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Report: UIA hired workers convicted of financial crimes, didn't ensure background checks were conducted during pandemic

Posted at 11:37 AM, Mar 18, 2022
and last updated 2022-03-18 13:52:13-04

LANSING, Mich. — A new report shows that the Unemployment Insurance Agency (UIA) employed workers who had been convicted of embezzlement and other financial crimes after failing to ensure pre-employment criminal history background checks were conducted during the COVID-19 pandemic.

The report from the Office of the Auditor General says they have identified 71 workers still employed with one or more convictions for crimes such as embezzlement, illegal sale/use of financial transaction device, false pretenses with intent to defraud, identity theft and armed robbery.

The purpose of the audit report was to assess the sufficiency of selected UIA practices for worker onboarding and offboarding during the COVID-19 pandemic. The report concluded the UIA practices were not sufficient, noting a number of troubling findings.

The largest spike in unemployment in Michigan history happened at the onset of the COVID-19 pandemic.

The CARES Act signed by the president back in March 2020 allowed the UIA to employ temporary staff, rehire former employees and retirees on a noncompetitive basis and make other temporary actions to quickly process UI applications and claims.

In April 2020, UA started getting help from three temporary staffing agencies, 16 Michigan Works! Agencies and other state agencies to hire limited-term employees to supplement its existing staff.

The audit found that UIA didn’t ensure that preemployment criminal history background checks were conducted on 5,508 staffing agency and Michigan Works! workers. According to the report’s findings, they identified 71 workers still employed with one or more money-related crime convictions.

The report also says 63 of 139 former workers they sampled continued to have access to the state’s network and Michigan Integrated Data Automated System (MiDAS) to view and make unauthorized changes to claims for an average of 32.6 days after their departure. According to the report, the continued access contributed to the $3.8 million UI fraud a former worker committed in mid-2020.

The report also found that the UIA and Department of Labor and Economic Opportunity (LEO) did not sufficiently address conflicts and ethics, laptop computer sanitization and insurance requirements.

The report also claims that LEO and UIA did not ensure they could hold the staffing agency liable for fraud committed by its workers, which included a known $3.8 million UI fraud.

Overall, the report found that the UIA did not do a sufficient job onboarding or offboarding employees during the pandemic.

Check out the full audit report below to learn more about its findings.

UIA and LEO Worker Onboarding and Offboarding Audit by WXMI on Scribd