While a new definition of concealment is pending, Wisconsin’s Dep’t of Justice announced on December 15th an “expanded effort to prosecute Unemployment Insurance fraud cases.” The press release accompanying this announcement states:
An expanded effort to prosecute Unemployment Insurance fraud cases has led to an increase in referrals to the Wisconsin Department of Justice (DOJ) from the Wisconsin Department of Workforce Development (DWD) from 6 in 2014 to 36 in 2015. In a continuing partnership between the two agencies, investigations conducted by DWD are referred to DOJ where these cases are prosecuted for criminal behavior.
“It’s shameful to see this safety net, intended to help those going through a period of financial difficulty and vulnerability, ripped off by fraudulent unemployment insurance claims,” said Attorney General Brad Schimel. “Those who take advantage of the system and steal our hard-earned tax dollars should be held accountable and prosecuted for their misconduct. I applaud Department of Workforce Development Secretary Reggie Newson for prioritizing this type of crime by hiring additional investigators.”
In 2015, the Wisconsin Department of Workforce Development has referred 36 felony cases to DOJ for prosecution. Those cases generally involve situations where people continued to collect unemployment benefits while ineligible because they were employed but failed to report the income. An additional 73 unemployment fraud cases were referred to district attorneys statewide this year.
In one Unemployment Insurance fraud case prosecuted by DOJ, an individual reported wages totaling $2,345.19 during a three year period when in fact, payroll records show the individual actually earned $68,398.36. As a result of this individual’s false statements, he received $42,573 in unemployment benefits to which he was not entitled. In another case, an individual reported no employment for a period of 104 weeks, resulting in more than $19,000 in unemployment benefits for 98 of those 104 weeks. Further investigation revealed this individual had earned $29,169.55 from an employer during 96 of the 98 weeks for which she collected unemployment benefits.
The charges filed against individuals making fraudulent Unemployment Insurance claims can range from misdemeanors to felonies, depending on the amount of money fraudulently collected. Wisconsin State Statutes provide sentencing recommendations for Unemployment Insurance fraud that include full restitution, fines, jail time, and probation.
Having promised to make consumer protection a focal point of his administration, Attorney General Schimel concluded, “DOJ will ensure those in need receive the benefits for which they are eligible and the cheaters and liars who take advantage of public assistance programs do not find refuge in our state. We will continue to partner with other state agencies to root out fraud and hold criminals accountable.”
Certainly actual fraud/concealment should be prosecuted. But, fraud based on nothing more than a simple mistake is NOT unemployment concealment. Misunderstanding of questions or a lack of knowledge about how much total weekly wages were received are currently being charged as concealment by the Department despite no evidence of an actual intent to conceal wages for the purpose of receiving undeserved unemployment benefits.
NOTE: thanks to clinic representation, the claimant charged with failing to report wages he did not know about won his case before the Labor and Industry Review Commission. The Commission explained:
The employee explained his circumstances to department personnel on at least two occasions and thereafter followed the department’s instructions. He reported the wages he could ascertain and relied on the department’s assurances that it would verify his wages with the EMPLOYER and recalculate his benefits to reflect the wages, inclusive of service charge commissions, reported by the employer. The employee was never told to estimate his service charge commissions, which would have been difficult to do given how much they varied from week to week. The employee openly disclosed to the department that he earns hourly base pay plus service charge commissions or, as he referred to them, “tips.” The employee believed that he was filing his weekly claims correctly and that the system was operating as explained.
Unfortunately for the employee, the department’s mechanism for verifying the wages he reported with the EMPLOYER, and obtaining the missing piece of wage information, did not work as expected. Consequently, the employee was paid more in unemployment insurance benefits each week than he should have received. Yet, the erroneous payments were not due to the wrongful or fraudulent actions of the employee. The fact that the department did not anticipate there being discrepancies larger than a few dollars between the amounts reported by the employee and the amounts reported by the EMPLOYER does not transmute the actions taken by the employee in good faith into acts of concealment. The mistakes the employee made when reporting his work for and wages from the EMPLOYER were honest mistakes.
So, it bears repeating: Unemployment is increasingly becoming a trap for claimants, a trap they should avoid by not filing unemployment claims at all.