Audit uncovers costly mistakes and fraud at unemployment office

Mar 23, 2011

A legislative watchdog says Michigan’s unemployment office failed to catch overpayments and cases of fraud as the agency was hammered with jobless claims during the Great Recession.

The Michigan Auditor General says the mistakes cost taxpayers an estimated $260 million.

Like many states, Michigan’s been forced to borrow money from the federal government – almost $4 billion - to cover its jobless claims as unemployment reached peaks not seen in three decades (higher than 14%).

The Auditor General report found the agency ran into trouble handling all those claims.

The auditor’s sample found thousands of cases where the state accidentally overpaid benefits that were never recovered.

The audit also found instances where the state failed to detect cases of fraud that would have also been punished with big fines.

The unemployment agency is disputing some of the findings where the auditor determined there was fraud. The agency says in the other cases, it’s taking steps to fix the problems uncovered by the Auditor General.