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Panel eyes tougher penalties for jobless fund fraud

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news Mitchell, 57301

Mitchell South Dakota 120 South Lawler 57301

PIERRE -- Hefty fines could be coming for people in South Dakota who falsely claim they are jobless and continue to accept unemployment checks after they've returned to work.

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The state Unemployment Insurance Advisory Council wants financial penalties of 50 percent for a first offense and 100 percent for a subsequent offense.

Council members unanimously gave their endorsement Tuesday. The Legislature will be asked to consider the plan next winter when lawmakers gather for the 2013 session.

The federal government, as part of a new unemployment integrity campaign, is requiring penalties of at least 15 percent in every state.

The 50 percent and 100 percent being proposed in South Dakota would be in addition to requiring that offenders repay the amounts fraudulently collected.

They also can face criminal prosecution. Some people are caught once while others are multiple offenders, according to Pauline Heier, director for the state unemployment insurance division. She said people deliberately misrepresent themselves as unemployed and then try to justify their actions by seeing the benefits checks as "loans." Workers typically don't repay the money. "These are not mistakes," Heier said. The original recommendation Tuesday was a 50 percent penalty.

Council member Shawn Lyons, who heads the South Dakota Retailers Association, looked at a list showing that other states in some cases have adopted tiered systems where penalties increase with multiple offenses.

Lyons proposed adding the 100 percent penalty for subsequent offenses in South Dakota.

Employers pay into the state's unemployment trust fund based on their employee numbers and their histories of layoffs.

During the recent recession, South Dakota's fund went broke because of the high demand for unemployment assistance.

The state Labor Department needed a federal loan to keep checks flowing to jobless workers, and a temporary surcharge was levied on businesses to get the program back on solid financial ground.

By August 2010, the trust fund's balance had recovered to $18.7 million. As of last week, the balance stood at $44.3 million.

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