Frank Zimmerman Pleads Guilty To Embezzlement From United States Department Of Labor
KNOXVILLE, Tenn. – On Apr. 17, 2014, Frank Zimmerman pleaded guilty in U.S. District Court to a one-count Information charging him with wilfully and knowingly embezzling over $1000 from the U.S. Department of Labor (“DOL”), in the form of overpayment of unemployment benefits.
Sentencing for Zimmerman has been set for Aug. 14, 2014, at 2:30 p.m., in U.S. District Court, Knoxville. He faces up to 10 years in prison, a fine of up to $250,000, a term of supervised release of up to three years, and a $100 special assessment. In addition to the criminal penalties, he faces a state determined one year ban from receiving unemployment benefits.
According to the plea agreement on file with the U.S. District Court, following an agency investigation, the Tennessee Department of Labor and Workforce Development (TDLWD) Division of Employment Security discovered and notified Zimmerman that he had been overpaid unemployment benefits of approximately $11,824.00, including approximately $2,399.00 in state benefits and approximately $9,425.00 in federal benefits. This overpayment was the result of Zimmerman’s failure to report earnings from approximately Apr. 25, 2010, to approximately Feb. 5, 2011. He received unemployment benefits for a total of 40 weeks before the fraud was uncovered. Zimmerman was required to report gross wages from working through a weekly certification process. He was required to follow certain policies and procedures, including becoming disqualified for benefits based on receiving earnings equal to or more than his weekly unemployment benefit amount.
In February 2010 Zimmerman filed an application and was approved for unemployment benefits from the TDLWD. Under TDLWD, he was entitled to receive 26 weeks of benefits based on funds that were paid to the state of Tennessee by his employer. After 26 weeks, if he continued to be eligible for unemployment benefits, extended benefits were available which were paid by the federal government to the state of Tennessee. Traditionally, these extended benefits were composed of only 50 percent federal funds; however, the American Recovery and Reinvestment Act of 2009 authorized 100 percent federal funding for extended employment benefits from Feb.17, 2009, through Dec. 31, 2013. Thus, 100 percent federal funds paid benefits authorized under that Act and during Zimmerman’s authorization period. Although administered by the TDLWD, a state agency, the funds remained federal property because the federal government retained control over the funds including the requirement that the beneficiary certify his or her continued eligibility for the benefits and report any income received during the period weekly.
Special Agents with the U.S. Department of Labor, Office of lnspector General interviewed Zimmerman in December 2012 where he voluntarily responded to their inquiries and signed a handwritten confession memorializing his unemployment fraud. Both special agents with DOL and TDLWD investigated this case. Assistant U.S. Attorney Brooklyn Sawyers is representing the United States.