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Credit card companies and financial institutions are typically the most common organizations targeted by identity theft, but government agencies are also seeing an increase in the crime as well. A Brownstown Township, Michigan man defrauded the State’s Unemployment Insurance Agency (UIA) out of more than $726,000. He committed unemployment fraud by submitting online claims for unemployment benefits he didn’t deserve.

Michigan’s UIA provides unemployment benefits to eligible workers who are out of work due to no fault of their own, while meeting other eligibility requirements of State law. The UIA payments, which are typically funded by employer-paid taxes in a majority of states, are intended to provide temporary financial aid until another job can be found. (The payments are not intended to provide fraudsters with an extra source of income.)

Court records show that the Michigan man masterminded a sophisticated scheme using five fictitious companies and more than 114 identities to carry out his ruse. Over four years, he systematically obtained the personally identifiable information (PII) of the victims, then used that data to submit fraudulent claims for unemployment compensation benefits online. (Much of the PII was stolen, while some of the identities belonged to individuals who also participated in the scheme and received a cut of the benefits.)

Today’s deceptive fraudster hid behind his fake corporations and did not notify the victim that their unemployment claim had been received. (Normally, if an unemployment claim is received, the employee requesting unemployment benefits would be notified of the receipt of their claim by their previous employer. Since the company was fake, the victims were never notified.)

The 50-year-old Michigan man pleaded guilty to unemployment fraud and was sentenced to five years in prison. This fraudster’s crime left a large number of identity theft victims to pick up the pieces of their ruined credit report. (This serious crime usually takes victims years to restore their credit.) It looks like this fraudster will experience unemployment for real over the next five years. Instead of receiving unemployment benefits, he will receive a just punishment.

So how can you protect your identity from being used to commit unemployment fraud? Michigan’s UIA offers these telltale signs that something may be amiss:

  • You attempt to file an unemployment claim, but one already exists under your name.
  • You receive an IRS statement of benefits collected (Form 1099G) from Unemployment Insurance.
  • You are notified by your employer that a claim for benefits has been filed although you are currently employed.
  • A request for information from Unemployment Insurance has been made under your name.
  • You receive an IRS letter about underreporting benefits that you have supposedly received.

Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, “Brownstown Man Sentenced to 5 Years’ Imprisonment for Unemployment Insurance Fraud,” released on December 1, 2017.

A Brownstown Township man was sentenced to 5 years in prison today after pleading guilty to defrauding the Michigan Unemployment Insurance Agency out of over $726,000, announced Acting United States Attorney Daniel L. Lemisch.

Lemisch was joined in the announcement by Special Agent in Charge James Vanderberg, Department of Labor – Office of Inspector General, Special Agent in Charge David P. Gelios, Federal Bureau of Investigation and Wanda M. Stokes, Director, Michigan Talent Investment Agency, Unemployment Insurance.

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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.