Feds charge Michigan contractor in $2M unemployment fraud scheme

LANSING — Federal officials allege a contract employee for the Michigan Unemployment Insurance Agency exploited the coronavirus pandemic to authorize more than $2 million in fraudulent payments.

Authorities allege Brandi Hawkins, 39, of Detroit used "insider access" to approve hundreds of illegitimate claims beginning in April, during a historic wave of layoffs promoted by the virus and economic shutdown orders.

Authorities seized $200,000 in cash while executing a search warrant on Hawkins, according to U.S. Attorney Matthew Schneider's office. Prosecutors claim she used proceeds to purchase "high-end handbags" and other luxury goods. She’s  charged with theft or bribery from a program receiving federal funds, wire fraud and money laundering.

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"These are serious allegations, and my office is committed to prosecuting any person who attempts to use the COVID-19 crisis to defraud the people of Michigan,” Schneider said.

The criminal complaint filed Friday is the first public development in a month-long investigation into suspected unemployment fraud in Michigan by both state and federal officials. Authorities say international imposter rings have targeted jobless agencies across the country in an attempt to take advantage of enhanced benefits offered during the coronavirus pandemic.

The  Michigan Unemployment Agency announced in early June it had frozen 340,000 active accounts that had already been approved for payment, delaying benefits for some legitimate claimants and requiring them to submit additional documentation to confirm their identity while officials investigated potential fraud. 

The investigation of Hawkins is ongoing, according to prosecutors, who will decide whether to seek a criminal indictment once the probe is complete. In her role as a contract employee, Hawkins duties included reviewing, processing and verifying the legitimacy of unemployment claims. 

Bridge was not able to reach Hawkins for this story.

The complaint alleges "probable cause exists" to show Hawkins knowingly and fraudulently transferred, possessed, used, and processed federal funds intended for pandemic unemployment assistance.

She "used access and authority granted by the State of Michigan to fraudulently direct these funds into multiple bank accounts via interstate wire transmissions," according to the complaint.

Federal officials allege she worked "with outside actors," currently unknown to law enforcement, who "entered numerous false claims" into Michigan's unemployment insurance system. The unemployment agency fired her on June 17.

Jeffrey Frost, a special fraud adviser appointed by the state two weeks ago, applauded Schneider's "quick action" in the case. 

"The Unemployment Insurance Agency will continue to work closely with state and federal partners to identify unemployment fraud that can be quickly turned over to law enforcement for prosecution,” Frost said in a statement.

As of July 6, the Michigan UIA said it has resolved 285,000 of the 340,000 active unemployment insurance accounts it had initially frozen during the fraud probe, along with 160,000 of the 200,000 new claims it had held up pending identification verification.