It Pays to be Behind Bars

36419135 - hands of criminal with handcuffs in the court room

For those of us on the outside of prison, we likely count our blessings that we are not donning an orange jumpsuit, following a strict daily schedule in our cells. The freedom to go to work, enjoy dinner in a restaurant or take a stroll around the park is priceless. According to an article on, some prison inmates found being behind bars almost worth the price, cashing in on undeserved benefit payments.

How do state and federal assistance programs make sure to exclude recipients of benefits after the recipients have arrived to jail/prison to serve time? It’s simple? the inmates go on a list, one for prisons and one for jails. At that point, it is up to the office personnel of the state or federal assistance program to compare the lists of inmates to their internal recipient lists to make sure the appropriate parties are removed. (This sounds like a simple enough process – no room for errors.) The New Jersey state comptroller’s office revealed a shocking situation involving nearly 20,000 inmates of both jails and prisons who received around $24 million total in benefits from government programs over a two-year period. One comptroller commented? ”The numbers are pretty significant. I think we were surprised by the magnitude of numbers.”

The investigation found large receipts of benefits distributions, including $39,000 to an inmate locked up for drug offenses, $25,000 to an inmate locked up for unlawful possession of a weapon and $37,000 to an inmate convicted of sex offenses to a child. (Let’s do that math – three people who are doing time for inexcusable acts receiving a total of $101,000 in a short period of time.) As part of the 14-page report from the New Jersey Comptroller’s office, the report explains that some state officials running programs ranging from unemployment benefits to food stamps did not cross reference the lists of jail and prison inmates to their internal recipient lists properly, some refusing to cross reference at all. An audit showed issues with agencies revealing more than $10 million in unemployment benefits, $7.1 million in Medicaid, $4.2 million in food stamps and $1.2 in workers’ compensation benefits that were paid to inmates. The comptroller’s office is making efforts to work with state agencies to recover the lost benefits, although it won’t be a straightforward process. They are teaming with state and federal agencies to enforce tougher controls to prevent such distribution problems.

Kudos to New Jersey for teaming up with the feds to crack down on this problem. More states need to take this approach. This is the type of large scale fraud we need to crackdown on nationwide. We shouldn’t be paying our criminals to cash in behind bars.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Audit Says 20,000 Inmates were Mistakenly Paid Nearly $24M in State and Federal Benefits,” written by Ryan Hutchins and published by on May 29, 2013.

While one inmate was locked up for more than a year for a drug offense, the unemployment benefits were coming in — all $39,000, and then some.

Another serving time for unlawful possession of a weapon started receiving unemployment only after spending three months in prison, and was paid more than $25,000 over a year.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.