Charges imminent in AG Nessel's payroll fraud investigation

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Posted at 11:22 AM, Jul 02, 2019
and last updated 2019-07-02 15:48:25-04

(WXYZ) — Michigan Attorney General Dana Nessel said she is gearing up for potential criminal and civil charges as part of the efforts to combat payroll fraud.

According to a release, Nessel's office has received nearly 100 complaints of payroll fraud through its tip line and website.

Most companies reportedly involve misclassification of workers, including failing to pay some workers overtime and compensating them under the table to avoid paying taxes and benefits.

The Attorney General's Office says that in some instances, complaints claim the number of workers affected by these practices surpass 300. Most tips came from the hospitality/restaurant, entertainment, construction and trucking industries.

“Payroll fraud affects all of us, especially the families who are robbed. 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,” Nessel said in a release. “No family should live in poverty because greedy businesses cheat the system and refuse to play by the rules. This has gone on for far too long and Michigan isn’t going to wait any longer to crack down on these crimes.”

Nessel's office will send letters demanding business records to at least 10 businesses operating in Michigan.

Michigan taxpayers are shortchanged $107 million a year in revenue through tax fraud when businesses misclassify workers by reporting employees as self-employed independent contractors or paying them off the books as a way to avoid paying their fair share of taxes, a Michigan State University study found.