Over the past two years, 475 Arizona prisoners collected $1.1 million in unemployment benefits while sitting in their cells.

On Feb. 8, the state Department of Economic Security found the 475 individuals by cross-matching lists of their beneficiaries and people incarcerated with the state Department of Corrections, said Tasya Peterson, communications director with DES.

On Feb. 22, DES began trying to recapture the $1.1 million in overpayments from January 2010 to January 2012.

DES presently can not report how much money they’ve collected and from who, but they are seeking collection in a number of ways including offsetting future benefits, seizing federal and state tax returns, and working with the Attorney General’s office to prosecute those who have collected enough benefits to constitute criminal unemployment fraud, Peterson said.

“In cases of fraud where the amount of the overpayment is significant enough to reach criminal prosecution level, we will get a court order for restitution,” Peterson said.

DES is now in the process of checking its unemployment benefit holders against those in county jails, “to receive similar information,” said Kevan Kaighn, another media spokesman with DES.

Following this discovery, various state agencies are scrambling to prosecute fraudulent collections and prevent future abuse.

Gov. Jan Brewer’s office conceded that “while no government program is foolproof,” she’s “encouraged that the Department of Economic Security and Department of Corrections are cooperating with the Arizona Attorney General’s Office to ensure that any individuals who gamed the system in this manner are prosecuted,” according to a prepared statement issued by Matthew Benson, communications director the Governor’s office.

Last year, data from the U.S. Department of Labor revealed Arizona had the 4th highest rate in the nation for improper unemployment payments, and had given out more than $434 million incorrectly in the past three years.

How this actually happened is complicated, officials said but DES acknowledges that there was nothing in place to prevent this fraud in the past, or distinguish between a prisoner and one of the other 99,000 people claiming unemployment in Arizona every week.

When a check is issued to a prisoner, family members can deposit the checks in the prisoner’s bank account, said Bill Lamoreaux, spokesman with the Arizona Department of Corrections.

Before the check is deposited, “inmate banking protocols” demand the issuing agency —in this case DES—address “eligibility concerns.” But DES officials say they have no way of knowing if someone is in jail.

Once the issuer of the check confirms the validity of the check, it’s cashed. DOC doesn’t have the authority to deny the check, he said.

“We can’t say that they’re eligible, DES has to say that they’re eligible,” Lamoreaux said.

Peterson said that the reason those checks were cashed was because there was no way to know a person was incarcerated in the system when they were issued unemployment checks.

“Previously, the process to exchange this data between the two agencies’ systems was not in place and therefore we were not able to identify these claimants unless they failed to file their weekly claim,” Peterson said.

That cross check process was only made available in January, Kaighn said.

But Peterson said DES now has put precautions in place to make sure this doesn’t happen again.

“We will be cross matching our UI database with the Department of Corrections inmate database weekly to identify these issues more proactively,” Peterson said.

DOC echoed the sentiment of cooperation.

“The Department continuously works with various entities to identify and stop benefit fraud from occurring in our complexes,” Lamoreaux said.

Overall, prisoners collecting unemployment is part of a larger trend of improper unemployment payment in Arizona. A report from the U.S. Bureau of Labor Statistics showed fraudulent overpayment to people not “able and available” for work (such as in the hospital or in jail) cost Arizona an estimated $4.4 million in 2010 alone.

The U.S. Department of Labor, the federal agency who contributes to unemployment benefits, and who commissioned these reports on fraudulent overpayment, did not immediately return calls for comment but said they were looking in o the matter.

This discovery comes as part of a wave of similar findings by other states in the past few months—including California, New York, Wisconsin, Pennsylvania, and Missouri. In one case in Los Angeles, Carlos Granda at KABC-TV reported an inmate’s two girlfriends allegedly cashed $20,000 in checks over a year and a half—then the inmate and other gang members then used the money in jail.

Officials said they are working as quickly as they can to collect the payments and keep prisoners from getting paid to sit in jail in the future, but it’s unclear how long it will take.

“It is difficult to estimate the length of time it will take to recoup all funds paid,” Peterson said.

Mejdrich is a senior at the University of Arizona and is the Bolles Fellow this semester covering the Legislature. The fellowship was named to honor former Arizona Republic investigative reporter Don Bolles who was assassinated in the line of duty.