TRENTON – Acting Attorney General John J. Hoffman announced that a Bergen County man was sentenced to state prison today for leading a criminal scheme in which he and three other men stole over $180,000 from the State of New Jersey by filing false claims for unemployment benefits. The charges against the four men were the result of an investigation by the Division of Criminal Justice and the New Jersey Department of Labor and Workforce Development.

Stephen Pirrone, 54, of Paramus (formerly of Old Tappan and Norwood, N.J.), was sentenced today to seven years in state prison by Superior Court Judge James J. Guida in Bergen County. Pirrone pleaded guilty on Feb. 23 to second-degree charges of conspiracy and theft by deception. He must pay restitution of $54,623 to the Department of Labor.

Pirrone’s three co-defendants pleaded guilty in December. Wilfredo Sanchez, 38, of Newark, pleaded guilty to second-degree conspiracy and third-degree theft by deception. He was sentenced on Feb. 27 to five years in state prison and was ordered by Judge Guida to pay $43,908 in restitution. Jose Flores, 39, of Newark, and Andre Brown, 37, of Woodland Park, pleaded guilty to third-degree theft by deception. Flores served over six months in jail and was sentenced by Judge Guida on Jan. 14 to five years of probation. He was ordered to pay $34,827 in restitution. Brown failed to appear for sentencing on Feb. 27 and is being sought on an arrest warrant. Brown faces a recommended sentence of 364 days in the county jail. He must pay $59,400 in restitution.

The defendants were charged in a June 26, 2014 indictment obtained by the Division of Criminal Justice Specialized Crimes Bureau. Deputy Attorney General Debra A. Conrad prosecuted the defendants and handled today’s sentencing.

The state’s investigation revealed that Pirrone originated the fraudulent scheme and enlisted the other defendants. From November 2006 through March 2013, the defendants collected $183,433 in unemployment benefits on seven fraudulent unemployment insurance claims, including two filed by Sanchez and Flores using false identities. All of the false claims were based on fraudulent employer quarterly wage statements submitted to the state in the names of two businesses that were defunct: a trucking company formerly operated by Pirrone called Culver Transportation, Inc., and a bankrupt trucking company from which Pirrone formerly rented office and terminal space. Sanchez and Flores attempted to file additional claims using eight other false identities, but those claims were determined to be invalid by the Department of Labor and no benefits were distributed.

“These four men thought they knew how to outwit the system and file false unemployment claims at will, but the Department of Labor foiled their plot through its vigilance and upgraded security measures,” said Acting Attorney General Hoffman. “We are partnering with the department to send these con artists to prison and protect this critical safety net for New Jersey’s workers.”
 
“Our attorneys and detectives are well-versed in investigating and prosecuting financial fraud, including fraud against government assistance programs,” said Director Elie Honig of the Division of Criminal Justice. “We’re working hard with the Department of Labor to root out unemployment insurance fraud.”

“My department’s anti-fraud initiative in collaboration with the state Attorney General’s Office continues to aggressively identify, pursue and prosecute those who cheat the system,” said New Jersey Labor Commissioner Hal Wirths. “We have developed strong procedures and techniques to prevent taxpayer dollars from reaching the hands of swindlers and our tactics to protect the Unemployment Insurance Trust Fund continue to expand.”

Since 2011, the Department of Labor has been cracking down on unemployment insurance fraud, saving the New Jersey Unemployment Trust Fund more than $550 million to date. Among the many anti-fraud practices and procedures adopted are software and program changes that enable the department to detect false claims by cross-checking data internally and with other databases to flag invalid information or suspicious patterns involving common elements among multiple claims, such as identical residences or Internet protocol (IP) addresses. The investigation into Pirrone and his co-defendants began when their claims were flagged based on their use of the same defunct employers and other common elements. 

Pirrone owed a debt to Brown and used the scheme to pay off that debt.  Pirrone also taught the scheme to Sanchez, who worked with Flores in filing false claims.  Sanchez and Flores paid part of the proceeds of their false claims to Pirrone by wiring money to his commissary account in federal prison. Pirrone was sentenced to federal prison in March 2012 for fraudulently collecting federal tax refunds by filing false returns.   

Deputy Attorney General Conrad presented the case to the state grand jury for the Division of Criminal Justice Specialized Crimes Bureau. The investigation was conducted for the Division of Criminal Justice by Detectives Lynn Patrick Fitzgerald and Glenn Stanton. The investigation was conducted for the Department of Labor and Workforce Development by Supervising Investigator Michael Kulyk and Supervisor of Investigations Michael B. Marich of the Bureau of Benefit Payment Control, under the direction of Charles J. Walkowiak, Director of Fraud Prevention and Risk Management.

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