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Michigan Attorney General prepares payroll fraud charges

Posted at 4:00 PM, Jul 02, 2019

LANSING, Mich. — Michigan Attorney General Dana Nessel is preparing criminal and civil charges against at least 10 businesses her office believes is guilty of payroll fraud.

Nessel's office launched a "Payroll Fraud Enforcement Unit" in April, which her office says has received nearly 100 complaints so far.

Most complaints come from the hospitality, restaurant, entertainment, construction and trucking industries and involve incorrectly classifying workers and contractors in order to pay them 'under the table' to avoid taxes and other legal requirements.

"Payroll fraud affects all of us, especially the families who are robbed," Nessel said in a statement Tuesday. "When shady businesses exploit people by cheating them of the wages they are owed, families have less money in their pockets, zero benefits and an uncertain future."

By the end of the week, Nessel's office will have sent letters demanding business records to 10 businesses operating in Michigan, and it is prepared to use subpoenas and warrants if businesses do not cooperate.

The AG's office is working with other state agencies as well as the U.S. Department of Labor and the Internal Revenue Service.

Payroll fraud cost Michigan workers more than $400 million in lost wages and overtime pay between 2013 and 2015, according to the Economic Policy Institute. A Michigan State University study found tax fraud, specifically businesses paying workers and contractors under the table, costs the state more than $100 million in revenue every year.

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