IN THE UTAH COURT OF APPEALS

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David E. Erickson,

Petitioner,

v.

Workforce Appeals Board, Department

of Workforce Services,

Respondent.

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MEMORANDUM DECISION

Case No. 20110309‐CA

F I L E D

(July 19, 2012)

   2012 UT App 201

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Original Proceeding in this Court

Attorneys: Andrew W. Stavros, Salt Lake City, for Petitioner

Suzan Pixton, Salt Lake City, for Respondent

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Before Judges McHugh, Roth, and Christiansen.

ROTH, Judge:

¶1 David E. Erickson seeks judicial review of the Workforce Appeals Board’s (the

Board) conclusion that he was not eligible for unemployment benefits he received, as

well as its assessment of an overpayment and fraud penalty.  We decline to disturb the

Board’s decision.

¶2 Following a field audit, the Utah Department of Workforce Services (the

Department) investigated whether Erickson was eligible for unemployment benefits he

had received over the course of approximately seven months.  Based on this

investigation, the Department concluded that Erickson was not eligible for

unemployment benefits because he was not unemployed.  The Department also
20110309‐CA 2

concluded that Erickson had knowingly withheld material information or had failed to

report information in order to receive unemployment benefits to which he was not

entitled.  Accordingly, the Department required him to repay the full amount of

benefits he had received and assessed a fraud penalty.  The Department’s decision was

affirmed by an Administrative Law Judge (the ALJ), and the ALJ’s decision was in turn

affirmed by the Board.

¶3 On appeal, Erickson first challenges the Board’s conclusion that he was ineligible

for unemployment benefits because he was not unemployed.  Unemployment benefits

are only available to “an individual who is or becomes unemployed.”  Utah Code Ann.

§ 35A‐4‐401(1)(a) (2011).  “An individual is ‘unemployed’ in any week during which he

performs no services and with respect to which no wages are payable to him . . . .”  Id.

§ 35A‐4‐207.  A claimant is unemployed and eligible for benefits if the claimant works

“less than full‐time” and if the claimant is “available for and actively seeking full‐time

suitable work.”  Utah Admin. Code R994‐207‐102(1)(a), (c).

¶4 A lack of income alone does not necessarily equate to eligibility for

unemployment benefits, however.  For example, unemployment benefits will not be

paid to “a claimant who is devoting substantially all his time and efforts to . . .

expanding an existing business even though he receives no income.”  Id. R994‐207‐

101(1).  In this regard, there are several “types of potentially employed claimants who

need to have their claims examined,” including corporate officers.  Id. R994‐207‐

101(2)(a).  A corporate officer’s eligibility to receive unemployment benefits must be

scrutinized because though the officer might not receive income from the corporation,

he may nonetheless be devoting substantial time and effort to the company, thus

making him unavailable for other paid employment.  As the Utah Supreme Court

explained in Child v. Board of Review, 8 Utah 2d 239, 332 P.2d 928 (1958),

A president of a corporation who is also a manager, who has

year‐round responsibility to operate the business of the

corporation and does so, cannot by purportedly laying

himself off as manager in those periods when there may be

no actual business activity, but when his corporate duties

and management activity persist in the pursuit of future or

continued business of the company, obtain unemployment

benefits.  He is much in the same position as a man working

on a deferred commission payment basis who certainly

cannot be said to be unemployed during the time the

commission actually is not paid, but earned.
1.  Besides Erickson, the only other person authorized to write checks on Eire’s bank

account was Erickson’s significant other.

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Id. at 929.

¶5 Here, the Board concluded that because Erickson was the sole corporate officer of

Eire Construction Services, Inc. (Eire) he was not unemployed and, thus, not eligible for

unemployment benefits.  Erickson however contends that the Board’s decision was not

supported by substantial evidence.  “[T]he Board’s [decision] . . . will be affirmed . . . if

. . . supported by substantial evidence.”  Grace Drilling Co. v. Board of Review, 776 P.2d

63, 67 (Utah Ct. App. 1989) (internal quotation marks omitted); accord Utah Code Ann.

§ 63G‐4‐403(4)(g) (2011) (“The appellate court [in reviewing a final agency action] shall

grant relief only if . . . it determines that . . . the agency action is based upon a

determination of fact, made or implied by the agency, that is not supported by

substantial evidence when viewed in light of the whole record before the court.”).

