Labor Seal NYS Department of Labor                          

Contact Leo Rosales Cell: 518-281-6167 Office: 518-457-5519 Email: leo.rosales@labor.ny.gov www.labor.ny.gov
New York State Cracks Down on Unemployment Insurance Fraud in New York City
Department of Labor Announces 2009 Fraud Investigation Results

Albany, NY (January 13, 2010) - Can't See the video? Click Here to Get Adobe Flash Player. State Labor Commissioner M. Patricia Smith today announced 159 arrests in New York City during 2009 for the theft of $800,112 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:

New York City Region:

Manhattan                            55 arrests                     $261,966

Brooklyn (Kings)                   35 arrests                     $198,254

Queens                                 33 arrests                     $198,057

Bronx                                    25 arrests                     $81,897

Richmond (Staten Island)      11 arrests                     $59,938

 

Total NYC Region:  159 arrests     $800,112

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 are 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."

Manhattan District Attorney Cyrus R. Vance, Jr. said, "At a time when so many New Yorkers depend on unemployment benefits, the Manhattan DA's Office is committed to rooting out and prosecuting those who fraudulently receive these funds.  Thanks to the work of the Governor's Office, the Department of Labor and state and local law enforcement agencies, through investigations like these we can ensure that unemployment benefits are directed toward those who urgently need them. I am proud that our Office was able to restore more than $250,000 to the State."

Kings County District Attorney Charles J. Hynes said, "This kind of fraud steals funds intended to help people who are in genuine need of public assistance. We continue to be vigilant about prosecuting these crimes."

Queens District Attorney Richard A. Brown said, "The payment of unemployment benefits is intended to assist out-of-work individuals and their families struggling through these tough economic times - not to subsidize the lifestyles of those who bilk the government of scarce resources through deception."

Bronx District Attorney Robert T. Johnson said, "The Labor Department is to be applauded for enhancing its data-matching and investigative ability. We will continue to stand alongside them in their efforts to put a stop to fraud."

Richmond County District Attorney Daniel M. Donovan, Jr. said, "Unemployment Insurance fraud is a crime against the taxpayers of this state and our neighbors who are out of work in this tough economy and legitimately need temporary assistance. We will continue to work with our partners in government and law enforcement to aggressively investigate and prosecute this crime."

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.