215 Atlantic Automotive Workers Ordered to Repay Unemployment Benefits to State of Michigan

75 intentionally drew benefits illegally

DETROIT, May 27 -- Two hundred and fifteen workers with Atlantic Automotive in Benton Harbor have been ordered to repay unemployment insurance benefits they drew while on the job.

"These workers were employed by Atlantic Automotive," Sharon Bommarito, director of Michigan's Unemployment Insurance Agency (UIA), said, "and collected unemployment benefits while working or receiving earnings, which violates the state's unemployment insurance (UI) law."

"In 75 cases, we found workers intentionally misrepresented their employment status by claiming they were unemployed, while, in fact, they were on the job, working full-time," Bommarito said.

In the remaining 140 cases, the workers failed to correctly report some earnings, such as holiday, training or vacation pay, while they were collecting unemployment benefits.

"In these cases, we believe that the workers' actions were unintentional," Bommarito said. "But they must still repay the agency for the benefits they received."

In total, the 215 must repay $693,419 in unemployment benefits to the state's unemployment insurance program. The 75 who intentionally defrauded the agency must pay an additional $2.3 million in penalties.

If the agency is not compensated for the benefits and penalties, then it will begin collection efforts that could ultimately lead to liens against their personal property and tax returns.

Bommarito explained that the plan to defraud the agency began after periodic layoffs at Atlantic Automotive that typically occur in January and July. Employees will file for unemployment benefits during the layoffs. In 75 cases, however, the workers continued to claim unemployment benefits after the layoffs had ended, and they were back to work.

"The company brought the issue to our attention after they became aware of one employee who was drawing benefits while working. Further investigation uncovered others," Bommarito said. "Atlantic Automotive officials were very cooperative with us, and, in fact, provided us with the information they had collected, which we then used to open our investigation."

UIA will begin efforts to reclaim the benefits that were paid to all 215 Atlantic Automotive workers, as well as penalty charges. Bommarito said the agency has several methods at its disposal for recouping the money. The agency can:

* Have all or part of the workers' Michigan income tax refund withheld and applied against their restitution;

* Recover the workers' restitution and penalties from future unemployment benefits;

* Place a lien against property they own in Michigan, or against any bank accounts they have in the state, or both, in order to collect the penalties; and

* Refer the accounts to Michigan's Attorney General to obtain a judgment for restitution and penalties and garnish the workers' wages.

"Maintaining the integrity of Michigan's unemployment insurance program is a key priority for UIA," David Plawecki, a deputy director with the state's Department of Labor & Economic Growth, said. "We're taking a firm stand against anyone who tries to defraud the UI system -- whether the person is a worker or an employer."

In addition to fighting fraud among workers, the agency is focusing on employers who are paying less than their fair share of unemployment taxes through a practice known as "SUTA dumping."

"In early May, Governor Granholm signed into law several measures that close loopholes in the state's UI law that some employers have used to avoid paying their fair share of unemployment taxes," Plawecki noted. "Unfortunately, the legislation does not fully address the entire SUTA dumping problem, and we will be pursuing further legislation to slam the door on those remaining loopholes."

"We must protect the integrity of the UI program to ensure that it remains fiscally sound and able to help those who are legitimately entitled to unemployment benefits," he said.

Unemployment Insurance Agency news releases are available at the agency's website (http://www.michigan.gov/uia ).