A Hummel Report Investigation
How is it that someone can show up for work every day at a computer repair shop and still collect unemployment benefits? That's the question we pose this week to an East Providence man - who says the business is his wife's and he doesn't take any pay for the hours he puts in there; at the same time collecting the maximum benefit allowed in Rhode Island. Jim Hummel goes to the state for answers about the unemployment insurance program, finding out what's allowed - and what may get you in trouble.
Click HERE to view an extended interview with Ray Fillipone of the RI Department of Labor and Training.
It is just after 10 o'clock on a weekday morning and David Arruda is arriving for work.
Arruda parks in a rear lot, unlocks the back door, puts out the `Open' flag out front and settles in for a full day of business.
The *business* is D.A. Computer on Waterman Avenue in East Providence.
On his Linkedin page Arruda calls himself the owner of the company. His car bears the vanity plates DA COMP; he hands out business cards touting computer repairs, upgrades, sales and service and he has a Facebook page where customers can weigh in on how he's doing.
At the same time Arruda has been collecting unemployment insurance benefits of more than $500 a week since last fall - when he was laid off as the general manager of this Coventry electronics manufacturing company.
So as he arrived for work one day earlier this month, we asked Arruda why he is both working - and collecting.
Hummel: ``Jim Hummel, how are you?
Arruda: ``I know, nice to see you.''
Hummel: ``You own the place here?''
Arruda: ``No, I don't. No. No''
Hummel: ``It's DA...Computer?''
Arruda: ``Yes. It is.''
Hummel: ``So you don't own it, you just work here?''
Arruda: ``Yes. Yeah. Why is that, why?''
Hummel: ``Well, we're just curious. You do computer repairs, is that the deal?''
Arruda: ``Yes I do. Yeah. Yeah.''
Hummel: ``No, we were just curious that you have the business, but you're still continuing to collect unemployment.''
Arruda: ``Well, this is not my business.''
Hummel: ``Whose is it?''
Arruda: ``It belongs to my wife, actually.
Hummel: ``Does she work here?''
Arruda: ``Well...uh, uh, does she work here? No she doesn't, but it's her business.''
Arruda's wife, Rachel, works for a law firm in Providence.
Hummel: ``But you work for her?''
Arruda: ``Yes, I do. Yeah.''
Hummel: ``You draw a salary?''
Arruda: ``No, I don't.''
Hummel: ``You work for free.''
Arruda: ``Yes, I don't draw a salary.''
Hummel: ``Okay, why would that be?'''
Arruda: ``I just...it's something. I don't know. I mean...''
Hummel: ``You go to work and you don't draw a salary.''
Hummel: ``Okay. Well, is that fair to the unemployment system? That you have a business going, but you're still drawing from your old company, unemployment every week?''
Arruda: ``Well, I don't, I don't, I don't take a salary out of here.''
Hummel: ``When you call the unemployment people they say, `Are you looking for full-time work?' Are you looking for full-time work?''
Arruda: ``Well, I do have my feelers out there, yeah.''
Arruda: `` Yeah.''
Hummel: ``So you're looking for something other than this business?''
Arruda: ``Yeah, I mean my background was manufacturing.''
Hummel: ``Well why wouldn't you just draw a salary off of this? If it's your wife's business and stay here?''
Arruda: ``I just don't, we're not making enough money out of here.''
Hummel: ``Okay. And so when you answer the question, they say: `Are you looking for full-time work?' you are.''
Hummel: ``And when they ask do you make any money, what do you tell them?''
Arruda: ``I don't make money.''
Hummel: ``Okay. So your wife makes all of the money?''
Arruda: ``Well, my wife owns the company. I just...you know.''
Hummel: ``So you work for free.''
Arruda: ``Well, not for free, I mean there's just no....I have...I don't take a weekly salary or anything out.''
Hummel: ``Well, if you were taking a weekly salary that would affect your ability to collect unemployment, wouldn't it?''
Arruda: ``Well, yeah, but I don't, I don't make any money out of here.''
Hummel: ``Yeah, but my point is, what about people who would say - and you know why we're here - people who would say: `Look, he's drawing on unemployment, but he's got a business going, he's on the internet.' You're not hiding anything at all, you certainly have vanity plates that say `DACOMP,' you formed a corporation a year ago. Isn't that a way to just get around having to report to unemployment?''
Arruda: ``I don't know 'cause I don't get a salary out of here - it's not like I'm double dipping or anything. I don't get a salary.''
Hummel: ``How much money does this business make?''
Arruda: ``That's kind of confidential (a), (b) I don't take any money out of here.''
Hummel: ``Well, it's not confidential if you're drawing on unemployment and the state's involved and wants to know whether you're bringing money into your household.''
Hummel: ``So you don't have any answer for that?''
Arruda: ``No, I just don't know.''
Since he was laid off last fall, Arruda has been collecting $546 a week, the maximum benefit allowed by the state.
Within hours of our interview, Arruda's lawyer contacted us saying we quote: ``may not have all the facts concerning his unemployment status.'' So we asked the lawyer to disclose who owned the company when it was formed last year and who has a stake in the business. We also asked for sales tax and quarterly earnings estimates that are required to be filed with the state Division of Taxation.
He refused to provide any of the information we requested.
So we went to the state Department of Labor and Training, which oversees the unemployment insurance program. Ray Fillipone, who has been with the department for 35 years, said he could not talk about any specific case, and we did not mention Arruda by name.
But we did present Fillipone with the facts surrounding Arruda's situation.
Fillipone: ``Not drawing a salary, but is he performing services? That's one of the things we'd be looking at, is the individual performing services? No. 1.''
Last month we sent an undercover producer in to DA Computer to see Arruda in action. The producer asked him about a problem with his laptop.
Arruda: ``That's an $80 job right there.''
Producer: ``Right there.''
Arruda: ``Yeah, because, I mean, not people do that. I do it.''
Producer: ``How much would it cost to bring it here and have you go through it?''
Arruda: ``Well I mean if you want me to just...well, just to reload the operating system is like 80 bucks.
Producer: ``Okay, yeah.''
Arruda: ``Ummm. That jack is 80 bucks, so you're up to $160.
Producer: ``One sixty.''
Arruda: ``But I mean, you're not going to get a new computer for $160. I mean I sell used laptops all day. Like, this is for sale, there's one over there. This is $350.''
Fillipone: ``Secondly, if that the individual is at that place of employment, are they truly able and available and actively seeking full-time employment?''
During our interview, Arruda said he had been looking for work. So we again went to his lawyer asking for a list of the places he had applied to, or interviewed with, for a full-time job since he was laid off. The lawyer did respond at all to our request, not even to say he could not provide the information.
Hummel: ``And what if the person then said to you: `Well I can close up shop tomorrow and go get a job,' does that mitigate?''
Fillipone: ``No we would still look at what was being done prior.''
Hummel: `` And you guys are serious about this?''
Fillipone: ``Oh yeah. Very serious.''
In East Providence, Jim Hummel, for The Hummel Report.