Criminalizing unemployment benefits

The Department of Workforce Development has not only been extremely aggressive on charging claimants with concealment (aka fraud) for unintentional claim-filing mistakes, but it has also pushed criminal penalties for that concealment. I noted previously that the state’s Department of Justice has been only too eager to follow up with that criminal prosecution for those mistakes.

Since then, the state Justice Department hired Jake Westman specifically to prosecute these cases, and he has been busy. Here are his 2016 cases (11 filed that year), his 2017 cases (45 filed that year), and his 2018 cases (37 filed so far). Since he switched in October 2018 to a job at the Division of Hearings & Appeals, Shelly Rusch has taken over his case load. Here are her 2017 (1 case from Westman) and 2018 cases (11 switched from Westman so far).

All of these 93 cases charge claimants criminally with unemployment fraud. None so far have gone to trial, and almost all have ended with plea bargains. One case, 2018-CF-129, was dismissed on Ms. Rusch’s motion after a competency hearing.

Here is a breakdown of the claimants charged in these criminal cases based on race, gender, and initial address information available in these court records.

Here, we see that all 11 of the 2016 cases were against African-Americans living in Milwaukee. In 2017, African-Americans were defendants in 32 of 45 cases, or 71%. All of those cases were against Milwaukee residents. Of the remaining 13 cases in 2017, seven were against Caucasians, three against Latinos/as, and two against Native Americans. In 2018, the cases against African-Americans finally expanded beyond Milwaukee with 24 based there and four based in other cities. For 2018, African-Americans constitute 75.7% of the defendants (28 out of 37). The remaining nine cases consist of Caucasian defendants.

More Caucasian men are being criminally charged than Caucasian women (nine to seven). Among African-Americans, however, more women are being charged: 38 women to 34 men.

As noted here, the Department of Workforce Development considers concealment to be an unintentional claim-filing mistake. The Department claims otherwise, but the cases brought by the Department and appealed to the Labor and Industry Review Commission show that the Department presumes claimant’s mistakes are intentional and then places the burden of proof on claimants to demonstrate that their mistakes were accidental for some reason. Without knowledgeable help from someone who knows how complicated the unemployment claim-filing process has become or how aggressive the Department is on this issue and a Commission that insists on following unemployment law as written, it can be difficult for someone to explain his or her confusion and get a concealment charge overturned.

What makes this criminal prosecution of claimants for their mistakes even worse is that the Commission has NOT applied the strict liability for mistakes standard that the Department wanted with the 2016 changes in the definition of unemployment concealment. Section 18 of 2015 Wis. Act 334 left intact the requirement that unemployment concealment means “to intentionally mislead.” And so, the Commission has affirmed that unemployment concealment still requires a finding of intent. See Domingo Ramos, UI Hearings Nos. 16606402MW and 16606403MW (23 Feb. 2017) (applying new concealment definition, Commission finds that claimant’s job search mistakes were not intentional and so not concealment).

The Department of Workforce Development, however, has consistently ignored this requirement for unemployment concealment to be intentional and continues to charge concealment against claimants for their unintentional claim-filing mistakes.

And, now the Department of Workforce Development has been combining with the state Department of Justice to bring criminal charges against claimants for those same accidental mistakes. The plea bargains in many of these cases involve little more than paying back the alleged concealment penalties DWD first charged against these claimants in unemployment proceedings. In several, those monies have already been paid back, and so claimants are simply stuck with an additional $500 to $1000 in court costs as part of their plea bargain. In some other cases, it appears that the criminal case was nothing more than an additional mechanism with which to pursue collection against claimants for whom prior collection efforts had been unsuccessful.

That DWD and the state DOJ is targeting folks by race is obvious from this data. Here are the number of “fraud” cases by year:

2013 -- 14,682
2014 -- 13,034
2015 -- 9,793
2016 -- 8,438
2017 -- 5,132

From Addendum A of the 2017 Fraud Report at 11. So, of the thousands of fraud cases per year that DWD is pursuing, it is only bringing 30-50 criminal cases a year, and 70-80% of those criminal cases are against African-Americans. This result simply stinks to high heaven.

