Falsely Claiming UI Benefits: Is It Unemployment Insurance Fraud?
Updated : December 12th, 2022
Unemployment Insurance (UI) fraud is when someone collects UI benefits by providing false, unreported, or misreported information while filing a claim. Anyone who is filing a claim, reopening a claim, or certifying for UI benefits is legally responsible to make sure that they follow the requirements that are set by the law of the state that they reside in. Unemployment fraud can occur in more than one form, it could range from intended criminal activity to someone providing incomplete or inaccurate data that results in receiving UI benefits.
What Happens When You Falsely Claim Unemployment Benefits?
Making fake unemployment claims is considered to be Unemployment fraud and can lead to serious penalties and consequences. The penalties can range from monetary fines, penalty weeks of unemployment to serving a prison term.
Irrespective of whether the person commits unemployment benefits fraud intentionally, unknowingly, or even if it is a clerical error, the amount needs to be repaid to the state’s labor office. The labor office sends the concerned person a benefits overpayment notice that contains the details of how much unemployment benefits they owe the state. The details for repayment differ from one state to the other. If the person does not repay the money in time or set up a payment plan, the debt is transferred to a collection agency and may also show on one’s credit card report.
Certain states assess penalty weeks to people who indicate an intention to defraud the unemployment insurance plan. Penalty weeks refer to the weeks of unemployment benefits that the person may qualify for at any given point in future but will not be receiving it as a punishment for over collecting the benefits in the past. This system differs from benefits repayment in numerous cases. In penalty weeks, the person first pays back what he/she has fraudulently collected and then serves several weeks of unemployment without payment.
In instances where the state labor department has discovered that a person has intentionally set out to defraud the unemployment program, he/she can face a criminal prosecution for it. In such a situation, the case goes to criminal court where a judge reviews the evidence of the case against the accused to establish whether he/she is guilty of the intent of UI fraud. If the judge finds the crime to be severe and warrants it, the person may be given a monetary fine. The fine does not include repaying the overdrawn benefits, and it to be paid to the court.
In the severest cases of UI fraud, the guilty individual needs to serve prison time. This is usually given to those who exhibit numerous counts of fraud or defraud the state of large amounts through benefits received from illegal ways. The period of prison time differs according to the state law and the preceding judge’s discretion. The jail time usually varies from one year and can go up to five years as well.
Cases Where People Have Been Caught with Unemployment Insurance Fraud
Unemployment Insurance fraud detection can be done through a number of ways. Some of them include:
- New employers hire reports
- Quality Control Audits
- Public tips by internet, telephone or mail
- Claim Center Referrals
- Cross-matches with some government records
- Other investigative efforts
Mentioned below are a few unemployment fraud cases along with the verdicts of the presiding judges.
Unemployment Insurance Fraud in Ann Arbor, Michigan
Three individuals, Kenneth Dixon, Jamela Washington, and Natika Washington were convicted following a 5-day jury trial in Ann Arbor. The charges were related to unemployment identity theft where they fraudulently claimed unemployment benefits of other people.
The defendants were charged with the use of counterfeit access devices, theft of government money, identity theft, and conspiracy to commit those offenses. The evidence presented at trial determined that between October 2009 until April 2012, the accused were systematically involved in a conspiracy to obtain the personal information of unsuspecting victims, and then using that information to submit fraudulent online claims for unemployment compensation benefits.
The guilty verdicts of the three individuals were the cumulation of an expansive investigation into a conspiracy that victimized individuals by stealing their identities and defrauded the Michigan Unemployment Insurance Agency of more than $400,000. All three guilty individuals were sentenced to serve 10 years of federal prison time in September 2017.
Indiana Unemployment Insurance Fraud Case
William Hicks, 45, of Indiana was charged with unemployment fraud after which he pleaded guilty. The department discovered that Hicks was working and receiving wages while claiming unemployment insurance benefits through the agency records.
Hicks was sentenced to two years of probation in addition to repaying the benefits that were fraudulently claimed. The amount of falsely claimed benefits exceeded $38,000.
Unemployment Insurance Fraud Case, Miami
An Indiana Department of Workforce Development (IDWD) employee began to investigate Joseph Meier and found evidence that he was claiming unemployment insurance benefits while he was working and receiving wages.
39-year old Meier was ordered to pay back $12,607, to the state after he pleaded guilty of unemployment insurance fraud. Meier was sentenced to one year of probation and ordered to repay the amount of benefits claimed along with 8% of interest per annum for the benefits that were fraudulently collected.
Unemployment Insurance Benefits Fraud in Michigan City & Indiana
Leo Wilson, 51 of Michigan City was sentenced to 2 years of probation and ordered to repay the department $22,836.50 for the benefits that he had fraudulently collected.
Sherry Beoughter, 46, of Valparaiso was sentenced to 545 days of probation and ordered to repay $13,334.10 for the benefits that she fraudulently collected.
The IDWD’s unemployment insurance fraud investigation task force identified the pair. The force examines claims of individuals who provide false, misreported, or unreported information on purpose in order to fraudulently avail benefits.
Unemployment Insurance Fraud Case, Iowa
A Williamsburg man was convicted of unemployment fraud and was ordered to serve a 100 day jail term for defrauding Iowa’s unemployment insurance program. Paul Meade, 55, had been convicted of fraudulent practice in third degree.
Meade said that he filed for unemployment insurance benefits between December 27, 2015 and June 25, 2016. All through the period, Meade was being paid by Whirlpool Corp.
Meade pleaded guilty to the charge on July 20, 2017. The state department states that Meade collected $10,747 worth of benefits during the 6-month period. It also announced that he would have to repay $12,359.05 to the state; which includes more than $1,600 as penalty.
Tips to Avoid Unemployment Insurance Fraud
The best way to avoid committing UI fraud is to first understand what must not be done and what needs to be done. Sometimes people are unaware that they are falsely claiming for benefits.
Here are some tips to follow to avoid committing unemployment insurance fraud:
- Always report your employment before you make a claim. Employment includes cash jobs, self-employment, commission, 1099 or temporary.
- Do not misrepresent information or make a false statement to increase or receive benefits.
- Always report your work refusals.
- Do not fabricate job searches. Conduct enough work research.
- Always report a work separation.
- Do not use another individual’s identity (name and/or social security number) to file for insurance payments.
- Always report other types of reimbursements such as Worker’s Compensation payments.
- You must report it if you are incapable and not available to work (for example, sickness, injured, living abroad, etc).
- Do not help someone else file a fraudulent insurance claim.
What Can You Do If You’ve Unknowingly Committed UI Fraud?
Whether you commit UI fraud unknowingly or intentionally, you need to pay back all the benefits that you have collected. The payment may also include a penalty that could go up to 50% of that sum. In most cases, it may also include getting disqualified from receiving future benefits. In severe cases where the amount withdrawn is too high, the person may also face fines or look at prison time. However, the policies that oversee unemployment insurance fraud vary from state to state.
If you have committed unemployment insurance fraud by mistake, it’s best to notify the department of labor and offer to repay the amount collected. UI fraud hardly ever goes unnoticed. You will definitely have to repay the amount that you have overdrawn, you might also have to pay a small fine. But it’s may not turn out to be more severe that that.
If you are currently unemployed and on the lookout for jobs, keep your optimism levels high. Search for jobs endlessly and attend as many interviews as you can.Related Tags : UI benefits, UI Fraud, Unemployment insurance benefits, unemployment insurance fraud