Michigan investigator awarded for exposing multi-million dollar unemployment fraud ring

The U.S. Department of Labor has awarded an investigator with the Michigan Unemployment Insurance Agency for exposing an interstate, multimillion dollar insurance fraud ring.

UIA Regulation Agent Kurt Eggly, a senior investigator with the agency, collaborated with federal agencies to identify 15 suspects who have since been convicted of wire fraud, conspiracy to commit wire fraud or aggravated identity theft, the UIA said in a press release. Eggly received the Department of Labor Inspector General Special Achievement Award, marking the third time he has won the award.

The fraud group filed nearly 600 fake claims across 19 states, including 100 fake claims in Michigan, according to the release. If successful, the scheme would have won the group close to $7 million.

The group's moves came as Michigan accumulated more than $8.5 billion by December 2021 in suspected fraudulent unemployment payments tied to loosened security measures and a computer glitch during the COVID pandemic, a significant jump from 2020 estimates ranging in the "hundreds of millions," according to a Deloitte report for the UIA.

That state report found that Michigan's fraud total included nearly $2.8 billion in imposter fraud or claims involving stolen identities, nearly $5.7 billion in likely intentional misrepresentation cases or claims involving false statements or documents. In addition, a 2021 audit identified about $3.9 billion in ineligible payments due to a state error in eligibility criteria, but the agency believes a portion of that $3.9 billion overlaps with the intentional misrepresentation number.

 “Kurt’s work exemplifies the very best in investigative techniques to allow him to build solid cases that stand up in court," UIA Director Julia Dale said in the Friday release. "I’ll put Kurt’s skills up against any agent in the country when it comes to fighting fraud."

Courts sentenced the last of the 15 suspects to prison in January.

The U.S. Attorney's Office in Detroit said the defendants were ordered to pay $2.2 million in restitution.

The UIA has since claimed success over charging 162 individuals with unemployment benefit thefts since March 2020, including 91 convictions and more than $90 million in recovered assets, according to the release, which did not note the $8.5 billion in fraud losses.

Republican lawmakers have criticized the lax effort of the administration of Gov. Gretchen Whitmer for the fraud, which resulted after the Michigan agency made changes during the pandemic that made it more susceptible to fraud. One of those changes intentionally allowed payments to be made without the usual identity verification procedures ahead of the payment, while a glitch in the state's computer's fraud management system in May 2020, according to the agency and a 2020 state audit.

The U.S. Department of Labor's award to Eggly is the sixth in a string of federal recognitions for the state's work in investigating fraud, according to the release.

“I want to thank the DOL and all our law enforcement partners for bringing these criminals to justice,” Dale said. “It is our mission to create an agency that is a national model for fast, fair, and fraud-free service, and our partners have been instrumental in bringing bad actors to justice and helping us achieve that mission.”

amunoz@detroitnews.com