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Michigan paid millions of dollars in unemployment to the dead and incarcerated

Michigan’s agency responsible for unemployment benefits distributed hundreds of millions of dollars to potentially ineligible people, some of whom were in prison or dead, according to findings from the Michigan Auditor General’s Office.

Even after determining that the people who filed complaints were in prison or dead, the Unemployment Insurance Agency still paid them $1.7 million, the auditor found.

When the fraud was identified by the agency’s investigative unit, the agency underestimated penalties by nearly 50 percent because of problems with its internal computer system, the auditor found. And while it can still impose an additional $840 million in fines for fraud, the agency has rarely attempted to identify fraudsters, recoup ill-gotten gains or impose penalties in a few select transactions reviewed by the auditor .

The findings, released Wednesday, are the latest in a series of reviews by the auditor of the troubled agency, which is part of the Department of Labor and Economic Opportunity.

Total results include:

  • Between January 2020 and October 2022, the state issued $245 million in payments to potentially ineligible people, including the dead, incarcerated people, residents of long-term care facilities and people employed by the agency or the Ministry of Labor.
  • The agency underestimated fraud penalties by 49.4% due to problems with an internal data system. The agency could still impose up to $840 million in additional sanctions.
  • After reviewing a series of 30 cases, the auditor found that the agency failed to attempt to identify 70% of the fraudsters.
  • In the same cases, the agency did not attempt to recover 96.7% of the affected payments or impose penalties for fraud.
  • The agency also failed to refer 90% of these selected fraud cases to law enforcement.

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