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| Detroit Free Press
Senior officials at the Michigan Unemployment Insurance Agency disagreed over the balance between preventing fraud and rapidly delivering benefits to millions of Michigan residents during the COVID-19 pandemic, which resulted in the distribution of “hundreds of millions” to criminals, a report released by the agency showed Wednesday.
The report, prepared by Deloitte & Touche LLP for the UIA, said: “Obviously there was a lack of consensus among UIA administrators regarding some … changes underway.”
He cited an email sent by Teresa Burns, director of the UIA’s internal controls division, in which Burns said the agency was “pushing forward and relaxing a number of requirements in an effort to be paid as much as possible and get it done quickly. . “
The report noted that Burns said Steve Gray, then UIA director who resigned earlier this month, said during a call with UIA executives that fraud prevention doesn’t was not a high priority. Burns found that “concerning,” according to the report.
The email has not been independently verified by the Detroit Free Press.
The report also noted that while several UIA executives recalled hearing Gray make the comments, Gray denied – and did not recall – making them.
Gray did not immediately respond to a request for comment on Wednesday.
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The report, sent to Gov. Gretchen Whitmer’s office on Wednesday, details how the UIA handled an influx of fraudulent claims this spring that were part of an international criminal network intended to exploit state unemployment programs across the country.
A spokesperson for Whitmer said the agency agreed with the report’s findings and, in many cases, had taken corrective action to address the findings.
“Under new leadership, the UIA will continue to review its operations and procedures to ensure it strikes the right balance between timely payments to hard-working families and protection against fraud,” said Tiffany Brown , spokesperson for the Whitmer office.
Deloitte’s analysis, confirmed by the UIA’s own partial audits, found that it was likely that hundreds of millions of dollars were distributed to criminals. The report noted that most of the funds sent incorrectly came from the federal government, not state money, under the CARES Law of Aid, Relief and Economic Security.
More: 340,000 Michigan jobless claims, or 20%, reported for fraud, state says
As the UIA rushed to distribute benefits to millions of Michigan residents who were made redundant due to statewide business closures under a stay-at-home order, it also experienced a flood of fraudulent requests. In order to obtain advantages for declarers more quickly, the UIA has removed certain stops.
“While the agency’s previous decisions have been aimed at balancing fraud prevention and timely payment of eligible claimants, we strongly agree with the report’s findings that political, technological and organizational changes increased the agency’s potential exposure to fraud, ”said Liza Estlund Olson, UIA Acting Director. Estlund Olson assumed his role after Gray left.
In early June, the agency investigated 340,000 claims that had already received some payment, or 20% of all claims paid by the state at that time.
This means that at least some of the money was distributed to criminals at the same time that benefits were blocked for real claimants, many of whom had been reported for fraud.
The report also found that in a rush to hire more customer service representatives to answer registrant calls, the agency contracted with three external vendors, and the UIA did not perform background checks or due diligence on the contractors they hired, in the hope that the outside suppliers would do so.
One of those hires was Brandi Hawkins, who has since been indicted in a scheme to fraudulently disburse more than $ 2 million in unemployment insurance benefits. Hawkins was indicted by the Office of US Attorney Matthew Schneider in July after a search of his home revealed more than $ 200,000 in cash.
The report found that, based on interviews, Hawkins was fired on June 17, but this dismissal was not properly communicated to the appropriate UIA personnel, and that she had maintained access to the system after being released.
State Representative Matt Hall, R-Marshall, who chairs the Joint Select Committee on the COVID-19 Pandemic, said in an emailed statement: “On hearing testimony from the agency and the former Manager Gray over the past few months I’ve been asking about this. “
He said he asked if the fraud detection tools had been changed, if those changes had an impact on the agency’s efficiency and what was being done to ensure the unemployment system was protected and efficient.
“I got few responses until today when we found out their actions were helping,” he said.
To read the full report, click here.
Contact Adrienne Roberts: [email protected].
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