“Substantial evidence is more than a mere scintilla of evidence . . . though something

less than the weight of the evidence.”  Grace Drilling Co., 776 P.2d at 68 (omission in

original) (internal quotation marks omitted).

¶6 In reaching the conclusion that Erickson was not unemployed, the Board found

that Erickson was a corporate officer for Eire at the time he filed for and received

unemployment benefits.  Eire’s Articles of Incorporation identify Erickson as the sole

officer, director, and registered agent for the corporation, and Erickson himself

admitted to being Eire’s sole corporate officer and registered agent.  The Board also

found that Eire was an “active company.”  Eire maintained a valid business license,

telephone number, and bank account.  Eire’s financial records indicated that it

generated income and paid for expenses each month, such as utilities, insurance, and

legal fees.  Erickson was one of only two people authorized to sign checks on Eire’s

bank account,1 and Eire wrote several checks to Erickson during the period in question.

¶7 Erickson, however, claimed that he was a corporate officer in name only and had

no active involvement with the company.  Erickson explained that he registered Eire for

a friend because that friend had “poor credit and [a] previous bankruptcy filing,” and

according to Erickson, that friend actually runs the business.  Erickson further explained

that although this friend was not authorized to sign corporate checks, Erickson would

give him signed blank checks so he could pay for business expenses.  He also claimed

that the checks made out to him from Eire were not income; rather, a check for $2569.83

was payment to him for a trench box and trailer he sold to Eire, and other checks, made
2.  Erickson also challenges the Board’s decision that he was not eligible for

unemployment benefits because he was not actively seeking employment.  This aspect

of the Board’s decision was an alternative basis for its conclusion that Erickson was not

eligible to receive unemployment benefits.  As we have already upheld the Board’s

decision that Erickson was not eligible for unemployment benefits because he was a

corporate officer and not unemployed, it is unnecessary for us to reach this particular

issue.

20110309‐CA 4

out to him for $2500 and $1000, were payments from Eire to Erickson’s grandmother.

According to Erickson, Eire leased space on his grandmother’s farm for $1200 per

month to store equipment but paid the rent to him because he tends to handle his

grandmother’s finances.  Erickson did not produce a lease agreement for Eire’s

equipment storage, and none of the check amounts matched the $1200 rent.

¶8 Based on this conflicting evidence, the Board concluded that Erickson was a

corporate officer and therefore not unemployed and not eligible for unemployment

benefits.  The Board stated that it considered Erickson’s attempts to explain his

involvement with Eire to be “self‐serving and not credible.”  See generally Questar

Pipeline Co. v. Utah State Tax Comm’n, 850 P.2d 1175, 1178 (Utah 1993) (explaining that

appellate courts defer to the Board’s determinations concerning witness credibility).

The Board reasoned that “[i]f [Erickson] did not want the responsibilities of a corporate

officer, he should have taken his name off the corporate documents and the bank

account,” but “leaving his name on the documents and the bank account” gave weight

to the position “that he was involved with the corporation on a day to day basis.”  The

Board thus determined that even if Erickson was not earning any income, his

involvement with the corporation was sufficient to establish that he was not

unemployed.  Given the evidence in the record, there is substantial evidence to support

the Board’s conclusion that Erickson was not unemployed but was, instead, a corporate

officer, not entitled to unemployment benefits.2

¶9 Erickson next challenges the Board’s conclusion that he committed fraud by

failing to disclose material information in order to receive benefits to which he was not

entitled, as well as the Board’s resulting assessment of an overpayment and fraud

penalty.  In particular, Erickson argues that there is not substantial evidence to support

the Board’s decision.  Three elements “must be prove[n] to establish an intentional

misrepresentation sufficient to constitute fraud”:  materiality, knowledge, and

willfulness.  Utah Admin. Code R994‐406‐401(1); see also Utah Code Ann. § 35A‐4‐405(5)

(2011).
20110309‐CA 5

¶10 Materiality is proven “when a claimant makes false statements or fails to provide

accurate information for the purpose of obtaining . . . any benefit payment to which the

claimant is not entitled.”  Utah Admin. Code R994‐406‐401(1)(a).  On the occasions

when Erickson applied for unemployment benefits, he was asked if he was an officer of

a corporation.  On each occasion, Erickson answered in the negative.  We have already

concluded that there was substantial evidence to support the Board’s determination that

Erickson was, in fact, a corporate officer, not entitled to unemployment benefits.  See

supra ¶ 8.  Therefore, by representing that he was not a corporate officer, Erickson

provided false information for the purpose of obtaining unemployment benefits to

which he was not entitled.  The element of materiality was therefore established.

