Former Unemployment Insurance Agency staffer pleads guilty in fraud scheme

Mark Hicks
The Detroit News

A former lead claims examiner for the Michigan Unemployment Insurance Agency has pleaded guilty to a wire fraud charge in connection with a pandemic-related unemployment insurance fraud scheme, the U.S. Attorney's Office announced Friday.

Jermaine Rose, 43, pleaded guilty to one count of conspiracy to commit wire fraud during a hearing Thursday, records show.

Sentencing is scheduled for July 21 before U.S. District Judge Linda Parker.

He faces up to 20 years in prison.

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“The theft of pandemic unemployment insurance benefits is always a serious crime. The fact that an employee of the Michigan Unemployment Insurance Agency facilitated this theft makes it all the more outlandish," U.S. Attorney Dawn Ison said Friday. "The conduct here was a major breach of the public trust, and my office is committed to bringing all those who abuse the public trust by participating in Covid-19 fraud schemes to justice.”

Reached Friday night, Amir Makled, Rose's attorney, said his client "is obviously very regretful for the choice he made and he accepted responsibility for it."

Rose, who had worked with the state since 2004, was charged in August of 2020.

Weeks earlier, an investigation involving personnel from the U.S. Department of Labor and U.S. Secret Service had begun amid allegations about a scheme aimed at seizing millions of dollars in pandemic unemployment assistance. The probe focused on Rose, who had been working from home in Detroit during the pandemic, authorities reported in an affidavit.

According to the plea agreement filed in U.S. District Court this week, Rose could use his credentials to approve specific unemployment insurance claims submitted to the state agency.

In April 2020, he entered into an agreement with others to defraud it, according to the court filing.

"Rose’s co-conspirators would electronically submit fraudulent claims to MUIA in the names of various individuals, some of whom would be victims of identity theft and some of whom were entirely fictitious people," investigators wrote. "These co-conspirators would make various false statements in the applications attesting to the eligibility of these purported claimants and would often upload fictitious documentation to support those fraudulent claims."

The co-conspirators would alert Rose about those claims and he used his state system access to approve them and release the benefits, typically through Bank of America debit cards mailed out, according to the plea agreement.

Rose was often paid between $50 and $150 per claim he touched, officials said.

While some who sought Rose had legitimate claims and paid him to speed up the payment process, many submitted fraudulent ones in bulk, according to the plea agreement. "Rose was well aware that many of the claims that he authorized were fraudulent."

His actions were estimated to have cost the agency between $550,000 and $1.5 million.

"During a time when so many deserving people suffered from pandemic-related economic challenges, Rose exploited his position to release payment on fraudulent unemployment insurance claims in exchange for illicit payments from his co-conspirators," Special Agent-in-Charge Irene Lindow, Chicago Region, U.S. Department of Labor Office of Inspector General, said Friday.

Makled said that early in the pandemic, "claims were backlogged for several weeks, and (Rose) made the unfortunate decision to try to move people to the front of the line and attempted to clear flags that were raised for claims the government found to be fraudulent."

He added: "There’s not a substantial pecuniary gain on his behalf. It was just a regretful decision."

Rose was initially suspended then terminated from his position.

Last month, the Michigan Unemployment Insurance Agency reported it had suspended or fired 18 employees during the pandemic due to pending criminal investigations.

A state audit found the agency lost more than $8.5 billion to suspected fraudulent payments amid record claims and persistent attempts at fraud.

In December, the U.S. Secret Service reported at a minimum, nearly $100 billion had been stolen from COVID-19 relief programs.