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November 15, 2012

REGION 5 ETA WORKFORCE DEVELOPMENT LETTER 002-13

TO:  Region V State Workforce Agencies (SWAs)

FROM:   Byron Zuidema
             BYRON ZUIDEMA
             Regional Administrator

Subject:  Fraud or other Crimes in Unemployment Compensation Programs

AFFECTED PROGRAM:  Unemployment Insurance

PURPOSE:  To remind State Agencies of the long standing agreement with the Office of Inspector General (OIG) in dealing with cases of fraud or other crimes in unemployment compensation programs.  

REFERENCE:  Unemployment Insurance Service Information Bulletin No 14-85, dated February 8, 1985; Unemployment Insurance Program Letter (UIPL) No. 16-85, dated May 13, 1985; and UIPL No. 21-90, dated April 4, 1990; and UIPL 29-05, dated August 2, 2005.

BACKGROUND:  In 1985, a Memorandum of Understanding (MOU) was executed between the Employment and Training Administration (ETA) and the OIG to establish the role of the OIG in investigating cases of fraud or other crimes in the UI program.  The MOU defined the types of fraud and established monetary thresholds for state UI agencies to refer cases to the OIG.  The OIG agreed to assume responsibility for investigating and prosecuting fraud cases that meet the established criteria and, upon request, to aid state UI agencies in other incidences of fraud or abuse.

The MOU was later reissued in 2005.  Consistent with the long standing Memorandum of Understanding between the OIG and ETA, the OIG continues to assist SWAs in their investigations and prosecutions, as appropriate. 

MESSAGE:  This Memorandum serves as a reminder of that long standing MOU between the OIG and the ETA to establish procedures to address issues of fraud, vulnerability, and integrity in UI programs and to further the capabilities of the SWAs, OUI, and OIG to successfully fulfill their roles and responsibilities concerning cases of fraud or other crimes in regular State-UI and Federal-UI programs. 

States are responsible for promulgating their own UI laws and regulations as long as they conform to Federal law.  Each SWA designs its own UI program and investigates and prosecutes fraud and abuse under the state law and regulations.

It is the responsibility of the Administrator of each SWA to promptly report to the Chicago OIG and ETA Regional Offices known or substantive allegations of malfeasance, criminal misconduct, and large-scale fraud meeting the criteria specified below.  A substantive allegation is one for which the SWA Administrator has determined that there is a reasonable basis to the allegation.  The SWA Administrator may delegate the responsibility for determining whether there is a reasonable basis to the allegation and the responsibility for reporting allegations to appropriate staff of the SWA.  Substantive allegations will be reported through the Chicago ETA Regional Administrator (RA) or can be reported simultaneously to the Chicago RA and the Chicago OIG Special Agent in Charge (SAC).  The SWA Administrator or the Administrator’s designee will make the initial contact regarding the allegation by telephone or email [1]/ to the Chicago ETA RA or simultaneously with the OIG SAC.  A written notification with all pertinent details must then be forwarded by the SWA to the Chicago ETA RA and the Chicago OIG SAC within five (5) business days of the initial notification.  The SWAs also have a responsibility to report immediately any suspected cases of fraud or abuse to their own State investigative agencies as required by State law and regulations.

Known instances or allegations of potentially illegal or fraudulent activity in excess of $5,000 [2]/ must be reported through the Chicago ETA Regional Office or simultaneously with the OIG SAC for the following programs:

·         Unemployment Compensation for Federal Employees (UCFE);

·         Unemployment Compensation for Ex-Service Members (UCX);

·         Trade Adjustment Assistance (TAA);

·         Disaster Unemployment Assistance (DUA);

·         Extended benefit programs, wholly or partially funded by the Federal government.

Similarly, known instances or allegations of potentially illegal or fraudulent activity in any amount for the following categories will be reported through the Chicago ETA Regional Office or simultaneously with the OIG SAC:

·         Internal and external thefts and embezzlements of UI administrative funds;

·         Fictitious/fraudulent employer schemes, potentially involving multiple states and/or international boundaries;

·         Schemes involving claims or taxes in multiple states and/or international boundaries;

·         Multi-claimant or multi-state schemes involving the use of false federal documentation (social security numbers, military records, immigration documents, etc.);

·         Schemes involving counterfeit benefit checks or multi-victim forgery cases such as forged UI weekly certifications and forged UI check cashing.

Within 5 days after a case is reported to the RA and the Chicago OIG SAC, the OIG will contact the SWA to discuss the prospects of whether or not an investigation by the OIG will be initiated.  Within 45 days of the initial referral, a written decision will be provided to the SWA and the RA on whether or not the OIG will proceed with an investigation.  If the case is not accepted by the OIG, the SWA will determine appropriate action.

ACTION REQUIRED:  SWAs are requested to provide this information to appropriate staff.

REPLY REQUESTED AND DUE DATE:  None.

ORIGINATING OFFICE AND CONTACTS

ETA:  Office of State Systems, Division of Unemployment Insurance; John Scott, Division Chief, at (312) 596-5507; or Steffanie Belmonte, Unemployment Insurance Specialist, at (312) 596-5436. 

OIG:  Office of Inspector General, James Vanderberg, Special Agent in Charge, at (312) 886-6622.

BYRON ZUIDEMA                                                              JAMES VANDERBERG

Regional Administrator                                                          Special Agent-In-Charge

cc:        State UI Directors

            Gay Gilbert, Administrator, Office of Unemployment Insurance


[1] / Due to ETA Personally Identifiable Information (PII) requirements, any written notifications that include PII must be encrypted or sanitized prior to transmittal.

[2] / Upon mutual agreement between the SWA, Chicago OIG SAC, and the ETA RA, the dollar threshold for reporting may be adjusted on a state-by-state or Regional basis.


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