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New York State Cracks Down on Unemployment Insurance Fraud in Western New York
Department of Labor Announces 2009 Fraud Investigation Results

Albany, NY (January 11, 2010) - Can't See the video? Click Here to Get Adobe Flash Player. State Labor Commissioner M. Patricia Smith today announced 76 arrests in Buffalo and Western New York during 2009 for the theft of $323,965 from New York State's Unemployment Insurance (UI) trust fund. The State Labor Department worked with district attorneys and other law enforcement agencies to bring these people to justice. Most of those arrested had collected UI benefits while earning a paycheck. Governor David A. Paterson said, "One of the pitfalls of having so many New Yorkers collecting UI is that there will always be somebody who will try to take advantage of the system.  Fortunately, we're doing a great job to keep on top of fraud and the results speak for themselves.  In fact, New York's stepped-up crackdown on Unemployment Insurance fraud saved businesses large and small more than $35 million last year alone." 

"It is nothing short of shameful to think that people would steal from a fund designed to help families put food on the table, gas in their cars and clothes on the backs of their children," said Commissioner Smith. "Governor Paterson has directed the Labor Department and its partners in law enforcement to remain aggressive in bringing individuals who defraud the UI system to justice. Rest assured we will do just that."

The arrests are a direct result of a Labor Department program that emphasizes better fraud detection through data matching, more proactive investigations, and better coordination with local law enforcement and prosecution agencies.

Details by county are below:

Western New York Region:

Erie                  49 cases           $219,878.25

Niagara            19 cases           $67,245.50

Chautauqua      5 cases             $18,888.50

Cattaraugus      3 cases             $17,954.00


Total Western New York Region:  76 cases     $323,965

The State Labor Department administers unemployment insurance benefits for the federal government. The weekly payments assist eligible workers who have lost their jobs through no fault of their own. To qualify for UI, people must be:

  • unemployed
  • ready, willing and able to work and
  • searching for a new job.

When applicants cheat the system by stealing from the UI Trust Fund, it has a negative effect on businesses across the state.  Employers whose accounts pay for the false claims must take on a higher tax rate. For example, the average employer in New York State (with some 14 employees) that has an undetected fraudulent claim filed against it will pay over $700 more in taxes the next year. However, if the Labor Department detects the fraud the tax increase is not charged to the employer.

"Unemployment insurance is a safety net for those who need assistance, not a jackpot for those who would game the system and cheat their neighbors," said Deputy Secretary for Public Safety Denise E. O'Donnell. "In this economic climate, when government resources are scarce and needs high, we must be especially vigilant to discourage and punish cheating. Governor Paterson and I applaud Commissioner Smith and local law enforcement officials for their aggressive efforts to track down cheaters and recover the money they stole from honest taxpayers."

New York State Police Superintendent Harry J. Corbitt said, "The State Police stands ready to assist in investigating and apprehending those individuals willing to engage in the fraudulent use of Unemployment Insurance funds meant to assist honest workers and their families."

To make an anonymous report about fraud against the Unemployment Insurance fund, call the Department of Labor's toll-free hotline at (888) 598-2077.