UIPL10-87acc.pdf

ETA Advisory File Text

U.S. DEPARTMENT OF LABOR Employment and Training Administration Washington D.C. 20213 DIRECTIVE UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 10-87 TO ALL STATE EMPLOYMENT SECURITY AGENCIES FROM DONALD J. KULICK Administrator for Regional anagement SUBJECT Prosecution of Fraudulent Claims in the Unemployment Insurance UI Program 1. Purpose. To provide State Employment Security gencres SESAs with interpretive guidance and to furnish procedural instructions on the above subject. 2. References. 18 U.S.C. S641 18 U.S.C. 51341 18 U.S.C. 3663 e Z B and Memorandum of Understand- ing MOU between the Department of Labor s Office of the Inspector General OIG and the Employment and Training Administration ETA regarding Unemployment Compensation criminal investigations transmitted in UIS Information Bulletin No. 14-85 copy attached . 3. Backqround. Over the past several months some Regional Offices as well as SESAs have brought to our attention certain actions taken by the Department of Justice DOJ relating to the prosecution of UI fraud cases in Federal courts. Specifically the issues are a. May the DOJ during plea bargaining with a claimant reduce the amount of the initial UI benefit overpayment b. May the DOJ prosecute fraudulent State UI overpayments under 18 U.S.C.5641 Theft of Government Property r RESCISSIONS EXPIRATION DATE February 28 1988 .. DISTRIBUTION c. Does t.he OIG have the aut.hority pursuant t.o the MOU to require SESAs to refer fraudulent State UI claims for investigation and prosecution in Federal courts Following is a brief discussion of the facts surrounding each issue our guidance on the issue. and procedural instructions for SESA use 4. Plea Barqaininp a. Summary of Issue. This issue involved fraudulent UI claims both under the State UI program and Federal programs i.e. Unemployment. Compensation for Former Federal Employees UCFE and Unemployment. Compensation for Ex-Servicemembers UCX . The initial determination issued by the SESAs in these fraud cases generally pertained to claimants who had been employed while claiming UI benefits for several weeks. Under State UI law. each week was t.reat.ed as a separate count. of fraud. Either because they were Federal program cases that. met. t.he prosecut.ion referral criteria or were State UI cases that. were prosecut.ed under a Federal statute such as 18 U.S.C. S1341. for mail fraud t.hese cases were referred by t.he SESAs t.o t.he OIG for further investigat ion and prosecution by U.S. At.t.orneys DOJ in Federal courts. In t.hese cases t.he U.S. At.t.orneys ent.ered into plea bargaining wit.h the claimants involved and accepted a guilty plea to only one count of the alleged multiple violations. As a result of such action t.he courts ordered full restitution by the claimant. for only the one week in some inst.ances while in other instances no restitution was ordered. Upon receipt of such court. decisions SESAs only sought. repayment. for t.he amount covered in the restitution order. For example. an original overpayment. of 1 500.00 covering 10 weeks of benefits and 10 counts of violations would be reduced to a court.-ordered restit.ut.ion amount of 150.00 for one count. Upon receipt of t.his amount of repayment.. t.he SESAs considered the case closed and made no further efforts t.o recover the balance of overpayment. amounting to 1 350.00. b. ETA Guidance. The DOJ has complete prosecutorial discretion subject only to the approval of the court. to determine the number of counts of alleged violations and t.o reduce the number of counts during plea bargaining. Additionally DOJ has independent discretionary authority t.o plea bargain and has no obligation t.o seek the DOL s approval or input. on any decision involving a plea bargain. However the fact that the Federal court has not ordered restitution for every violation or complete restitution for the original amount of the overpayments in such cases does not relieve the SESA from the responsibility or obligation to seek full repayment for any and all fraudulent overpayments. Section 3663 e Z B of 18 U.S.C. provides that any amount. repaid to the State under an order of restitution shall be setoff against any amount recovered by the State in any State civil proceeding to the extent provided by the law of that State. Therefore the SESA should make all efforts provided by State law to recover any overpayment even if partial or total restitution is ordered by a court. Federal prosecution is not. a substitute for State action to recover overpayments. c. Procedural Instructions. In cases involving Federal court-ordered restitution of part or all of the original overpayment SESAs will 1 Credit the claimant s overpayment account for the amount of all restitution collected by DOJ or the court and forwarded to the SESA or paid directly to the SESA or the State. 