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AUDIT: Whitmer Wasted $12B Paying Out Fraudulent Unemployment Claims

'The Whitmer Administration has continued to show incompetence and disrespect for the taxpayers they serve...'

(Bruce Walker, The Center Square) An outside audit has uncovered the Michigan Unemployment Insurance Agency paid approximately $8.5 billion in fraudulent claims since March 2020.

The Deloitte audit results were announced Wednesday, one month after the Michigan Auditor General reported the UIA erroneously remitted nearly $4 billion in Pandemic Unemployment Assistance, the program paid from the federally funded Coronavirus Aid, Relief and Economic Security Act.

Some of the $4 billion blunder was attributed to UIA’s erroneous application of eligibility criteria, and, according to the Detroit News, the UIA claims an unspecified amount of that number may have been counted in the fraudulent claims uncovered by the Deloitte audit.

The UIA has been under fire since the beginning of the pandemic in March 2020. Former UIA Director Steve Gray resigned in November 2020, and received a $85,872 severance package, which was sealed with a confidentiality agreement regarding his job performance and departure.

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“The UIA and the billions they have paid out in fraudulent claims is a massive hit to taxpayers and the credibility of our government under Gretchen Whitmer,” Eric Ventimiglia, executive director for Michigan Rising Action, said. “After this $8.5 billion failure, it is hard to believe that Whitmer is capable of getting her state departments back on track.”

State Rep. Steve Johnson, R-Wayland, chairs the Michigan House Oversight Committee, which has repeatedly questioned UIA leadership. Johnson lays the blame for the UIA’s audit results on Whitmer.

“The Whitmer Administration has continued to show incompetence and disrespect for the taxpayers they serve,” Johnson said in a statement. “The Whitmer Administration should be ashamed that they lost over $10 billion in taxpayer money under their ‘leadership’ and demand that Steve Gray pay back his $85,000 hush fund buyout.”

Johnson announced the committee he chairs will conduct a joint hearing with the Senate Oversight Committee to investigate UIA improprieties.

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“This is absolutely unacceptable to the taxpayers of Michigan and there should be consequences for this level of gross mismanagement, but alas, if the Whitmer Administration is consistent on anything, there will be no accountability,” he said.

Tori Sachs, executive director of the Michigan Freedom Fund, noted the state’s general fund for the 2022 fiscal year is $11.8 billion, which is lower than the $12.4 billion the UIA misspent.

“Governor Whitmer’s team handed out over $12 billion in fraudulent and incorrect unemployment payments,” Sachs said in a statement. “The Whitmer administration wasted these billions while small businesses were forced to shut down, workers lost their jobs, and were unable to get the unemployment they needed and qualified for,” she added.

Sachs alleges the governor was more concerned with seeking the vice presidential nomination from then-presidential candidate Joe Biden in 2020 than she was in overseeing the administration of the departments under her authority.

“Whitmer was too distracted by raising her national political profile and auditioning for Vice President to worry about suffering caused by her ridiculous orders and ensuring basic competence in her own government,” Sachs said.

Then to cover up her administration’s failures, Whitmer bought the former director’s silence with a taxpayer-funded hush money parachute,” she continued. “It is incomprehensible how a state agency, on Whitmer’s watch, could recklessly waste more money than the state government spends on its entire general fund budget. In any other job, the leader, in this case Whitmer, would be fired and investigated.”

In a letter addressed to the governor, Sen. Ed McBroom, R-Vulcan, and Johnson, current UIA Director Julia Dale downplayed the billions of dollars erroneously paid out by her department.

“According to the analysis conducted by Deloitte and Touche LLP, less than 1% of claims paid since October 2020 were estimated to be a result of imposter fraud or intentional misrepresentation,” said the letter.

“Not only is this below the commonly accepted average, but it is also an improvement upon UIA’s pre-pandemic performance,” it added. “UIAs [sic] success in fraud detection and deterrence is the result of a distinguished, multi-tiered approach incorporating a number of policy, technological, and operations reforms implemented by the agency.”

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