MADISON, Wis. – Jonny Hoffner hasn’t checked his mailbox in the past year without a knot in his stomach. A basket filled with hundreds of documents at his and his wife Michelle’s home tells the story: an endless battle with the State of Wisconsin for thousands of dollars in benefits paid out in 2020.
Like so many others that year, the Hoffners were trying to salvage their livelihoods as Madison wedding photographers after the pandemic wiped out six-figure bookings.
“He came back in pieces,” Michelle explained. “But when it comes to our income, our livelihoods: they have been completely destroyed.”
Nearly two years later, the state accused them of fraudulently taking Pandemic Unemployment Assistance (PUA) and concealing wages. Along with demanding everything back, Jonny said, thousands more were added to the state’s hefty 40% fraud penalty: a total at the time of more than $60,000.
” A little company ? We are small business. It’s us. And the state is coming after us after we’ve just been decimated by a pandemic,” Jonny said.
Then came the relief. Department of Workforce Development administrative law judges said they found no evidence of intentional fraud or concealment, just some honest mistakes in the way they filled out their paperwork – a problem current that has resulted in massive overpayment debt for many. The rulings appeared to reduce the amount due for misclassifications to a much more manageable amount.
By mid-2022, the Hoffners believed the ordeal was over. This was not the case.
Treated “immediately like a criminal”
Fraud was a legitimate problem with billions of dollars stolen across the country after the federal government tried to respond quickly to the pandemic with trillions in aid doled out with, at times, minimal oversight. Organized criminals stole hundreds of thousands of dollars while individuals found ways to steal identities for benefits or take out thousands in $10,000 pandemic emergency loans from Small Business Administration by exploiting a flaw in the application.
But caught in the cracks of thousands of ongoing state and federal fraud investigations, some like the Hoffners: labeled as fraud but with a legitimate claim of innocence.
Just days after receiving rulings seemingly in their favor following their initial appeals, the Hoffners received yet another letter from the DWD in the mail: a single page, with no details, telling them that the department had “overturned” their own rulings. . internal judges taking the side of the Hoffners.
This is something that unemployment attorneys aren’t even sure are allowed. Legal Action of Wisconsin told News 3 Investigates that they are appealing a similar case in which ALJ rulings were “overturned” by the DWD, along with a number of their own cases the lawyers are dealing with. pandemic overpayments due to misclassifications.
“[Administrative law judges] aren’t very independent,” noted attorney Victor Forberger of the Madison Unemployment Appeals Clinic. “They are meant to be.”
For the Hoffners, it was back to the drawing board. Now, months later, they are still immersed in the nightmare.
“They immediately treat you like a criminal,” Michelle said of the hearings.
The couple say the evidence used against them in the hearings has often focused on a blog post they wrote in late 2020, thanking clients for sticking with them and featuring about seven pandemic weddings that Jonny, primarily, had slaughtered. These weddings were two or three hour appointments for Jonny only, not the normal 12 hour packages that included them both. Weddings were short with just a few people while states clamped down on mass gatherings: In one case in Chicago, Jonny served as both witness and photographer.
Overall, canceled bookings and drastically reduced hours meant they earned about a third of their normal income. They tried to turn to alternatives like selling artwork (unsuccessfully) and Airbnb-ing their home to try to complete, measures later used against their benefit claims. Yet their loss of income was significant. PUA, of course, was designed for people in their position: the self-employed and with significantly reduced incomes.
With only their accountant to help sort through evidence and navigate hearing after decision after hearing, the Hoffners are committed to fighting the claims through every appeal available to them. It’s not easy: they can’t even make out how much the state currently claims to owe, with amounts fluctuating on their online portal and different from the amounts shown in a stack of paperwork that is now nearly about a foot tall. high.
“It seems the state would have preferred us to close our business because we are being punished, it seems, for staying in business,” Jonny said.
