Categories
18. Restitution, Waiver, Fraud

Stein v MESC – 18.11

Stein v MESC
Digest no. 18.11

Section 9

Cite as: Stein v MESC, 219 Mich App 118 (1996).

Appeal pending: No
Claimant: N/A
Employer: Melvin Stein (Modern Roofing, Inc.)
Docket no.: N/A
Date of decision: September 24, 1996

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COURT OF APPEALS HOLDING: Employees of the Michigan Unemployment Agency may seek and execute search warrants when investigating fraud claims arising out of the Michigan Employment Security Act. That there is statutory authorization for the issuance of subpoenas does not bar the use of a search warrant in appropriate circumstances (e.g., fraud).

FACTS: An employee of the MESC obtained and executed a search warrant to secure employer business records to aid in an investigation of fraudulently obtained unemployment benefits by present and former employees. In response, the owners brought an action against the MESC in the Court of Claims. The employer argued the MESC employee acted outside the scope of her authority in obtaining a search warrant as the MES Act does not expressly authorize the use of search warrants. The employer asserted the MESC employee was limited to the subpoena process as provided in Section 9 as that is the only means of gathering information specifically set forth in the Act.

DECISION: Challenge to search warrant dismissed.

RATIONALE: The use of a subpoena is one way for the MESC to obtain the employer’s records. The statutory provision for a subpoena does not foreclose the option of seeking a search warrant. Relying on Richter v Dep’t of Natural Resources, 172 Mich App 658 (1988), the Court of Appeals observed: “One of the investigative duties contemplated by the act is the duty to investigate fraud.” The court went on to say:

“We believe that encompassed within this authority to conduct fraud investigations, which can lead, as in the instant case, to criminal prosecutions, is the ability to utilize the tools necessary to carry out such investigations, including search warrants. Accordingly, we hold that agents of the MESC are entitled to obtain and execute search warrants when investigating fraud claims arising pursuant to the MESA.”

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99

Categories
18. Restitution, Waiver, Fraud

Sallmen v Danti Tool & Die, Inc – 18.10

Sallmen v Danti Tool & Die, Inc
Digest no. 18.10

Section 62(b)

Cite as: Sallmen v Danti Tool & Die, Inc, unpublished opinion of the Saginaw Circuit Court, issued September 8, 1986 (Docket No. 86-23988-AR-3).

Appeal pending: No
Claimant: Ermin Sallmen
Employer: Danti Tool & Die, Inc.
Docket no.: B85 09103 100921W
Date of decision: September 8, 1996

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CIRCUIT COURT HOLDING: Any and all earnings regardless of how small must be reported to the Commission when certifying for benefits.

FACTS: After becoming unemployed the claimant began to perform part time services for another employer. The services consisted of the claimant’s participating in a sales training program. During this program the claimant received $90.00 per week against future commissions.

Although earning $90.00 per week, the claimant failed to disclose these earnings to the Commission when he certified for his weekly benefits. The claimant indicated he failed to do so because a Commission clerk had advised him that if he earned less than half of his weekly benefit rate he would still be entitled to his full weekly benefits. Therefore, he did not think it necessary to disclose he was working and earning $90.00 per week since that was less than half of his benefit rate.

DECISION: Board decision modified. Claimant must pay restitution, but intentional misrepresentation not established. No fraud penalty.

RATIONALE: It was clear that the claimant had accepted and performed services for the new employer for remuneration and therefore had earnings within the meaning of Section 48(1) of the MES Act.

The claimant had a legal duty to disclose to the Commission that he was working and receiving pay from another employer regardless of the impact on his benefit rate.

Digest Author: Board of Review (original digest here)
Digest Updated:
6/91

Categories
18. Restitution, Waiver, Fraud

Pardon v MESC – 18.09

Pardon v MESC
Digest no. 18.09

Section 62(b)

Cite as: Pardon v MESC, unpublished opinion of the Wayne Circuit Court, issued November 8, 1984 (Docket No. 82-219 979 AE).

Appeal pending: No
Claimant: Larry A. Pardon
Employer: Imperial Cab
Docket no.: B79 16525 77987
Date of decision: November 8, 1984

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CIRCUIT COURT HOLDING: The claimant was not seeking work, was not available for work and wrongfully claimed his children as dependents for purposes of calculations. Consequently, he was subject to the fraud provision of the MES Act, Section 62(b).