But for a new governor who may or may not think of unemployment in the same way as his predecessor, things would be getting even more dire. Rep. Kerkman managed to get criminal penalties for unemployment substantially increased via 2017 Wis. Act 147. As detailed in the Legislative Council memo, fines are substantially increased (usually now up to $10,000 or more) and prison time is increased substantially as well (now from nine months to ten years) depending on the amount of “concealment” at issue.

The current practices of DWD are making unemployment not only impossible to receive but damn near dangerous. Something needs to change in 2019.

Unemployment criminalization in court

Back in December 2016 I described how the state’s justice department announced its expanded effort to prosecute unemployment concealment.

That effort is showing results. The entire caseload for two DOJ prosecutors — Annie Jay and Devra Ayala — is apparently just for prosecuting claimants for past unemployment concealment.

UPDATE (8 Nov. 2016): I have learned that a third prosecutor, Amber Hahn, has another sixteen cases alleging criminal theft for unemployment concealment. That means there are 48 criminal cases for concealment in Dane County.

For Ms. Jay, all of her criminal felony cases from 2015 on in Dane County involve unemployment concealment. For Ms. Ayala, all of her criminal felony cases in 2016 in Dane County involve unemployment concealment. Combined, there are 32 cases in total (each prosecutor has 16 cases).

It appears that all of the defendants in these cases originally lived in Milwaukee. These cases are being filed in Dane County, however, because the alleged “crime” happened in Madison. The claimant’s allegedly false unemployment claims were made on the Department’s computers here in Madison.

In some of these cases, the claimants have paid back all of the monies connected to their alleged concealment. Still, DWD and DOJ have turned around and charged them criminally for that same alleged concealment

It appears that the Department of Workforce Development and the Justice Department are prosecuting these cases in order to lay the groundwork for adding new criminal penalties to unemployment claims in 2017. In 2015, there were several bills intended to add new and significant criminal penalties for unemployment concealment that were not passed by the legislature. I expect that these criminal prosecutions by DOJ will serve as “evidence” for why the legislature needs to take up these bills again in 2017 and make felony prosecutions that much easier. After all, if criminal concealment is happening, the reasoning will be, then prosecutors should have all the tools available for going after that concealment.

So, if anyone needs another reason NOT to file for unemployment benefits, here is one more: facing felony convictions and jail time for nothing more than a mistake on your unemployment claim.

Criminalization and strict liability for concealment: moving forward

The official Advisory Council/DWD bill, AB819, passed the Assembly yesterday and is now ready for the Senate to take up (as reported previously, both the Assembly and the Senate had committee hearings on their respective versions of the DWD-UI bill; so far, only one elected official — Sen. Chris Larson — has voted against these changes to unemployment law).

Meanwhile, the criminalization of unemployment mistakes — aka concealment which will soon be redefined as strict liability — via AB533 was also passed by the Assembly this week. This bill even gained a sponsor — Rep. Rohrkaste. It was also significantly amended to criminalize individuals acting on behalf of employers who:

knowingly makes a false statement or representation in connection with any report or as to any information duly required by the department under this chapter, or who knowingly refuses or fails to keep any records or to furnish any reports or information duly required by the department under this chapter and who, as a result of that false statement or representation or knowing refusal or failure, avoids liability to the department for contributions, reimbursements, assessments, or other amounts under this chapter . . .

In other words, employers and their agents who make “knowing” mistakes on their unemployment reports may face the same criminal penalties that claimants do for their mistakes on their weekly claims. Watch out employers.

NOTE (19 February 2016): Mike Ducheck from LRB points out a major mistake of mine: the substitute amendment was NOT passed but tabled. Instead, the Assembly passed an amendment that deleted several lines from the bill, including the requirement that a “person knowingly made false statements or representations” for these new criminal penalties to apply. In other words, there is no criminalization for employers’ mistaken unemployment reporting, only claimants’ mistaken unemployment reporting once the recommended changes to concealment in AB819 pass.

Note as well that these new criminal penalties will only apply for the “mistakes” that occur after this bill becomes law.