Albany, NY (August 15, 2012) -
The New York State Department of Labor (DOL) today announced the arrest of 13 people in the Capital Region for stealing a total of more than $84,400 in unemployment insurance benefits. New York State Police arrested 10 residents of Schenectady County, two of Albany County, and one of Saratoga County. The arrests stemmed from an investigation initiated by the DOL, in cooperation with district attorneys in Schenectady, Albany and Saratoga counties.
The Department of Labor also thanked Schenectady County District Attorney Robert Carney for obtaining the conviction of a Schenectady employer for cheating on unemployment insurance taxes. The case originated with the Governor's Joint Enforcement Task Force on Misclassification, which investigates cases where workers are improperly classified as independent contractors by employers. Schenectady County Assistant District Attorney Katie McCutcheon prosecuted the case, and Lawrence Farfield pled guilty in June to defrauding the Department of Labor by filing false tax returns and not paying unemployment insurance taxes. Farfield is expected to be sentenced on September 12, 2012, and the court is expected to order restitution of more than $2,500 in unpaid unemployment insurance taxes to the Department of Labor.
Governor Cuomo said, "Those who cheat the unemployment insurance system, whether they are claimants improperly receiving benefits or employers evading unemployment insurance taxes, are stealing money from those who need it most: New Yorkers who are unemployed through no fault of their own. We will continue our efforts to root out and prosecute those committing fraud against our unemployment insurance system."
Counties in the Capital Region have recovered thousands of dollars in stolen benefits over the last year. Schenectady County has recovered $83,961, and Albany County has recovered $86,781 from claimants working for employers such as the New York State Department of Taxation and Finance; Albany Medical Center; Owen, Renz & Lee; Compass Two; and Chartwells. Saratoga County has recovered $26,265 from claimants employed by companies such as Lazare; Cardona & Sons; Carbone Auto Group; Nemer Volkswagen; Executive Cleaning Service; and World Logistics. Rensselaer County has recovered $42,365 from claimants employed by companies such as JC Penney; Maxim Health Care; and WellPoint Co.
Employers across the state contribute to the Unemployment Insurance Trust Fund. When the Fund is forced to pay out because of a fraudulent claim, employers have to pay more -- and that means consumers will be paying more as well.
New York State operates one of the largest unemployment insurance systems in the country. In 2011, New York State paid out nearly $7.7 billion in total unemployment insurance benefits to 1.15 million people. At the height of the recession in 2009, the state paid out $9.2 billion in unemployment insurance payments to 1.2 million people.
"We urge every employer to carefully examine their monthly statement of unemployment insurance benefit payments from the Department of Labor," said New York State Labor Commissioner Peter M. Rivera. "If you see an employee collecting benefits while still working, alert the Department as soon as possible. This not only saves taxpayer dollars, but also helps to keep your unemployment insurance taxes low by preventing wrongful charges to your account."
The Department of Labor's Office of Special Investigations (OSI) partners with employers to aggressively investigate and root out unemployment insurance fraud within their businesses. OSI builds cases and refers them to local district attorneys to prosecute. During the last three years, DOL has uncovered more than $150,480,451 in fraudulent unemployment insurance overpayments and referred more than 2,600 cases to district attorneys and law enforcement agencies, including 750 last year alone. Over the last twelve months, OSI has referred 156 fraud cases totaling more than $1.1 million to district attorneys in Schenectady, Albany, Saratoga and Rensselaer counties.
New York State Police Superintendent Joseph A. D'Amico said: "I thank the Department of Labor, the State Police Bureau of Criminal Investigation and the Capital Region District Attorneys for their collaborative efforts in this investigation. As a result, individuals will be held accountable for defrauding the State's Unemployment Insurance program, an expense ultimately paid by business owners, clients, and the public."
Schenectady County District Attorney Robert M. Carney said: "The successful prosecution of unemployment insurance fraud cases in our County has been greatly enhanced by state funds that allow our office to dedicate an assistant district attorney to focus on fraud-related crimes. Devoting resources to these types of crimes benefits every taxpayer by recouping monies for the State of New York. Interagency collaboration maximizes the law enforcement response we need to reduce such fraudulent and deceptive criminal activity in our community, and I am grateful to the Governor's Office and the Department of Labor for spearheading these efforts."
Albany County District Attorney David Soares said: "I commend the investigators from the NYS Department of Labor for their commitment to rooting out fraud and corruption. Unemployment insurance is intended to assist those who are out of work and offer a way for caretakers to provide for their families while they are seeking new employment. Individuals that would try to benefit by defrauding this system will be held accountable. These cases will now free up thousands of dollars in reserve funds for individuals who rightfully deserve these benefits. In these tough economic times, I will not allow undeserving individuals to steal resources and benefits from those who truly need assistance. I thank the New York State Department of Labor's Office of Special Investigations for uncovering these individuals and will remain aggressive in bringing criminals who defraud the Unemployment Insurance system to justice."
Saratoga County District Attorney James A. Murphy, III said: "State and local government agencies working together makes sense and results in good cases that save small business owners tens of thousands of dollars. Every time someone commits unemployment insurance fraud it's like taking money out of a business owner's pocket, which increase is ultimately passed on to the consumer in higher prices. I proudly stand with Governor Cuomo and New York State Labor Commissioner Peter M. Rivera and my fellow DAs to bring a stop this fraudulent scheme that preys on hardworking citizens and innocent business owners."
In May 2012, Governor Cuomo announced that $51.2 million in fraudulently collected unemployment insurance benefits were returned to New York State's Unemployment Insurance Trust Fund through the Treasury Offset Program (TOP), a state-federal partnership in which federal tax refunds are intercepted to cover delinquent debts. New York State was the first state in the nation to use TOP to recover fraudulently collected unemployment insurance benefits. The program recovered $51.2 million - the largest amount in the nation - from more than 50,000 individuals.
Anyone with information about unemployment insurance fraud should call the Department of Labor's toll-free fraud hotline at (888) 598-2077.