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State raiding ‘fraud fund’ to balance state budget, despite unpaid refunds

Posted at 6:39 PM, Dec 27, 2016
and last updated 2016-12-27 18:42:41-05

LANSING, Mich. — The state of Michigan owes millions of dollars to people wrongly accused of unemployment fraud, according to the Unemployment Insurance Agency (UIA). However, some citizens take issue with a last minute move by state lawmakers concerning money from that fund.

Governor Rick Snyder has approved transferring $10 million dollars from the contingent fund to the General Fund, in order to balance the state's budget.


John Wirtz, 28, had to fight to clear his name. The state accused him of unemployment fraud and ordered him to pay thousands of dollars in fines or else.

"When the total came out to about $13,000 my eyes just kinda grew, and I go 'Holy cow'," Wirtz recalled.

He said he thought, "How could anybody go through that when they only took out 6 or 700 dollars in unemployment at that point in time?"

Wirtz said he did nothing wrong when he filed for unemployment benefits. He said he thought he was alone, felt helpless, and started paying fines he didn’t even owe.

"All of a sudden when I started doing more research and reading into it and found out you guys were doing an investigation because somebody emailed you about it, then I'm going 'ok, maybe there's a little relief ahead,'" Wirtz recalled.

In November 2016, Wirtz finally had a hearing in front of an administrative law judge. Detroit attorney Tony Paris helped proved his innocence, and he said the state now owes Wirtz about $8,500.

About 2,500 other people are in the same boat, according to the UIA. case-reversals2The agency said it's in the process of repaying $5.4 million to those individuals. In these cases, the state said a computer flagged legitimate claims as fraudulent. The UIA is now required to have a state employee double-check a computer's fraud determination. The agency recently finished a review of 22,000-plus cases. Of that, the UIA said it reversed 93%.

However, some worry if and when they'll ever see their wages and tax refunds returned since Snyder approved moving millions from that 'fraud fund' to balance the state’s books. State senator Dave Hildenbrand, a Republican from Lowell, introduced the bill.

The Problem Solvers interviewed Hildenbrand by phone today and asked why the state legislature is balancing the budget with money owed to citizens. Not all of them have been repaid, according to the UIA.

Hildenbrand replied, "If, for some reason, the fund is short from making those, honoring all those obligations we will certainly put money in to shore up that fund so we can meet those obligations."

As the state balances the budget with Wirtz and other citizens' money, he has no choice but to wait.

"I don't know if it's legal for them to do or what not, but that's not my say," he said.

Wirtz added, "If it's going to go into a General Fund, what if they spend it all and we don't have money left over to get reimbursed at that point in time?"

According to the Senate Fiscal Agency, there's at least $150 million in the contingent fund. Hildenbrand also noted this. However, Congressman Sander Levin is calling for the state to review another 30,000 questionable cases.

The UIA said it's reviewing Levin's request for additional reviews. The Problem Solvers contacted the UIA on Wirtz behalf regarding his refund. We'll keep you updated.