Governor Andrew M. Cuomo today announced that an investigation conducted by the New York State Department of Labor (DOL), in collaboration with the Bronx, New York, Kings, and Queens County District Attorneys and the New York State Police (NYSP), has led to the arrests of 35 people who are charged with fraudulently collecting between $10,000 and $38,000 in unemployment insurance payments. Additional arrests are expected in the near future.
The arrests stemmed from an investigation that began in August of 2010. All the arrested individuals were previously employed by Madison Square Garden and Radio City Music Hall, which share common corporate ownership. The employees were laid off and then later rehired. Once rehired, the employees issued false statements to DOL and collected unemployment insurance benefits that they were not entitled to. Over 100 employees were identified by DOL. The District Attorneys are prosecuting 35 individuals for felony crimes. Madison Square Garden and Radio City Music Hall are not targets of the investigation and have fully cooperated with DOL and law enforcement.
"This combined effort between state government and local law enforcement agencies is proof that New York State is aggressively rooting out unemployment insurance fraud at every turn," said Governor Cuomo. "When individuals commit unemployment insurance fraud, all New Yorkers pay for it. They are not only cheating the system, they are stealing directly from the taxpayers. These practices will not be tolerated. The new New York is dedicated to upholding a system of utmost fairness and ensuring that those who flout the law are brought to justice."
Employers across the state contribute to the Unemployment Insurance Trust Fund. When the Fund is forced to pay out because of a fraudulent claim, the 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.
"All employers receive monthly statements of unemployment insurance benefit payments from the Department of Labor," said New York State Labor Commissioner Peter M. Rivera. "We urge every employer to review these monthly statements and alert the Department of Labor as soon as they see an employee collecting benefits while still working. This saves not just taxpayer dollars, but also helps keep employer unemployment insurance taxes low by preventing wrongful charges to their accounts."
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. While DOL has no criminal jurisdiction in regard to prosecuting unemployment insurance fraud, OSI builds cases and refers them to local District Attorneys to prosecute. Over the last three years DOL has uncovered over $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.
New York State Police Superintendent Joseph A. D'Amico said, "Governor Cuomo has made fighting unemployment insurance fraud a high priority. The State Police will continue to work with our partners in state government and local law enforcement to arrest those who commit these crimes against New York State employers."
New York County District Attorney Cyrus R. Vance, Jr. said, "In this economy, unemployment benefits are essential to the families of New Yorkers who have been laid off or find themselves in between jobs. It is important to ensure that these benefits are directed to those who are truly in need, and not to those who have returned to work and are now cheating the system."
Kings County District Attorney Charles J. Hynes said, "I am pleased to be able to work with the Department of Labor on such an important investigation. Stealing from unemployment benefits is taking much needed resources from honest people who need it to feed their families. These defendants will be prosecuted to the full extent of the law."
Queens County District Attorney Richard A. Brown said, "In today's tough economic climate, unemployment insurance benefits are a vital lifeline for many New Yorkers. Those who falsely apply for and receive unemployment benefits cheat legitimately unemployed workers and increase insurance tax rates paid by employers. Their actions erode a vital workplace protection that was created for the benefit of all workers."
Bronx County District Attorney Robert T. Johnson said, "Unemployment benefits provide a safety net for those families and individuals who find themselves deprived of income after losing their job. When people cheat the system by filing fraudulent claims, the safety net is compromised. It depletes available resources for those who are most in need of financial assistance. We estimate that the sixteen defendants who've been charged in Bronx County are responsible for collecting approximately $350,000 by filing fraudulent claims. Such abuse cannot not be tolerated in these tough economic times."
In May 2012, Governor Cuomo announced that $51.2 million in fraudulently-collected unemployment insurance benefits had been 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.
The U.S. Department of Labor's Office of Inspector General also assisted in the investigation.
Anyone with information about unemployment insurance fraud should call the Department of Labor's toll-free fraud hotline at (888) 598-2077.