Michigan’s Unemployment Insurance Agency failed so catastrophically during the government-imposed coronavirus lockdowns that fraudsters calling themselves Kimberly Kardashian and Kylie Jenner received $7,000 unemployment checks, the Detroit News reported.
Neither Kardashian nor Jenner live in Michigan.
Someone illegally filed the Kardashian claim on May 13 from a Traverse City address, but the UIA’s fraud detection software did not detect a problem until May 15, after the state had sent the money.
The agency admits these failures were “much more than an aberration.”
A third-party audit of Michigan’s UIA found that the state paid “hundreds of millions” to fraudulent claimants.
Under Gov. Gretchen Whitmer, who imposed some of the most arbitrary and tyrannical coronavirus restrictions in the Midwest, the UIA has made paying fraudulent unemployment claims a routine occurrence.
The Detroit News received internal emails showing that the UIA purposefully sent thousands of unemployment checks despite knowing that 7-8% of them were fraudulent.
Whitmer’s rush to send unemployment checks to Michiganders whom she intentionally forced out of work caused the Unemployment Insurance Agency to rush their fraud-prevention measures.
“The pressure to get the money out of the door was enormous,” said Liza Estlund Olson, the agency’s acting director since November. “And everybody was looking at ways to figure out how to do that and continue to fit within the parameters of what we normally do.”
The UIA blames a software glitch for sending most of the fraudulent checks, but the agency admits that it decreased verification standards to get checks out more quickly.
When the shutdowns started last year, employees warned then-UIA Director Steve Gray not to lower security standards, but he did not listen to them.
Gray resigned last November, accepted a $85,872 severance package, and signed a non-disclosure agreement to keep Michigan’s citizens from learning about the UIA’s mismanagement.
“The staff totally and completely understands that our job is to pay claimants if they’re eligible to be paid,” Olson said.
The UIA’s system errors began when Gray directed the agency to remove the 10-day waiting period for unemployment benefits and to allow people to apply for backdated benefits.
Without these safeguards, Michigan sent out hefty checks before the Fraud Manager system could detect potential fraud.
Gray’s office allowed the error to persist for nearly two months, from March 31, 2020, through May 19, 2020. Emails indicate that employees did not notice the widespread errors until mid-May.
During that time, the UIA’s chief investigator Timothy Kolar had been moved to a “special project” for the Department of Labor and Economic Opportunity.
When he returned, he told the UIA’s leaders that the agency was approving unemployment benefits “without being put through fraud manager first.”
“We renew our call for Gray to repay the $86,000 hush money payment he received from Governor Whitmer, and encourage the House Oversight Committee to give this new bombshell story the attention it deserves when they begin their investigation of the state’s unemployment agency,” said Eric Ventimiglia, executive director for Michigan Rising Action.
The U.S. Attorney’s Office so far has charged 13 people for defrauding Michigan’s unemployment system.
Michigan Attorney General Dana Nessel has opened another dozen fraud investigations.
The Unemployment Insurance Agency has terminated 10 employees, including five contractors and five full-time staff, for allegedly committing or conspiring to commit fraud.
Kim Kardashian and Kylie Jenner were not the only reality-TV stars’ names used to fraudulently claim unemployment benefits.
One grifter applied for unemployment benefits with a fake photo ID of actor John Krasinski, who played Jim in The Office.