District Inspector General and state agencies: Unemployment benefits were claimed and received while working full-time at DPS; Additional penalties faced under state law
Detroit Public Schools today suspended 18 employees and identified 14 former employees involved in unemployment benefit fraud as a result of an investigation completed this week by the district’s Office of Inspector General (OIG). The suspensions are immediate pending a disciplinary hearing. Another two current employees whose cases were investigated are on leave and will be interviewed at a later date. The individuals face other penalties under state law, including restitution of up to two or four times the amount illegally received and additional felony charges for offenses that occurred after February 9, 2012.
The fraudulent unemployment claims covered varying periods of time for each individual between the years of 2008-2012, in some cases for individual employees covering all four years. Individual fraudulent claims ranged from $31,000 to $1,900. Affected staff held positions including Director, Auditor, Teacher, Ed Tech, School Services Assistant, and Noon Hour Aide. The active DPS employees received a total of $322,530 in fraudulent unemployment benefits payments. A search identified an additional 14 former employees involved in fraudulent unemployment claims. Including those, the total funds involved in this fraud was $470,464.
Of the 18 employees interviewed by the DPS OIG, 16 admitted that they fraudulently received unemployment benefit payments while working full time at DPS. Two employees made partial admissions to receiving unemployment benefits while working full time at DPS.
DPS Emergency Manager Roy Roberts said, “Thousands of dedicated adults come to work every day in our schools to better the lives of this community’s children. We will not tolerate the actions of a small few who, for whatever reason, believe that they can misuse public resources for their own gain. The work of the DPS Office of Inspector General is to be commended for taking a leadership role in conjunction with other state agencies to bring this investigation, which began with a tip, to a thorough conclusion.”
Individuals must file bi-weekly claims with the Michigan Automated Response Voice Interactive Network (MARVIN) via phone and/or online to certify for and receive unemployment benefit payments, answering nine questions about employment status for the two-week period covered. All of the individuals interviewed made bi-weekly unemployment benefit claims and certified that they were not employed. The employees provided false information to the Unemployment Insurance Agency via the MARVIN system. The employees reported no DPS income or underreported DPS income for dates in which they had DPS income to report. The employees did not report that they were back to work as full time DPS employees. As a precaution to unintended responses to the foregoing questions, MARVIN also asks its users to certify that the information is correct. If the answer is “no,” MARVIN will ask all of the questions again.
The thirteen-month investigation began with a tip in April 2011.
Inspector General Wilbert Marsh said, “Our partnership with the Michigan Unemployment Insurance Agency was critical in this investigation. The evidence will show that the individuals intentionally provided false information to the state resulting in fraudulent benefit payments. These individuals were full time employees with the District at the time of these claims and did not meet criteria for unemployment benefits. There’s really not an excuse for fraud. Their actions were not a mistake.”
The school district worked closely with the Michigan Unemployment Insurance Agency (UIA), Michigan Department of Licensing and Regulatory Affairs (LARA) and the Unemployment Insurance Agency’s Fiscal Integrity Group, as well as the DPS Office of Human Resources.
“The Unemployment Insurance Agency has increased its efforts to detect and prevent unemployment insurance fraud. It is our duty to work with all employers to prevent any overpayments that occur as a result of fraud,” added Mario Morrow, Michigan Licensing and Regulatory Affairs (LARA) Communications Director.
According to the DPS OIG report, Michigan law provides that intentional efforts to hide and/or give false information to qualify for, receive, or increase unemployment benefits will result in severe penalties. Claimants found to have intentionally given dishonest information:
- Will be required to repay money received and will have to pay a penalty of two times (if less than $500 of improper payments) or four times (if $500 or more of improper payments).
- The two times penalty is increased to a penalty of four times the amount of improper payments for second or subsequent offenses.
- Will lose remaining benefits.
- Will be required to pay court costs (if prosecuted) and fines, face jail time or perform community service, or all of these.
- Claimants making intentional misrepresentations to obtain benefits in excess of $3,500 after February 9, 2012 may be charged with a felony at the state level.
If the employees plead guilty to unemployment compensation fraud, this is a misdemeanor and they are required to pay restitution over a two-year period, and the charges are dismissed from their record. If they fail to make the payments within two years, they are resentenced and convicted of a misdemeanor. Restitution payments are sent to the State of Michigan and payments are credited to the DPS unemployment account.
Of the 18 cases, some are awaiting prosecution, others have warrants issued or requested, and in some cases full or partial restitution has been made.
Since its inception, the DPS Office of Inspector General has opened 550 investigations, 87% of which have been closed. 49 are pending and 21 are inactive. 109 employees have been referred for disciplinary hearings, and 41 have been terminated as a result of OIG investigations. Monetary restitution, recovery and cost avoidance due to OIG investigations has totaled $8,715,948.
Individuals with information on waste, fraud or abuse may contact the OIG anonymous telephone hotline at 313-870-3436 or email tips to inspectorgeneral@detroitk12.org .
