Unemployment Fraud Accusations – A Sour Note for Former Workers


New York City is one of the world’s greatest centers of entertainment. On any given night, you can watch the best actors, musicians and athletes in stage productions, concerts or major sporting events at landmark entertainment venues. These venues rely on employees, such as ticket takers, ushers and concession workers to make your evening a success. Thirty-five former workers at two of these entertainment venues have recently hit a sour note and been accused of committing unemployment fraud, according to today’s ”Fraud of the Day” from WSJ.com.

The article reports that these former employees – mostly ushers – are accused of earning between $10,000 and $38,000 through fraudulent claims for unemployment benefits ”by failing to report that they had been rehired after earlier layoffs.’? Investigators said that the former employees ”continued to fill out online forms claiming they hadn’t yet found a job.’? Officials say the total amount of fraud was $1.5 million.

The charges resulted from a government probe kicked off two summers ago involving the state labor department, police and prosecutors in three city boroughs. (Love the cooperation!? While the probe implicated over 100 employees, officials say ”only some will be prosecuted for felony crimes.’? (Hmm…That doesn’t sound right.)

Neither entertainment venue has been accused of wrong doing. It is also important to point out that the defendants have only been accused of a crime – all are presumed innocent until proven guilty.

So, how can unemployment fraud similar to the facts alleged here be prevented? The state labor commissioner pointed out that New York employers receive monthly statements, indicating the former workers who are receiving unemployment benefits. He cautioned employers to check their statements. This is an important first step, but more can be done.

Here, it is alleged that the fraud was committed by simply continuing to fill out the form online. And, that’s a key point at which fraud can be detected. Agencies should begin to leverage public records and data analytics technology to identify red flags for fraud. That way, they can investigate the potential instances of fraud before they send the checks. That will be music to everyone’s ears.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”35 Charged with NY Unemployment Benefits Fraud,” written by the Associated Press and published by WSJ.com on July 27, 2012.

NEW YORK — A group of 35 former workers at Madison Square Garden and Radio City Music Hall have been charged with fraudulently collecting unemployment benefits during periods when they were on the job.

The workers, many of whom were ushers, were accused of reaping between $10,000 and $38,000 each in undeserved payments by failing to report they had been rehired after earlier layoffs, state labor officials said Friday. Some of the workers had been let go and rehired several times. Investigators said in court filings that during periods when they were working, the employees continued to fill out online forms claiming they hadn’t yet found a job. A total of $1.5 million was taken improperly, officials estimated.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.