Most unemployment fraud stories are simple: the fraudsters say they aren’t working while they really are. Boom, done. But no no, the fraud is getting more complicated, as we’ll see in today’s Fraud of the Day from the Sentinel-standard.com.
The article reports that three defendants created an elaborate scheme to defraud Michigan’s unemployment system. They established 19 fake companies with 170 fictitious employees. They then ”laid off” several non-existent employees, who filed very real claims for unemployment benefits. The unemployment compensation funds were then sent to the addresses of abandoned homes that the fraudsters listed on the phony claims. The crooks then picked up the cards at the abandoned houses. The fraudsters withdrew tens of thousands in benefits for their own personal use. (Too bad they are criminals. It sounds like they have a real knack for business. They could be helping society, instead of ripping off the system.)
Of the 170 fictitious employees listed with the fake companies, 40 were names associated with the Michigan Department of Corrections. (Shocking!) At least 16 were incarcerated (three were serving life sentences). The others were innocent identity fraud victims with no knowledge of the criminal enterprise.
The defendants received varying sentences, commensurate with their roles in the scam: one defendant has been sentenced to three to 20 years in prison and ordered to pay $159,908.60 in restitution and court fees; the second defendant was sentenced to 90 days in jail, five years of probation and $54,136.66 in restitution and court fees; and the third defendant was sentenced to two years of probation and ordered to pay $97,771.84 in restitution and court fees. (Almost would’ve been easier to get a real job.)
Congratulations to Michigan on their great work in finding the fraud and successfully prosecuting the fraudsters. But the state’s work isn’t over. Now, it faces an arguably tougher job: recouping the stolen funds. This is a common challenge for states with the need to collect unemployment funds from fraudsters or simply from those who have inappropriately overpayments.
There’s an old adage that says: ”you can’t get blood from a stone.” Well, sometimes it seems like it might be easier to get blood from a stone than unemployment funds from someone who has improperly received unemployment compensation. In some instances, states will simply have to cut their losses; in other cases, the state will be successful. What’s the difference between success and failure? Leveraging technology to score the likelihood that the debtor can and will pay. Technology helps states to prioritize cases, locate debtors and monitor databases for those who may be tougher to locate.
Are there any debtors out there that your agency is trying to find? If so, are you leveraging technology to find them?
Source: Today’s ”Fraud of the Day” is based on the article titled ”Three Sentenced in Massive Identity Theft, Unemployment Insurance Scam,” published by Sentinel-standard.com on August 15, 2012.
Michigan Attorney General Bill Schuette and Michigan Unemployment Insurance Agency Director Steve Arwood today announced three individuals charged with scamming taxpayers out of Michigan Unemployment benefits have been sentenced and will be required to repay approximately $160,000 in restitution. Jamaal Cann, 29, of Shelby Township, Kellee Norfleet-Cann, 27, of Shelby Township, and Darnell Bailey, 28, of Dearborn, all pled guilty to felonies and have been sentenced by Judge Mary Chrzanowski in Macomb County’s 16th Circuit Court.
”Unemployment Insurance is meant to protect Michigan families,” said Schuette. ”Anyone attempting to game the system and take advantage of Michigan taxpayers will be held accountable. We will continue to work with Director Arwood to eliminate fraud in our taxpayer-funded programs.”