Taking Generosity Too Far

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Unemployment benefits were created to help people who recently lost their jobs manage expenses as they look for new opportunities. (Therefore, it should go without saying that in order to qualify for unemployment insurance, the person applying for the benefits should be unemployed.) MLive.com tells the story of a Michigan roofing company that ordered its employees to apply for unemployment benefits while they were actually working on a part time basis. (That’s a bit of a twist.)

According to the story, the part time roofing company employees were instructed to ”bank” their hours in the winter months until they added up to one full 40-hour week of pay. (During that time, the employer falsely certified to the Unemployment Insurance Agency that the workers were unemployed.) At that point, the employer would pay the workers and inform the UIA that they had worked for one week. This practice prevented the loss of multiple weeks in unemployment insurance benefits. (The part timers collected more than $100,000 over five years.)

Apparently, this was not the only scam going on under the company’s roof. The company was also in trouble for requesting that employees lie about where they became injured so that accidents experienced on the job would not be recompensed through workers’ compensation insurance. (This cost multiple health care plans more than $70,000 over two years.)

U.S. Attorneys alleged that by having their employees report injuries as ”off-the-job” incidents, the roofing company owners were able reduce workers’ compensation premiums. As a result, the company maintained a low ”incident rating,” enabling the business to bid on contracts that they would have been disqualified from bidding on with their actual number of workplace accidents. (It appears that this company specialized in building roofs over their house of lies. They may have kept out the elements, but not the government.)

The company owners pleaded guilty to mail fraud and health care fraud and must pay $174,267 in restitution to the Michigan Employment Security Commission as well as several health care providers. The company may also face up to $1 million in fines and five years of organizational probation.

The owners of this company built an extensive fraud conspiracy under the guise of generosity to their employees. What they failed to consider is that the government is only generous to those who qualify for help, not to those who intend to steal funds they do not deserve.


Source: Today’s ”Fraud of the Day” is based on an article titled, ”Roofing company pleads guilty in unemployment fraud case over ‘banking hours’,” written by Kalil AlHajal and published by MLive.com on Nov. 3, 2015.

An Orlando man who stole hundreds of federal tax-refund checks was sentenced this week to more than five years in prison.

Michael Carvalho’s bank accounts showed more than $2.2 million, but federal prosecutors say it wasn’t actually his.

The money came from refund checks belonging to unknown victims, whose signatures were forged, according to the U.S. State Attorney’s Office.

Carvalho would deposit the money into at least 11 personal and business bank accounts in an attempt to hide where the money actually came from, federal court documents state.

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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.