Unemployment fraud, another COVID-19 scam out of California and more

Thousands falsely charged with unemployment fraud

Between 2013 and 2015, the Michigan Unemployment Insurance Agency allegedly used a flawed automated system — the Michigan Integrated Data Automated System — which falsely charged thousands with unemployment fraud and took millions from the victims, according to an Undark magazine article.

Class-action lawsuits allege that the system searched unemployment datasets and used flawed assumptions to flag people for fraud, such as deferring to an employer who said an employee had quit — and was thus ineligible for benefits — when they were really laid off, according to the article.

The agency charged more than 40,000 people and billed them about five times the original benefits, which included repayment and fines of 400 percent plus interest, according to Undark. The agency later ran a partial audit and admitted that 93% of the charges had been erroneous — yet the agency had already taken millions from people and failed to repay them for years.

See Government’s Use of Algorithm Serves Up False Fraud Charges, by Frankie Schembri, Undark magazine, June 1.

Another COVID-19 scam out of California

On May 27, the city attorney of Los Angeles announced that his office is suing Wellness Matrix Group for allegedly engaging in a “fraudulent scheme” related to the COVID-19 pandemic, according to an NPR article.

The lawsuit alleges that the California-based company sold purported “at-home” tests for the coronavirus and falsely claimed the FDA had approved the tests, according to the article. The company also sold a supposedly coronavirus-killing “virucide,” and claimed the product could “build a force field around your event or even spray your entire city.”

The city attorney also sued Barry Migliorini, the CEO of Wellness Matrix Group, and George Todt, a supposed sales rep and director of business affairs.

See LA Sues California Company, Alleging ‘Sophisticated’ COVID-19 Fraud, by Tom Dreisbach, NPR, May 27.

Fraud in the Wake of COVID-19: ACFE Benchmarking Report

COVID-19 is affecting the business environment in countless ways and will continue to open the door to increased pressure, opportunity and rationalization that can lead to fraud. To illuminate the global pandemic’s impact on the fight against fraud, the ACFE is undertaking a series of benchmarking surveys exploring how fraud risks and anti-fraud programs are changing in the current environment. The Fraud in the Wake of COVID-19: Benchmarking Report summarizes the results of the first of these surveys, which was conducted from late-April to mid-May.

Download the report.