FACTS: The claimant had owned a corporation which provided package transportation services. Ultimately the business went bankrupt. The assets of the claimant’s corporation were sold to another corporation owned by his wife which also provided package delivery services. Thereafter, the claimant spent anywhere between 20 and 40 hours per week providing uncompensated services for his wife’s corporation, and spent his free time at a health club.

During the period he was providing uncompensated services and spending a good deal of time at a health club the claimant was drawing unemployment benefits. For purposes of calculation of his benefit rate the claimant claimed his children as dependents. Although the claimant’s four children were all under the age of 13, the wife’s corporation paid them thousands of dollars per year for nominal services. Monies paid to the children were used for household purposes.

DECISION: The claimant was ineligible for benefits and subject to the penalty provision of MES Act Section 62(b) for intentional misrepresentation.

RATIONALE: Although he certified he was seeking work and available the claimant was not looking for a job but was providing uncompensated services to his wife and spending the bulk of his free time in athletic pursuits.

Digest Author: Board of Review (original digest here)
Digest Updated:
6/91

Categories
12. Misconduct

General Motors Corp v Belcher – 12.27

General Motors Corp v Belcher
Digest no. 12.27

Section 29(1)(b)

Cite as: General Motors Corp v Belcher, unpublished opinion of the Wayne Circuit Court, issued October 3, 1979 (Docket No. 78-832-459 AE).

Appeal pending: No
Claimant: Frank Belcher
Employer: General Motors Corp.
Docket no.: B77 3823 55598
Date of decision: October 3, 1979

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CIRCUIT COURT HOLDING: A discharge from employment because of false statements to the Commission is not for reasons constituting misconduct connected with work.

FACTS: The Commission imposed the fraud penalty in Section 62(b) of the Act after finding that the claimant had misrepresented his eligibility for benefits by understating his earnings. The employer then discharged the claimant, in keeping with its standard practice in such cases.

DECISION: The claimant is not disqualified for misconduct discharge.

RATIONALE: “[W]e cannot expect the average factory worker, having notice of shop rules, such as shop rule (1) here involved, to understand that his unemployment payments are a result of contributions made by his employer, and that when he gives false information to the unemployment agent, he is ultimately causing detriment to his own employer.

“In sum, Mr. Belcher has already been penalized under Section 62(b) and has made full restitution, and General Motors has experienced minimal detriment. In line with the Douglas [Chrysler Corp v Douglas, Wayne Circuit Court, Case No 101-015, June 6, 1968] decision and those upon which it relied, Mr. Belcher’s discharge was clearly not due to ‘misconduct connected with his work.'”

Digest Author: Board of Review (original digest here)
Digest Updated: 11/90

Categories
16. Procedures/Appeals 18. Restitution, Waiver, Fraud

Sanders v MESC – 18.12

Sanders v MESC
Digest no. 18.12

Section 62(b)

Cite as: Sanders v MESC, unpublished opinion of the Wayne Circuit Court, issued April 30, 1957 (Docket No. 287-132).

Appeal pending: No
Claimant: Early Sanders
Employer: Chrysler Corporation
Docket no.: B56-769-18197
Date of decision: April 30, 1957

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CIRCUIT COURT HOLDING: The burden of establishing fraud by competent evidence rests with the MESC.

FACTS: The claimant received a telegram on Thursday to return to work that same day. Also that day he reported to an office of the Commission and obtained a benefit check for the previous week. The following week he again reported to the Commission and certified for benefits for the prior week despite having returned to work for part of that week.

DECISION: The finding of claimant fraud was upheld.

RATIONALE: The Commission’s agent testified the claimant was asked about his earnings in the week in question. She said she did not require the claimant to fill in the day of the week and it is conceivable that had she so required, the claimant would have changed his entries. But that is conjecture. The fact remains that the dates the claimant entered were wrong and that he had returned to work on the day he had received his previous benefit check.

The burden should be upon the Commission to establish that fraud was committed, and fraud should not be presumed but established by competent proof that persuades one that a proper inference may be drawn. For it must be conceded that the Commission could not be expected to secure an admission by a claimant that he had committed a fraud. So, to prove an intent to defraud an inference must be drawn from the facts themselves.

Digest Author: Board of Review (original digest here)
Digest Updated:
7/99