Jobless Benefit Cheats Busted In Fraud Probe

They Got Unemployment Insurance While Working

Gov. Andrew M. Cuomo announced that an investigation conducted by the state Department of Labor (DOL), in collaboration with the Bronx, New York, Kings, and Queens County district attorneys and the New York State Police, led to the arrests of 35 people who are charged with fraudulently collecting between $10,000 and $38,000 in unemployment insurance payments.

Additional arrests are expected in the near future.

The arrests stemmed from an investigation that began in August 2010. All the arrested individuals were previously employed by Madison Square Garden and Radio City Music Hall, which share common corporate ownership. The employees were laid off and then later rehired.

Once rehired, the employees issued false statements to DOL and collected unemployment insurance benefits that they were not entitled to. Over 100 employees were identified by DOL.

The district attorneys are prosecuting 35 individuals for felony crimes. Madison Square Garden and Radio City Music Hall are not targets of the investigation and have fully cooperated with DOL and law enforcement.

“This combined effort between state government and local law enforcement agencies is proof that New York State is aggressively rooting out unemployment insurance fraud at every turn,” said Cuomo. “When individuals commit unemployment insurance fraud, all New Yorkers pay for it. They are not only cheating the system, they are stealing directly from the taxpayers. These practices will not be tolerated. The new New York is dedicated to upholding a system of utmost fairness and ensuring that those who flout the law are brought to justice.”

Employers across the state con- tribute to the Unemployment Insurance Trust Fund. When the Fund is forced to pay out because of a fraudulent claim, the employers have to pay more and that means consumers will be paying more as well.

New York State operates one of the largest unemployment insurance systems in the country. In 2011, New York State paid out nearly $7.7 billion in total unemployment insurance benefits to 1.15 million people. At the height of the recession in 2009, the state paid out $9.2 billion in unemployment insurance payments to 1.2 million people.

“All employers receive monthly statements of unemployment insurance benefit payments from the Department of Labor,” said Labor Commissioner Peter M. Rivera. “We urge every employer to review these monthly statements and alert the Department of Labor as soon as they see an employee collecting benefits while still working. This saves not just taxpayer dollars, but also helps keep employer unemployment insurance taxes low by preventing wrongful charges to their accounts.”

The DOL’s Office of Special Investigations (OSI) partners with employers to investigate and root out unemployment insurance fraud within their businesses. While DOL has no criminal jurisdiction in regard to prosecuting unemployment insurance fraud, OSI builds cases and refers them to local District Attorneys to prosecute.

Over the last three years DOL has uncovered over $150,480,451 in fraudulent unemployment insurance overpayments and referred more than 2,600 cases to district attorneys and law enforcement agencies, including 750 last year alone.

“The State Police will continue to work with our partners in state government and local law enforcement to arrest those who commit these crimes against New York State employers,” New York State Police Superintendent Joseph A. D’Amico said.

“I am pleased to be able to work with the Department of Labor on such an important investigation,” added Brooklyn District Attorney Charles J. Hynes. “Stealing from unemployment benefits is taking much needed resources from honest people who need it to feed their families. These defendants will be prosecuted to the full extent of the law.”

“In today’s tough economic climate, unemployment insurance benefits are a vital lifeline for many New Yorkers,” said Queens District Attorney Richard A. Brown. “Those who falsely apply for and receive unemployment benefits cheat legitimately unemployed workers and increase insurance tax rates paid by employers. Their actions erode a vital workplace protection that was created for the benefit of all workers.”

In May, Cuomo announced that $51.2 million in fraudulently-collected unemployment insurance benefits had been returned to the state’s Unemployment Insurance Trust Fund through the Treasury Offset Program (TOP), a state-federal partnership in which federal tax refunds are intercepted to cover delinquent debts. New York State was the first state in the nation to use TOP to recover fraudulently-collected unemployment insurance benefits.

The program recovered $51.2 million-the largest amount in the nation-from more than 50,000 individuals.

The U.S. Department of Labor’s Office of Inspector General also assisted in the investigation.

Anyone with information about unemployment insurance fraud should call the Department of Labor’s toll-free fraud hotline at 1-888-598-2077.