LINKEDINCOMMENTMORE

Lansing — The state of Michigan has frozen payments for roughly 340,000 active unemployment claims as potentially fraudulent and required identity verification to the Unemployment Insurance Agency, Department of Labor and Economic Opportunity Director Jeff Donofrio said Friday. 

The flagged accounts make up 15% of the 2.2 million claims filed since the coronavirus pandemic began and state government issued shutdown orders to try to limit the spread of the virus. 

The attack on Michigan's unemployment system is part of a nationwide onslaught on unemployment systems that federal officials said could result in at least $26 billion in unemployment benefits stolen fraudulently. 

"We know a large number of people have been swept up into this who are eligible," Donofrio said during a Friday call with reporters. 

Michigan residents whose accounts have been flagged and received a stop payment notification must verify their identity to continue receiving payments. 

Combating the false claims is a little like "whack-a-mole," Donofrio said, as officials attempt to crack down on various schemes from fraudsters who, at times, have used data from previous third party breaches such as those that occurred at Equifax and Ebay. 

Donofrio called the actions "sickening," but assured residents "we are also taking every step at our disposal to stop these fraudsters.”

The development came as Attorney General Dana Nessel announced a task force to investigate prosecute issues of fraud in the Michigan unemployment insurance program. 

The task force made of members of the U.S. Department of Labor's Office of Inspector General and the state police, labor, treasury and management offices will work to track back IP addresses and financial records to identify suspected fraudulent behavior. The group also will work to recover benefits that were obtained illegally, according to Nessel's office. 

“To steal money from this program intended to support households during a major global crisis is beyond reprehensible," Nessel said in a Friday statement. 

The task force's formation comes in response to an increased effort by criminals to file fraudulent claims using other people's information amid increased unemployment filings and expanded benefits in wake of the COVID-19 pandemic. 

The Secret Service recently issued a national alert "regarding an international criminal ring exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment programs." 

After the federal alert Michigan began examining its unemployment claims and found that criminals had taken advantage of a perfect storm of overworked staff, expanded benefits and record unemployment to attack the Michigan system as well, Donofrio said. 

“Whether it be a natural disaster or global pandemic, law enforcement knows that criminal actors use times of crisis to exploit systems and carry out their criminal actions,” Michigan State Police Director Col. Joe Gasper said in a statement. 

More than 2.2 million unemployment claims have been filed in Michigan since the start of the coronavirus in mid-March, though the number of new weekly claims has slowed in recent weeks. Of those claims, roughly 1.7 million have received at least an initial payment. 

The Unemployment Insurance Agency has been beset by delays because of the huge increase in weekly claims and, more recently, has had to deal also with a rise in fraudulent claims. The state is forcing certain filers to provide additional information to verify their identities before issuing payments. 

eleblanc@detroitnews.com

LINKEDINCOMMENTMORE
Read or Share this story: https://www.detroitnews.com/story/news/local/michigan/2020/06/05/nessel-forms-michigan-task-force-combat-fraudulent-unemployment-claims/3156509001/