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Miltgen v DSC Marywood Co. 18.14

Section 54(b)

FRAUD, Duty to disclose earnings, Agency advice

CITE AS: Miltgen v DSC Marywood Co, Kent Circuit Court, No. 00-06060-AE (March 23, 2001)

Appeal pending: No

Claimant: Georgia Miltgen
Employer: DSC Marywood Company
Docket No. B95-06582-RRR-145902W/FSC95-00107-RRR-145903W

CIRCUIT COURT HOLDING: Being told by an Agency representative that monies received as “gifts” do not have to be reported as income is not a defense to fraud when claimant failed to disclose “significant particulars” as to the receipt of that money.

FACTS: While receiving unemployment benefits, claimant performed services and was being compensated. Claimant knew she was obligated to report income from work to the Agency, but failed to do so. Claimant spoke to a representative of the Agency about whether she had to report the monies. She asked whether personal monies from a friend had to be reported; she did not report the reasons for receiving the monies or why she received the monies. Claimant claimed the monies she received were “gifts,” although she acknowledged the payments were at an hourly rate for the service she performed.

DECISION: Claimant knowingly and willfully failed to report the income and is subject to the fraud provision.

RATIONALE: Even if the payor told claimant that the monies were gifts, it was unreasonable for her to believe that she was receiving gifts, and not being paid for services rendered. “A purely subjective belief is not legally significant; the belief must also be objectively reasonable. A gift which happens to be in an amount which is a certain rate for actual hours of effort performed for the payor is compensation for work, not a gift . . .. [L]abels are of ‘little importance.’” See Allied Market v Grocer’s Dairy, 391 Mich 729, 735 (1974), Abbey Homes v Wilcox, 89 Mich App 574, 581 (1979), lv app den 407 Mich 875 (1979). Had claimant disclosed the nature of the particulars of the monies, being told that the monies did not need to be reported would probably have entitled her to act as she did, Woods v State Employees Retirement System, 440 Mich 77, 81-82 (1992). Since claimant admitted she did not provide those particulars, the answer she said she got does not provide her with a defense. United States v King, 560 F2d 122 (1977), and United States v Smith, 523 F2d 771 (1975).


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