Unemployment benefits fraud is a type of insurance fraud which the offender commits a fraudulent act by knowingly and intentionally presents, or prepares with knowledge an application with materially false information or withhold information to/from New York State Department of Labor in order to receive unemployment benefits.

Recent legislation and general policy of unemployment benefits fraud crackdown changes released New York State prosecutors and investigators after un-expecting and expecting unemployment insurance recipients. Unemployment benefits investigation and prosecutions statewide have steadfastly increased as the result.

In most cases, the individual accused of unemployment fraud in New York are not even aware what it is they’ve done wrong. For example, the beneficiary can simply make a human error and forget to cancel his/her unemployment benefits when he/she received a job offer overseas.

According to the New York Penal Law Sec 176.10, a person is guilty of insurance fraud in the fifth degree when he commits a fraudulent insurance act; as a result the person may be charged with a class A misdemeanor by up to 1 year of incarceration. However, if the misappropriated benefits were to exceed the value of one thousand dollars, the alleged beneficiary may be criminal liable to a felony charge.

A person who commits an unemployment benefits fraud, and has been previously convicted within the preceding five years of any insurance fraud crime is charged of aggravated insurance fraud in the fourth degree is a class D felony.

In many cases, clients first learn that they are the targets of an unemployment benefits fraud investigation when they received a letter from the New York State Department of Labor regarding excess benefits. In such cases, one should seek legal advice before speaking to them.

If you are recently being investigated or charged for unemployment insurance fraud in New York, then call our office at (212) 577-6677 to get professional legal assistance.

Helmer Toro, the owner of H&H Bagels in New York City, pleads guilty to grand larceny, offering a false instrument for filing, and for violating Labor Law for unemployment insurance tax manipulation. Toro admitted to failing to pay for more than $369,000 in taxes that were withheld from his employees’ payroll.

Investigation revealed that Toro filed New York City and New York State withholding tax returns under 6 shell companies to obtain a lower unemployment insurance tax rate. Toro admitted to lower his unemployment insurance tax rate by transferring his employees from one shell company to the next.

If convicted, Toro faces a penalty of 50 weekends in prison and a fine of $500,000.

Keith Ryan Jr. a local New York State resident, has been charged with Grand Larceny for fraudulently collecting $8,727 of unemployment benefits while holding 3 jobs, and with Falsifying Business Records for not reporting any of his earned income to the New York State Department of Labor.

Keith Ryan Jr.’s father Keith Ryan Sr. was also charged with Falsifying Business Records in the 2^nd degree. Ryan Jr. also allegedly used another employee’s swipe card to complete his co-worker’s overtime hours in order to pay off the debt he owed to him.

Keith Ryan Sr. was his son supervisor and Chief at the Village of Farmingdale Fire Department when his son worked part-time there. Ryan Sr. allegedly knew what Ryan Jr. was doing and still signed off on the false time sheets.

Ryan Jr. faces a maximum penalty of 7 years in prison if convicted of Grand Larceny in the 2^nd degree and Falsifying Records in the 1^st degree.

Ryan Sr. faces a maximum penalty of 1 year in prison if convicted of falsifying Business Records in the 2^nd degree.

New York State Office of the Attorney General arrested David Cohen, the owner of seven clothing stores in New York City on various charges including allegedly underpaying his workers, falsifying tax and business records, and impeding the criminal investigation. The Attorney General also sued for over $1.5 million in unpaid wages and damages.

Cohen’s clothing stores are Mystique Boutique, Madness Boutique and Exstaza, seven stores in all. According to the government, Cohen’s employees worked up to eleven hours per day, six days per week but most of them were not paid overtime. State and federal law requires overtime payment after forty hours a week. According to the complaint, Cohen has underpaid 150 workers more than $1.5 million in unpaid wages.

The complaint also alleges that when Cohen first discovered that his businesses were investigated, he pressured his workers not to cooperate with the investigation, even going so far as allegedly offering paying a worker $50,000 for information on  workers who were talking to the government.

Another problem from Cohen is that according to the Attorney General, he falsified tax records by underreporting to New York State both the number of employees at his stores and their salaries. This information is used by the state to determine an employer’s liability to the unemployment insurance fund. Misrepresenting payroll in formation is unemployment insurance fraud.

Criminal charges against Cohen include nineteen counts of falsifying business records” in the first degree and nineteen counts of  offering a false instrument for filing. Both charges are class E felonies that potentially carry terms of up to four years in prison each. Additional charges are criminal retaliation, tampering with witnesses, failure to pay wages,  and multiple Labor Law violations.

We receive many questions such as, “Can I be arrested for unemployment insurance fraud?” The short answer is yes. As a matter of fact, according to the New York State Department of Labor, there were 159 arrests made in 2009 in New York City alone for unemployment insurance benefits fraud. In total, $800,122 was stolen from the NYS Unemployment Insurance fund.

UI fraud in New York is investigated by the Department of Labor  and cases singled out for criminal prosecutions are referred to either local DA offices or the Office of the Attorney General for further action. In 2009 there were 55 UI fraud arrests made in Manhattan, followed by 35 in Brooklyn, 33 in Queens, 25 in the Bronx, and 11 in Staten Island.

If criminally prosecuted, unemployment insurance fraud is normally charged as a felony.