Audit: More than $47M in fraud uncovered, some linked to Cooper administration

The auditor said only $12.1 million was recovered of $47.2 million in fraud overpayments reported. Boliek, in his message within the report, said he was also concerned about “the lack of urgency from the Department of Commerce, and the Office of the Governor, to fix the problem.”

“Government waste comes in many forms, and in this case, it’s occurring through unemployment insurance,” Boliek said. “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.”

The auditor said a 10% improper payment rate is the standard by which state programs are held by the U.S. Department of Labor. From April 1, 2021, to March 31, 2025, the estimated improper payment rate was 22%, a solid 4% higher than the rate reported by a state audit in 2022. For nine years, the state’s rate has exceeded the national average.

Cooper, chasing a U.S. Senate seat in November against Republican Michael Whatley and Libertarian Shannon Bray, became governor with an election win in November 2016 and repeated in 2020. The fifth-decade Democratic politician appointed Tony Copeland to lead the Commerce Department from 2017-21, and Machelle Baker Sanders from 2021-25. First-term Democratic Gov. Josh Stein appointed Lee Lilley in January 2025.

In another audit, from July 1, 2024, to Nov. 30, 2025, first unemployment benefit payments were not issued 28% of the time in a timely manner. The late payments totaled $12.2 million. The rate is an improvement from a 2024 audit showing 43% not sent in a timely manner.

Since 2005, the state ranks No. 41 nationwide in timeliness, Boliek said.

“Losing a job can be a traumatic event that hurts entire families,” said Boliek. “Employers pay into our unemployment benefits safety net, and yet for 15 years benefits haven’t gone out the door when they should. People who lose a job still have mortgages to pay and bills to finance. As the follow-up audit from the professional team at the State Auditor’s Office shows, slight improvements have been made, but it’s not fair for the government to continually shrug its shoulders at such a longstanding problem.”

The auditor says work search requirement errors, benefit year earnings errors and separation determination errors are the primary cause of overpayments for North Carolinians through the years. In an audit in 2022, the Division of Employment Security was recommended to require work search activities reported within the weekly certification process to cut down on mistakes.

The agency got a federal grant to assist that August yet didn’t implement the online work search repository until this past December. The audit says the Division of Employment Security failed to identify a root cause for the delayed implementation.

Not all of the audits tie together to Boliek. The state auditor from January 2009 to Dec. 15, 2023, was Democrat Beth Wood, a well-respected analyst by both sides of the political spectrum an licensed certified public accountant. Cooper appointed lawyer Jessica Holmes as her successor.