A boost to uncover pandemic fraud
A spokesperson for the state Department of Workforce Development sent a short statement in response to an interview request and a list of questions related to this story. Due to the pending and complex nature of the two cases, she said, the department would not comment on the details of the case; other questions also remained unanswered. Jonny’s case has been moved to the next level of appeal at the Labor and Review Board, the spokesperson said; the DWD still determines how much Michelle really owes.
“As part of its work to effectively deliver effective services, including the management and oversight of Wisconsin’s Unemployment Insurance system, the DWD is responsible for the prevention of fraud and overpayments.”
They declined follow-up requests for an interview detailing general policies on how the DWD investigates fraud and concealment in overpayment cases.
In mid-2021, as alarms about pandemic fraud spread nationwide, a DWD spokesperson responded to a letter from congressional Republicans urging them to investigate, saying “Wisconsin has been a national leader in fraud detection”.
The unemployment benefit scam is not a new phenomenon, but one that got much easier when the federal government released trillions in aid in 2020 and 2021.
Still, a DWD report noted that in 2020, fraud actually decreased in Wisconsin unemployment benefits in both the number of dollars and the number of cases designated as fraud. In its 2022 report, the department said it kept the fraud rate to just 1.1% in 2021.
This report also noted, however, that their cases of fraudulent overpayments had increased: from 3,561 in 2020 to 11,474 in 2021.
“Fraudulent overpayments increased in 2021 as Unemployment Insurance concluded numerous investigations that determined that fraud had occurred in the previous year, which saw record amounts of benefits paid. and claims filed,” the report said.
To recover this money, the department uses liens on personal property (known as warrants), deductions from salaries and bank accounts, and the interception of tax refunds. In “egregious” circumstances, the report notes, the DWD will pursue criminal charges. There were no new criminal cases in 2021, but eight were prosecuted in 2020.
Without the DWD releasing specific information about how it reviews pandemic benefit claims for fraud, it’s unclear why the years-old payments have only recently come under scrutiny. The Hoffners’ benefits under review largely date from 2020, but it wasn’t until Christmas 2021 that they were alerted to the issues in their case.
Lawyers for Legal Action of Wisconsin say they handle cases where benefits were paid more than a year earlier. And for Victor Forberger, who has handled hundreds of pandemic unemployment cases, he says nearly all of his current cases are now being prosecuted for fraud and concealment, in a shift he says began in fall 2021 to re-examine the older cases using different standards to show income and expenses (in document requests, the DWD denied that this was the case.)
“He is reviewing all of these allegations and seeking to charge the cover-up,” Forberger said. No one disputes that rampant fraud occurred in many states, he said, or that criminal networks and identity theft were a problem. But here?
“The claims filing issues were so difficult, people make mistakes because they don’t understand what to do and how to fill in the information.”
Mishandled hearings, collection letters
Although administrative law judges ruled that Michelle’s filing errors were honest with no evidence of concealment, her benefits portal still shows thousands of concealment penalties owed in addition to tens of thousands of overpayments of advantages.
Jonny’s portal no longer shows active penalties, but he receives collection letters threatening to take over $10,000 from his tax returns. All in all, after the judges decided they needed to recover a few thousand dollars in PUA benefits, their portal currently shows around $50,000 between them in PUAs and a mix of other benefits and fines.
The ordeal put Jonny and Michelle to the test. At one point they needed a hearing to prove they had to miss a hearing because both were sick with Covid.
At another hearing, the DWD presented evidence against Michelle that had been mailed the day before the hearing and hadn’t arrived for several days (News 3 reviewed mailing date stamps on documents). The hearing continued, although Michelle said she had not had the opportunity to review opposing evidence in advance – a basic standard of court proceedings.
Now they are sending collection letters from the state threatening to intercede in their tax returns to collect the money owed. They plan to appeal at the last possible opportunity: yet the nightmare doesn’t seem to have an end in sight.
“I feel so clear about – we didn’t do anything wrong,” Michelle said. “We tried to survive.”
Photojournalist Lance Heidt contributed to this report.
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