closed businesses to prevent the spread of COVID-19 in 2020, ballooning the unemployment rolls and forcing the state to spend millions on other contractors.

In late August, Sagitec partners David Gerald Minkkinen and Sivaraman Sambasivam were indicted and accused of stealing trade secrets from their former employer Deloitte, according to court records filed in the Southern District of West Virginia.

In 2015, Sagitec won a contract with West Virginia and Maryland to update their unemployment systems. Federal investigators say Minkkinen and Sambasivam used Deloitte materials to win that bid. It's not clear if Ohio is in a similar spot.

Kentucky unemployment officials awarded a contract to Sagitec in May but went months without hearing back from the vendor, according to the Louisville Courier-Journal.

Will the indictment affect Ohio's ability to fix unemployment system's problems on time?

Sagitec isn't done with the job, announcing in a May news release that it completed the first phase of collecting unemployment taxes. The next phase would fix the website that most Ohioans use to claim unemployment benefits. The whole project was slated to be completed in fall 2023.

"We’re aware of the allegations and have put our project on hold while we consider the implications to our unemployment insurance modernization project," Ohio Department of Job and Family Services spokesman Bill Teets said.

A Sagitec spokesperson said the company was confident in its ability to meet its ongoing commitment to customers, including the state of Ohio. The company conducted an internal investigation, which it shared with federal investigators, and strengthened compliance protocols.

“Sagitec was not indicted in this matter and there’s no indication that any other employees are the targets of the government’s investigators," according to the spokesperson. "While we are actively working with the government on this matter, we continue to operate normally."

Jessie Balmert is a reporter for the USA TODAY Network Ohio Bureau, which serves the Akron Beacon Journal, Cincinnati Enquirer, Columbus Dispatch and 18 other affiliated news organizations across Ohio.

Sagitec Case by Jessie Balmert

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This article originally appeared on Cincinnati Enquirer: Ohio unemployment overhaul on hold because of federal case