Detroit Man Sentenced in $1 Million Unemployment Fraud Scheme

February 27, 22025 | JacobiJournal.com — A Detroit man has been sentenced to 51 months in prison for orchestrating a multi-state unemployment fraud scheme that stole nearly $1 million from government programs meant to assist struggling workers during the COVID-19 pandemic, officials announced.

The unemployment fraud scheme led by Tracey Dotson exploited gaps in state and federal relief systems, using stolen identities and fraudulent claims to divert critical Pandemic Unemployment Assistance (PUA) funds. By targeting multiple states, the scheme not only caused significant financial loss but also delayed aid to thousands of eligible workers who relied on these programs during the pandemic.

How the Fraud Unfolded

According to court records, Tracey Dotson, 49, along with his co-conspirator, used stolen personal information to submit hundreds of fraudulent unemployment claims. Consequently, they funneled money from Michigan, Pennsylvania, and Maryland’s unemployment insurance programs into their own pockets.

To access the stolen funds, they arranged for prepaid Bank of America debit cards—loaded with Pandemic Unemployment Assistance (PUA) funds—to be mailed to addresses in Michigan and Pennsylvania. Then, they swiftly withdrew and spent the money before authorities could detect the fraud. Unemployment Fraud Scheme

Luxury Spending and Illegal Purchases

Instead of using the funds legitimately, Dotson and his group spent more than $930,000 on designer clothing from Gucci and Louis Vuitton, high-end jewelry, drugs, a vehicle, and even a firearm. Meanwhile, thousands of deserving individuals struggled to receive assistance.

Legal Consequences

In April 2024, Dotson pleaded guilty to wire fraud and conspiracy to commit wire fraud. Consequently, U.S. District Judge Matthew F. Leitman sentenced him to 51 months in prison and ordered him to pay over $900,000 in restitution.

Ongoing Investigation and Broader Crackdown

Authorities, including the FBI, IRS-Criminal Investigation, and the Department of Labor’s Office of Inspector General, continue to investigate similar fraudulent activities. The government remains committed to prosecuting those who exploit public assistance programs.

Read the full DOJ statement here.

FAQs: About the Detroit Unemployment Fraud Scheme

What was the Detroit unemployment fraud scheme?

Tracey Dotson and a co-conspirator submitted hundreds of fraudulent unemployment claims across Michigan, Pennsylvania, and Maryland, illegally obtaining nearly $1 million in government funds.

How did authorities uncover the unemployment fraud scheme?

Investigators traced prepaid debit cards loaded with Pandemic Unemployment Assistance (PUA) funds and identified spending patterns, leading to federal charges for wire fraud and conspiracy.

What penalties did Dotson face for the unemployment fraud scheme?

He was sentenced to 51 months in federal prison and ordered to pay over $900,000 in restitution for illegally diverting unemployment benefits.

Why is this unemployment fraud scheme significant?

The case highlights the vulnerability of public assistance programs to organized fraud and underscores ongoing federal efforts to detect and prosecute financial crimes targeting relief programs.

What are common examples of benefit fraud?

Benefit fraud can include submitting false information on applications, using stolen identities, claiming benefits while employed, or inflating hours or income. In this case, Dotson and his co-conspirator used stolen personal information to submit hundreds of fraudulent unemployment claims.

What happens if caught for benefit fraud?

Individuals caught committing benefit fraud may face criminal charges, prison sentences, fines, and restitution. Tracey Dotson, for example, was sentenced to 51 months in prison and ordered to repay over $900,000.

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