State audit uncovers nearly $50 million in North Carolina unemployment fraud
North Carolina released two audits revealing nearly $50 million in unemployment benefit fraud over recent years. The reports show that out of $168.8 million in overpayments made by the Department of Commerce from April 2021 to march 2025, $47.2 million was fraudulent, with only $12.2 million recovered. State Auditor Dave Boliek criticized government inaction, especially highlighting issues during former Governor roy Cooper’s administration, and emphasized the ongoing problem of public sector waste. The audits also indicated that North Carolina’s improper payment rate has consistently exceeded the 10% threshold over the past nine years,mainly due to errors related to work search requirements,benefit earnings,and separation determinations.
These findings coincided with a U.S. Department of Labor letter urging all states to take immediate action against unemployment insurance fraud, waste, and abuse. The department criticized several states, including New York, Illinois, and California, threatening to withhold funds if they fail to address fraud issues. Authorities reaffirmed their commitment to enforcing accountability, recovering stolen funds, and ensuring benefits are only received by eligible individuals.
North Carolina released a pair of audits on Wednesday, finding nearly $50 million in unemployment benefits fraud in the state in recent years.
The North Carolina Office of the State Auditor released two reports stating that $47.2 million of $168.8 million in unemployment benefit overpayments made by the Department of Commerce between April 2021 and March 2025 was fraudulent. That department’s Division of Employment Security only recovered $12.2 million in fraud overpayments during that time, according to the audit. State Auditor Dave Boliek criticized state leaders for the fraud, which occurred primarily during former Democratic Gov. Roy Cooper’s administration, asserting that “it’s not fair for the government to continually shrug its shoulders at such a longstanding problem.”
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“Government waste comes in many forms, and in this case, it’s occurring through unemployment insurance. Not only was there a higher rate of improper unemployment benefits, but there was also more than $47 million in fraud overpayments made during the scope of our audit,” Boliek said in the report.
“The North Carolina State Auditor’s Office will continue to serve as our state’s fiscal watchdog, assessing programs and sounding the public alarm to push for improvement,” he continued. “Ignoring problems for years and missing basic public expectation cannot continue to be tolerated.”
North Carolina’s improper payment rate for unemployment benefits “has routinely” exceeded the 10% limit and the national average for the past nine years, according to the report. The primary causes of overpayments in North Carolina have historically been work search requirement errors, benefit year earnings errors, and separation determination errors, it said.
The audits were released the same day the U.S. Department of Labor sent letters to the governors of all 50 states and territories, demanding “immediate action to combat fraud, waste, and abuse” within the unemployment insurance program.
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“The days of excuses are over,” Labor Department Inspector General Anthony D’Esposito said. “States that fail to protect taxpayer dollars should expect consequences. Acting Secretary of Labor Keith Sonderling and I will use every available enforcement tool to demand accountability, recover stolen money, and ensure unemployment benefits only go to eligible Americans.”
The Labor Department particularly slammed New York, Illinois, and California over fraud concerns. Acting Labor Secretary Keith Sonderling and D’Esposito threatened to withhold administrative funds from those states and others “for the first time in history” if fraud challenges are not tackled, in order “to ensure compliance in protecting UI system integrity and safeguarding taxpayer dollars.”
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