(Allan Miller) An independent audit of the unemployment benefits system found the administration of Michigan Gov. Gretchen Whitmer paid up to $1.5 billion in “fraudulent” claims.
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by Allan Miller, November 26th, 2020
Fox 17 reported on the investigation of the Michigan Unemployment Insurance Agency (UIA) conducted by Deloitte: “The company interviewed 24 UIA and Department of Labor and Economic Opportunity (LEO) personnel including executive leadership. They reviewed documents, emails, charts,
The report found the agency paid $22.9 billion in claims from March 15, 2020, to October 23, 2020, as the unemployment rate skyrocketed from 3.6 percent to 24 percent amid Whitmer’s coronavirus lockdown orders.
The analysis found states were warned in May of “a well-organized Nigerian fraud ring exploiting the Pandemic to commit fraud against various state UI programs.”
Deloitte discovered there may have been “internal fraud” by agency employees and contractors “in exchange for payments and kickbacks”:
On May 27, 2020, UIA estimated that $1.5 billion of higher-risk claims (claims that otherwise may have been detected by Fraud Manager) had potentially been paid prior to running through Fraud Manager. Additionally, UIA had identified multiple instances of potential internal fraud by UIA personnel and contractors using their access to UIA procedures and systems to fraudulently approve/disburse millions of dollars in federal and state UI claims to ineligible claimants in exchange for payments and kickbacks.
The report is addressed to Tricia Foster, Whitmer’s chief operating officer. Deloitte did not interview Foster, according to the report. Nor did the company talk to:
- John Arundel, Head of Claims, UIA
- Jeffrey Frost, Special Fraud Advisor
- Stacia Latona, Investigations Manager
- Susie Wiseman, Claims Department Analyst, UIA
Frost, the report said, conducted the interview with Jeff Donofrio, director of LEO, and provided “a verbal summary” to the company, which “did not have an opportunity to participate.”
It is not clear in the report why the individuals, including Foster, were not interviewed and whether the employees refused or were deemed not relevant to the investigation.
The report found former UIA Director Steve Gray downplayed the potential of fraud when he told “UIA personnel on a call that fraud prevention was not a high priority.”
“No legislator ever said, ‘UIA change your fraud detection systems in order to pay claims quicker’. It’s actually the opposite,” state Rep. Matt Hall told Fox 17.
“The department’s actions contributed to this widespread fraud. You know, now people understand why we’ve been talking about this for so long,” Hall, who leads the Joint Select Committee on the COVID-19 Pandemic, said.
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