Unemployment Insurance Fraud

The unemployment insurance benefits program, commonly referred to as UI, is designed to provide people with an income when they are unable to find work, have been laid off, or are out of work because of factors out of their control. Each state has its own unemployment insurance benefits program that they run in conjunction with the federal government.

State laws determine who is eligible for unemployment payments, as well as determine the penalties for people who misuse or abuse the program. In some situations where people or employers misuse unemployment programs, criminal unemployment insurance fraud charges are possible.

To learn more about proper unemployment program eligibility and collecting unemployment benefits in your state, you can read more on Nolo.

Unemployment Insurance Fraud

Most unemployment insurance fraud cases occur after a worker intentionally and knowingly makes false statements or misrepresentations in order to obtain unemployment insurance payments. Any lies, misrepresentations, or other intentional action or statement that lead to receiving unemployment insurance payments when a person is ineligible can result in fraud charges. Here are several ways people commonly commit this crime.

Failure to Report Employment

Some people who apply for unemployment insurance later go on to find a job. When this happens, people receiving unemployment payments have a duty to report their employment, and how much they make, to the state unemployment office. Failing to do so, and continuing to receive payments (or non-adjusted payments) while being employed is unemployment insurance fraud.

False Information, Identification, or Identity Theft

Some workers try to obtain unemployment insurance payments by submitting applications that contain false or misleading information. For example, an applicant who uses a false name, or who uses the personal identifying information of someone else to obtain unemployment benefits, commits unemployment insurance fraud. Similarly, submitting false information about employment status, income, and other related issues can also result in fraud charges.

Misrepresenting Employment Efforts

A person has to actively look for employment in order to receive unemployment insurance payments. Someone who fails to actively seek employment while reporting to the state unemployment office that he or she is looking also commits unemployment insurance fraud.

Employer Fraud

In addition to workers, employers can also commit unemployment insurance fraud. There are several ways employers can do this, such as misclassifying workers as independent contractors, failing to report paid wages or paying workers "under the table," or providing false information about workers who would otherwise be eligible to receive unemployment payments.

Legal Defenses

In any criminal case, including unemployment fraud cases, the type of legal defenses available to someone charged with a crime will differ depending on the circumstances. However, many unemployment insurance fraud cases involve one or more of the following defenses.

Lack of Criminal Intent

You cannot accidentally commit unemployment insurance fraud. To be convicted of this crime, a person has to intentionally make misrepresentations, lie, conceal, or do something else to fraudulently receive payments. If, for example, you mistakenly underreport your prior income when you apply for unemployment, this isn't enough to commit fraud.

Lack of Evidence

In any criminal proceeding, the state has the responsibility to present evidence to show beyond a reasonable doubt that the accused has committed a crime. In some unemployment insurance fraud cases, this evidence is simply not there. If the state cannot prove its case, you cannot be found guilty of a crime.

Potential Penalties

People who commit unemployment insurance fraud can face both civil and criminal penalties. A civil penalty usually involves a fine, while criminal penalties can include fines, incarceration, probation, and other penalties. Individual state laws determine what penalties apply in unemployment fraud cases, and differ significantly from state to state.

• Repayment. Someone convicted of unemployment insurance fraud will have to pay back any ill-begotten funds. If you don't have enough to pay the full amount back, the state might be able to take the money from you by, for example, garnishing your wages.
• Incarceration. Unemployment insurance fraud can be a misdemeanor or felony offense, depending on state law and the circumstances involved. Misdemeanors are crimes that generally have a maximum penalty of up to a year in jail, while convictions for felony offenses can lead to multiple years in state prison. For example, someone who makes false statements in order to receive unemployment insurance payments in the state of Utah commits a Class B misdemeanor offense if the payments received are less than $500. However, if the fraudulently obtained payments exceed $1,500, the crime is punished as a third-degree felony. (Utah Code Annotated section 76-8-1301)
• Probation. In addition to, or in lieu of, jail or prison time, courts can also send someone convicted of unemployment insurance fraud to a probation term. People on probation have their freedoms significantly limited, and must comply with a number of probation conditions. These conditions often include, for example, reporting to a probation officer, seeking the officer's permission before leaving the state, not interacting with known criminals, not committing more crimes, and maintaining suitable employment.
• Fines. If you are convicted of unemployment insurance fraud you might also be forced to pay a fine in addition to any repayments you have to make. For example, if you received unemployment payments of $5,000 and are convicted of unemployment insurance fraud, you will have to pay back the $5,000. You might also have to pay a criminal fine. Fines differ significantly from state to state, but can exceed $10,000 in some situations.

Find a Lawyer in Your Area

Even though unemployment insurance fraud might not seem like a significant crime, you always need to speak to an experienced criminal defense lawyer if you are facing charges. A conviction for unemployment insurance fraud can lead to serious penalties. Even if you are not convicted, being investigated for a crime and being subject to the criminal justice process is not something you want to do without the aid and advice of a criminal defense attorney from your area.