Building Bridges to Success: Attacking Unemployment Insurance Fraud

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Building Bridges to Success Attacking
Unemployment Insurance Fraud

• Tony Dixon, Director
• Division of Program Fraud
• U.S. Department of Labor
• Office of the Inspector General
• Washington, DC

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DOL - OIG Mission

• To serve the American Worker and Taxpayer by
  conducting audits, investigations, and
  evaluations resulting in improvements in the
  effectiveness, efficiency, and economy of
  Departmental programs and operations
• detect and prevent fraud, waste and abuse in DOL
  programs (and labor racketeering in the American
  workplace, the only OIG to do so)
• provide advice to the Secretary and Congress on
  how to attain the ultimate in program
  performance.

3
DOL-OIG Offices

• Detroit

• Seattle

• Cleveland

• Buffalo

• Boston

• Meriden

• New York

• Pittsburgh

• Newark

• CHICAGO RO

• Atlantic City

• San Francisco

• Columbus

• PHILADEPHIA RO

• Kansas City

• Denver RA

• Roanoke

• Las Vegas

• WASHINGTON DC RO

• St. Louis

• LOS ANGELES R.O

• ATLANTA RO

• Jackson RA

• DALLAS RO

• Baton Rouge RA

• Jacksonville

Approx. 150 Agents 28 Offices

• Houston RA

• Miami Sunrise

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Why A Joint Effort?

• What is UI?
• Benefits afforded via a multi-billion dollar
  program dependent on employer and complainant
  compliance with Federal and State laws.
• Who does UI Fraud Affect?
• Minimally, every American citizen.
• Who is responsible for addressing UI fraud?
• Arguably, every responsible American adult that
  has knowledge of fraud.

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The American Recovery and Reinvestment Act

• Why so important?
• Provides assistance to a significant amount of
  unemployed American citizens experiencing
  uncommon economic hardship
• Introduces an unprecedented amount of funds into
  the American society
• Represents a prime opportunity for massive fraud
  against the government
• Different than Hurricane Katrina Relief

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Possible Fraud Indicators

• Connections between (false) companies
• Common employer addresses
• Common claimant addresses
• Common claimants
• Minimal contributions by employer

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Fraudulent Checks
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Bogus or Misused UI Benefit Debit Cards
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Non- Existent Companies
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Identity Fraud
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Common UI Schemes

• Identity Theft 4. Fictitious Employer 7.
  Pretexting
• Data Mining 5. Money Laundering 8. Debit
  Card Fraud
• PII Fraud 6. Check Counterfeiting 9. UI
  Evasion

• Company representatives obtain personal
  information under false pretenses
• Internal employee uses position to obtain UI data
  base information for purposes of committing UI
  fraud
• Illegal obtainment of UI benefits via electronic
  deductions
• Development and or use of fraudulent UI benefits
• Recruitment of family and friends to receive UI
  claim benefits based on false wages

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Common UI Schemes - cont.

• Identity Theft 4. Fictitious Employer 7.
  Pretexting
• Data Mining 5. Money Laundering 8. Debit
  Card Fraud
• PII Fraud 6. Check Counterfeiting 9. UI
  Evasion

• Bogus companies file UI claims for unsuspecting
  or nonexistent individuals
• Illegal use of personal identification
  information
• The sale of confidential information
• Misuse of confidential employment/wage, federal
  tax and medical information
• Negotiation of illegally obtained UI benefits for
  profit

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Dumpster Diving
Pre-texting
What to do when you find or suspect fraud?
Report It!!!
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To Whom Do You Report Fraud?

• Supervisor
• State Department of Labor
• UI District Office
• UI National Office
• OIG
• Other authorities

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MOU - OIG and ETA, OWS

• Signed June 29, 2005 and currently in effect
• Established procedures for SWAs, OWS, and the OIG
  to address issues of fraud, vulnerability, and
  integrity in both State and Federal UI programs
• Requires each SWA to promptly notify the OIG of
  known substantive allegations of malfeasance,
  criminal misconduct, and large scale fraud

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MOU What to Report to OIG

• Known instances or allegations of potentially
  illegal or fraudulent activity in excess of 5000
  concerning UCFE, UCX, TAA, DUA, and extended
  benefit programs, with the mutual understanding
  that the dollar threshold may be adjusted on a
  State-by-State or Regional basis

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MOU What to Report to OIG, (cont.)

