What Are the Civil and Criminal Penalties for Unemployment Fraud?

March 09, 2013 (Press-News.org) Perhaps you made a false statement when you were applying for unemployment insurance benefits, or you allowed a friend to certify for benefits for you. Perhaps you have been working a part-time job and did not report that job to the Department of Labor. Whether willful or not, you now face accusations of unemployment insurance fraud.

What is unemployment fraud? What are the civil consequences of unemployment fraud? When can you face criminal charges for unemployment insurance fraud?

Types of Unemployment Fraud

Unemployment fraud covers a wide range of actions, including:
- Withholding information from the Department of Labor
- Providing the Department of Labor with false information (such as a false name, address or employment information)
- Failing to report all of your income earned
- Working (even part time) while receiving benefits and failing to report that work to the Department of Labor
- Allowing someone else to certify for benefits in your place
- Certifying for benefits while you are out of the country
- Buying, selling, counterfeiting or altering a Social Security account card

The Department of Justice can impose significant penalties for unemployment insurance fraud, including initiating criminal prosecution. Even small instances of insurance fraud can lead to $500 in fines and up to a year in jail. Perhaps more importantly, it can mean the end to your unemployment insurance.

False Statements or Representations

One of the most common forms of unemployment insurance fraud involves making false statements or representations to the Department of Labor. Under New York unemployment law, it is a misdemeanor to "willfully make a false statement or representation with the effect of obtaining ... any benefit or payment ... or in order to reduce the amount of contributions to the fund." This includes making false statements on behalf of others.

The key word in the provision is "willfully." For you to be convicted of a misdemeanor, the state must be able to show that you knew you were making a false statement.

Misdemeanors are punishable by up to a year in prison, and those who make false statements may be forced to forfeit their unemployment insurance benefits for up to 80 days. Yet, it does not always end there.

Take, for example, individuals who fail to tell the Department of Labor that they are working a part- or full-time job. Those individuals could face additional charges such as grand larceny. Grand larceny is theft of $1,000 or more. In the fourth degree (a Class E felony), it can land someone in prison for four years. Theft of more than $1 million (a Class B felony) can lead to 25 years in prison.

Petit larceny, offering a false instrument for filing and falsifying business records are other criminal charges that can attach to unemployment insurance fraud.

Employers Accused of Unemployment Fraud

Employers can also be accused of fraud if they assist in falsifying unemployment records, pay "under the table" wages, misclassify workers as independent contractors or transfer workers between more than one payroll to obtain a lower unemployment insurance tax rate (called "SUTA dumping").

Defending Against UI Fraud Charges

If you face criminal charges for unemployment insurance fraud, do not take those charges lightly. You could lose your unemployment insurance benefits, spend time in prison and pay thousands of dollars in repayment and fines. Instead, seek the help of an attorney experienced in defending benefits fraud charges.

Article provided by The Law Offices of Mark J. Sacco, PLLC
Visit us at www.trafficlawyerny.com