Employment and Training Administration
Washington, D. C. 20213






May 13, 1985




May 31, 1986











Acting Administrator
for Regional Management




Referral of Criminal Cases in Unemployment Insurance (UI) Programs to the Office of Inspector General (OIG) for Investigation and Prosecutive Action


  1. Purpose. To provide instructions for the referral to OIG by State Employment Security Agencies (SESAs) of case dealing with crimes in the UI program involving the following :

  2. References. 18 USC 1028; ET Handbook No. 376, Guidelines for Internal Security in Unemployment Insurance Operations.

  3. Background. The Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) have agreed with the Department of Labor (DOL), through a formal Memorandum of Understanding (MOU), that the authority to investigate certain fraud matters pertaining to the UI program shall be vested with the Department's Office of the Inspector General (DIG). Previously, such matters may have been investigated by a SESA or other investigative State and/or Federal agencies. Interim procedural guidelines for SESA implementation of the provisions of the MOU were communicated to SESAs by Regional Offices in May 1984. This directive finalizes procedural guidelines.

  4. Coverage. The procedural guidelines transmitted herein are only applicable to fictitious employer schemes, internal fraud by SESA employees or any other additional areas of mutual investigative concern. (See Section 7 below.) Procedural guidelines dealing with fraudulent benefit overpayments involving UCFE and UCX have been incorporated as changes to the appropriate handbooks for these Federal programs and will be issued shortly. Similarly, procedural guidelines for the TAA/TRA, DUA, REPP and FSC programs are being transmitted to all SESAs in a separate UIPL. Investigation of fraudulent benefit overpayments under the State UI program will continue to be the responsibility of each SESA.

  5. Required Notice to OIG by a SESA. Upon discovery of any suspected fictitious employer scheme or any incident of theft, embezzlement, or fraud involving a SESA employee, the SESA will prepare a notice for OIG investigation. OIG will commit necessary resources to investigate these kinds of offenses on a priority basis jointly with SESA investigative personnel. The potential for nationwide vulnerability and sizable fund losses are present with such offenses. Therefore, appropriate investigative response utilizing the resources of both the OIG and the SESA is essential.

    When a SESA discovers a possible fictitious employer scheme, or an incident involving employee internal fraud, the matter will be telephoned promptly to the Regional Inspector General for Investigations or the Chief of the Security and Special Investigations Branch (RIGI/CSSI) within 24 hours of such discovery. Such telephone report will be followed by written confirmation notice on a memorandum, State report form or DOL Incident Report, Form DL1-156 - one copy of each such notice is to be sent simultaneously to the appropriate Employment and Training Regional Administrator (ETA/RA). This notice should contain an account of the offense including the dollar amount and any other factual information that has already been developed on the case. In addition, and, if appropriate, any physical description of the individuals) involved together with identifying information as to name, SSN, address, date of birth, etc., should be indicated on the referral notice. Designation of responsibility for investigating complaints concerning such offenses will be decided within one working day from the date that the notice is received by the RIGI/CSSI.

  6. Reports. The RIGI/CSSI will provide an Advice of Scheduled Investigation (OIG Form 1048) to the SESA; with a copy to the appropriate ETA/RA, for those cases accepted for investigation. An Investigative Memorandum will be provided to the ETA/RA by the RIGI/CSSI when an investigation discloses SESA employee misconduct, program weaknesses or other issues of significance to UI program management. Information that may impact program administration or current benefit payments will be brought to the attention of the ETA/RA upon discovery by OIG. Additionally, the ETA/RA will be immediately advised by the RIGI/CSSI when notice is received from a SESA involving a fictitious employer scheme or a case of theft/embezzlement/ fraud by a SESA employee. The RIGI/CSSI will notify the SESA, with a copy to the ETA/RA, of the outcome of each case after closing.

  7. Availability of OIG Investigative Resources to Assist SESA Investigative Staff. The RIGI/CSSI will assist SESA investigative units in other types of fraud cases (including claimant fraud) on a case-by-case basis as resources permit upon request by a SESA. The nature of the assistance will depend upon local circumstances and might include problems encountered with suspects from outside the State, lack of resources to investigate sizable fraud which may involve Extended Benefits, the use of false governmental identification documents for claiming entitlement to benefits, interstate claims, etc. These matters will be decided by the RIGI/CSSI and appropriate SESA officials with the knowledge of the ETA/RA.

  8. Effective Date. The above procedures for referral of special cases of fraud and other crimes in the UI program shall apply to individuals or schemes that have been discovered by SESAs on or after the date of this release.

  9. Action Required. SESA administrators are requested to provide the above instructions to appropriate staff members for proper implementation.

  10. Inquiries. Direct inquiries to the appropriate Regional office.

  11. Attachment. OIG Form 104B, Advice of Scheduled Investigation, for informational purposes only.