• Known instances or allegations of potentially
  illegal or fraudulent activity in any amount
  concerning
• UI administrative fund thefts
• Fictitious/fraudulent employer schemes
• Multiple state and/international claim or tax
  schemes
• Schemes involving multi-claimant or multi-state
  false federal documentation
• Counterfeit benefit checks or multi-forgery cases

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OIG/ETA Partnership

• Regularly meet to discuss and brainstorm on best
  practices to address fraud
• ETA routinely refers information on suspected or
  known fraud to the OIG
• OIG implementing process for relaying appropriate
  investigative results to ETA for its knowledge
  and consideration
• Participation in each others training conferences
  and seminars

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DOL Incident Report
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New OIG Fraud Efforts

• Postings of fraud schemes to OIG internet site
• Fraud alerts to be sent to all OIG Offices and to
  ETA HQ
• Pursuit of ARRA related UI fraud according to
  thresholds of respective US Attorney District
  Offices

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Anti-Fraud Measures

• Properly Dispose of/Handle Information
• Shred or burn documents
• Secure Trash Areas
• Reduce unnecessary paper
• Archive records appropriately
• Log off computer when away from work station

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Anti-Fraud Measures cont.

• Implement telephone safeguards
• Do not answer excessive telephone questions from
  suspicious sources
• Flip the script and question the caller
• Carefully document any information provided by
  caller
• Verify and cross reference information with
  others alleged to have provided information
• Notify supervisor of suspicious activity and
  refer to UI District Office, UI National Office
  and OIG

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Who Is Committing the Fraud?

• Legitimate and Bogus Employers/Businesses
• Average American Citizens
• Internal Employees
• Loose-knit organized crime groups
• Street gangs
• Illegal immigrants
• International organized crime groups
• Others?

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Businesses
Storeowner Maria Sanchez

• More than 23,000 UI checks totaling more than 7
  million deposited
• Checks from CO, KY, NY, MP, NV and WA
• Multiple Claimant addresses on checks used in
  four other major UI investigations.

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Internal Employees
Tina Yayoi TURLEY California Employment
Development Department (EDD) Accounting
Technician UI Benefit
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Link Analysis Chart
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Florencia 13 Street GangGang Member Extensive
Counterfeiting of UI Checks
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International Organized Crime Groups
Abdulla Kasem Ahmed Muthana
Undercover operation with the Joint Terrorism
Task Force revealed that Muthana, a target in a
OIG UI case, had intentions of funneling money
derived from his UI fraud to the Hezbollah
militia in Lebanon.
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Potential Violations

• Title 18 U.S.C
• 371 Conspiracy
• 641 Public money, property or records
• 1341 Mail Fraud
• 1343 Wire Fraud
• 1028 Identity Theft

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DOL-OIG UI Investigative Results 10/01/2005
09/30/2009

• 447 Indictments
• 404 Convictions
• 107,576,853 in civil, administrative, and
  criminal restitution
• Jail sentences as high as 33 months

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• Questions?
• Thank you

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• Dan Petrole, Deputy Inspector General
• Tom Farrell, Assistant Inspector General,
  Investigations
• Rich Clark, Deputy Assistant Inspector General,
  Investigations

Contact Information

• Tony Dixon, Director Division of Program
  Fraud202.693.5165 (office)202.207.4484
  (mobile)dixon.robert_at_oig.dol.gov
• Jon Metrey, Deputy Director
• Division of Special Operations202.693.5165
  (office)202.207.4484 (mobile)metrey.jon_at_oig.dol.
  gov

• Robin Blake, Deputy DirectorDivision of Program
  Fraud202.693.7046 (office)202.
  (mobile)blake.robin_at_oig.dol.gov
• Chris Collins, Investigative Research
  Specialist
• Division of Intelligence
• 202.693.6987 (office)
• collins.john_at_oig.dol.gov