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News and Information Article
DETROIT, Dec. 22 // -- Three former employees with Michigans
Unemployment Insurance Agency (UIA) were arrested for defrauding the states
unemployment insurance (UI) program.
Richard Braceful and Simona Franklin, both of Detroit, and Lori Merchant
of Onondaga have been charged with heading up separate unrelated plans which
paid state unemployment benefits to individuals who were not entitled to them.
"The two larger schemes began in 2003 and may have been encouraged by the
crisis mode the agency was then facing," David Plawecki, a deputy director
with the states Department of Labor & Economic Growth, noted. "At that time,
the agency was trying to implement new telephone and Internet-based systems
for taking unemployment claims."
"The two systems were supposed to be ready in late 2002, when all local
unemployment offices were prematurely closed," he explained. "With offices
closed and almost 40 percent of its staff leaving for early retirement, the
agency started 2003 with a short supply of experienced staff, an ill-conceived
new claims-by-mail program, complicated new systems to complete and implement,
and hundreds of thousands of laid off workers calling the agency because their
unemployment checks were months late in arriving."
Braceful, who had worked at a UIA call center, allegedly set up false
unemployment claims for 49 individuals and authorized payment of 199
unemployment checks amounting to $331,760. The checks were issued in 2003.
He was subsequently dismissed by UIA.
Franklin had also worked at an agency call center and allegedly redirected
unemployment checks to six family members and friends. In total, she
redirected 83 checks from 24 fraudulent claims. The checks totaled $143,479
and were issued between 2003 and 2004. UIA subsequently dismissed Franklin
from her job.
The Merchant case was uncovered in June 2005 during a routine review of
activity reports. Further investigation uncovered that Merchant had issued
improper payments in a relatives name, totaling $10,860. Following the
investigation and after meeting with her supervisor about the payments,
Merchant abandoned her job and was dismissed.
"Despite the handicaps in 2003, our system of controls for detecting and
preventing fraud was able to uncover these cases," UIA Director Sharon
Bommarito noted. "We want to make it abundantly clear that anyone, who
attempts to defraud Michigans unemployment insurance system, will be
discovered and will be prosecuted to the fullest extent of the law."
Unemployment Insurance Agency news releases are online at
http://www.michigan.gov/uia .
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