Two Convicted of Unemployment Fraud Bookmark and Share

November 8, 2012

For Immediate Release: November 8, 2012< /b> Contact: Julie Rabinowitz, 207-621-5009

People who collect benefits while employed or who falsify work search records face prosecution

AUGUSTA—Two people have been convicted this fall of theft by deception for fraudulently receiving unemployment insurance payments. John P. Allen of Cumberland County and Leonard Nadeau of York County must not only pay back the benefits they received but also pay assessed penalties and interest.

Allen worked and earned wages while collecting benefits. He was convicted on Sept. 20, 2012, and sentenced to two years with all but three months suspended and two years of probation. He was ordered to pay $15,171 in restitution and a penalty of $7,585 plus interest.

Nadeau was found guilty of fraudulently receiving unemployment benefits totaling $18,175 and sentenced to three years deferred. If he pays $500 per month for three years, he will serve one year of probation. If he does not pay the debt timely he will serve jail time. In addition to the principal, Nadeau owes $9,087 in penalties and $4,867 in interest.

Several other cases are currently working their way through the criminal justice system.

Commissioner of Labor Jeanne Paquette emphasized, “Obtaining benefits under false pretenses is a crime. It takes money away from people who are genuinely in need and burdens employers through increased unemployment taxes.”

“The LePage Administration has made strengthening the unemployment system a priority, and an important part of that is preventing unemployment fraud,” she added.

For people claiming benefits, unemployment insurance fraud usually involves someone misrepresenting information to qualify for unemployment benefits. For example, an individual might continue to receive benefits after fully returning to work, might not report wages earned from temporary work, or might file for benefits under false pretenses or provide false information to the Department of Labor when filing claims.

To identify when people receiving benefits are hired for permanent work, the department cross-matches the list of active claimants against the National Directory of New Hires Database and against employer-reported quarterly wage data.

On the employer side of the unemployment system, fraud includes intentional misclassification of employees as independent contractors, misreporting worker wages to avoid payment of unemployment taxes and “SUTA dumping,” a rate manipulation practice for obtaining a lower tax rate than a business’ unemployment experience would otherwise allow.

The Department of Labor actively pursues the collection of benefit overpayments and any associated fines and interest. The collection process usually begins with by contacting claimants to request repayment or establish a repayment schedule. However, the department regularly uses State income tax filings and lottery winnings to offset monies owed; it also may reduce any unemployment benefits an individual may be eligible to receive. The department garnishes wages when other collection methods prove unsuccessful.

Citizens can report instances of suspected unemployment fraud by phone, email, fax or mail; information is available at . Tips can be kept confidential.