2 Pursue routine collection actions. including utilization of any restitution schedule ordered by the court. to recover the balance of the overpayment until further repayment. of the overpayment has been completed or has otherwise been disposed of in accordance with State law and procedures since an order of restitution is not a final disposition of the entire fraudulent overpayment amount.. While this guidance and procedural instruction relate specifically to Federal court actions the same is also applicable to decisions rendered by State or local courts operating under similar conditions. 5. Prosecution of Fraudulent State UI Claims by the DOJ Under 18 U.S.C. S641 Theft of Government. Property a. Summary of Issue. This issue involved fraudulent. UI claims under the State UI program that were requested from a SESA by OIG for investigation and referral for prosecution by U.S. Attorneys DOJ in Federal Courts under 18 U.S.C. 5641. This section of the Federal criminal code provides for the prosecution of anyone who steals money or thing of value of the United States. The legal justification for such prosecutive action was that since a State UI Trust Fund is commingled with Federal money and because of Federal supervision and control this would allow for the Federal prosecution of a State UI claim as a theft of government property. In the cases referred prosecution was obtained in the Federal court under 18 U.S.C. 5641. b. ETA Guidance. The DOJ and U.S. Attorneys have complete discretion in determining what statutory provision has been violat.ed in order to bring Federal prosecution. Any agreements reached with DOJ t.o change the use of 18 U.S.C. S641 as the appropriate criminal provision upon which a Federal prosecution of a fraudulent State UI payment should rest will be the subject of further guidance in t.he fut.ure. c. Procedural Instructions. It. should be noted that. our guidance procedural instructions pertain only to State UI fraudulent. claims and 18 U.S.C. 5641. It does not pertain to Federal program fraudulent claims that may be prosecuted in Federal courts under this Federal criminal statute. Additionally. both State UI fraudulent claims as well as Federal program fraudulent claims may continue to be referred to the OIG for investigat ion and their referral to the DOJ for prosecution in Federal courts under 18 U.S.C. 51341 relating to mail fraud or other Federal statutes as may be decided by the DOJ. 6. Prosecutive Authority of the United States a. Summary of Issue. The foregoing issues caused some SESAs to question whether the OIG has the authority to require them t.o refer State UI fraudulent claims for investigation and prosecution in Federal Courts pursuant to the MOW between OIG and ETA. b. ETA Guidance. Paragraph 2 of the MOU requires SESA notification to OIG of fictitious employer schemes and t.heft embezzlement fraud by SESA employees. Paragraph 3 requires routine referral to the OIG of fraud cases t.hat meet. the referral criteria involving UCFE. UCX TAA. DUA. Redwood Employee Protection Program and FSC. Paragraph 4 of t.he MOU provides that OIG will assist SESAs on other types of claimant fraud cases at the request. of the SESA. From the cases at issue. it would appear that. they would fall under Paragraph 4 of the MOU which pertains to assistance t.o SESAs on request of the SESAs - a cooperative effort. rather than a directory one. and one which it is the St.at.eis option to initiate. c. Procedural Instructions. Except. for fictitious employer schemes SESAs are not required to refer State UI fraudulent claims to the OIG for investigation. Such action would fall under Paragraph 4 of the MOU and is a result of a cooperat.ive arrangement whereby the SESA at its opt.ion requests OIG assistance in such matters. Generally. these kinds of fraudulent. claims should be prosecuted under applicable provisions of the State UI law 6. Action Required. SESA Administrators are requested t.o furnish appropriate staff with a copy of this UIPL for their future guidance on such matt.ers. 7. Inquiries. Direct inquiries to appropriate Regional Office staff . 8. Attachment. Copy of UIS Information Bulletin NO. 14-85.