FRAUD, Search Warrant
CITE AS: Stein v MESC, 219 Mich App 118 (1996)
Appeal pending: No
Employer: Melvin Stein (Modern Roofing, Inc.)
Docket No. N/A
COURT OF APPEALS HOLDING: Employees of the Michigan Unemployment Agency may seek and execute search warrants when investigating fraud claims arising out of the Michigan Employment Security Act. That there is statutory authorization for the issuance of subpoenas does not bar the use of a search warrant in appropriate circumstances (e.g., fraud).
FACTS: An employee of the MESC obtained and executed a search warrant to secure employer business records to aid in an investigation of fraudulently obtained unemployment benefits by present and former employees. In response, the owners brought an action against the MESC in the Court of Claims. The employer argued the MESC employee acted outside the scope of her authority in obtaining a search warrant as the MES Act does not expressly authorize the use of search warrants. The employer asserted the MESC employee was limited to the subpoena process as provided in Section 9 as that is the only means of gathering information specifically set forth in the Act.
DECISION: Challenge to search warrant dismissed.
RATIONALE: The use of a subpoena is one way for the MESC to obtain the employer's records. The statutory provision for a subpoena does not foreclose the option of seeking a search warrant. Relying on Richter v Dep't of Natural Resources, 172 Mich App 658 (1988), the Court of Appeals observed: "One of the investigative duties contemplated by the act is the duty to investigate fraud." The court went on to say:
"We believe that encompassed within this authority to conduct fraud investigations, which can lead, as in the instant case, to criminal prosecutions, is the ability to utilize the tools necessary to carry out such investigations, including search warrants. Accordingly, we hold that agents of the MESC are entitled to obtain and execute search warrants when investigating fraud claims arising pursuant to the MESA."