¶11 The second element is knowledge.  To establish knowledge, a claimant “must

have known or should have known the information submitted to . . . [obtain

unemployment benefits] was incorrect or that he or she failed to provide information

required.”  Utah Admin. Code R994‐406‐401(1)(b).  Because Erickson acknowledged

that he was the sole corporate officer for Eire, he “must have known or should have

known” that his repeated representation to the Department that he was not a corporate

officer “was incorrect.”  See id.  Although Erickson later attempted to justify his answer

by arguing that he was a corporate officer for Eire in name only, the Board did not find

his explanation credible.  The element of knowledge was therefore established.

¶12 The third element is willfulness.  Willfulness is established “when a claimant files

claims or other documents containing false statements, responses or deliberate

omissions.”  Id. R994‐406‐401(1)(c).  “Fraud requires a willful misrepresentation or

concealment of information for the purpose of obtaining unemployment benefits,” but

“[t]he absence of . . . direct proof of intent to defraud does not prevent a finding of

fraud.”  Id. R994‐406‐401(2)‐(3).  By filing a claim for benefits in which he incorrectly

reported his status as a corporate officer, Erickson filed “claims [for unemployment

benefits] . . . containing false . . . responses.”  Id. R994‐406‐401(1)(c).  The element of

willfulness was therefore established.

¶13 In sum, we conclude that there is substantial evidence to support the Board’s

conclusion that Erickson committed fraud by failing to disclose material information in

order to receive benefits to which he was not entitled.  And accordingly, we conclude

that the Board appropriately imposed an overpayment and fraud penalty.  See generally

Utah Code Ann. § 35A‐4‐405(5)(c) (providing that if a claimant obtains unemployment

benefits by fraud, he or she “shall repay . . . the overpayment and, as a civil penalty, an

amount equal to the overpayment”).
3.  Erickson contends that the “documents were also never entered into evidence at the

hearing.”  Our review of the record shows that the documents were admitted into

evidence by the ALJ.

20110309‐CA 6

¶14 Finally, Erickson argues that the Department violated his due process rights

when it emailed him several documents it intended to use at the ALJ hearing only an

hour before the hearing began.3

  Hearings before the ALJ must be “conducted . . . in

such a manner as to provide due process and protect the rights of the parties.”  Utah

Admin. Code R994‐508‐109(1).  Relevant evidentiary documents must be disclosed at

least three days prior to the hearing.  See id. R994‐508‐109(11) (“Parties may introduce

relevant documents into evidence . . . [and] must mail, fax, or deliver copies of those

documents to . . . all . . . interested parties so that the documents are received three days

prior to the hearing.”).  “If a party . . . does not receive the documents . . . prior to the

hearing, the documents will be admitted after provisions are made to insure due

process is satisfied.”  Id.  Specifically, if documents are not provided three days prior to

the hearing, the ALJ has discretion to “reschedule the hearing to another time,” “allow

the parties time to review the documents at an in‐person hearing,” “request that the

documents be faxed during the hearing, if possible, or read the material into the record

in case of a telephone hearing,” or “leave the record of the hearing open, send the

documents to the party or parties who did not receive them, and give the party or

parties an opportunity to submit additional evidence after they are received and

reviewed.”  Id. R994‐508‐109(11)(a)‐(d).

¶15 By emailing the documents at issue only one hour before the hearing with the

ALJ, the Department clearly failed to provide those documents to Erickson at least three

days prior to the hearing.  In dealing with a pro se claimant, the ALJ should be generous

in granting continuances to insure the claimant is not put at a disadvantage where the

Department has not timely complied with requirements regarding the disclosure of

relevant information.  However, under the circumstances, we conclude that Erickson

was not prejudiced by the Department’s untimeliness, and “provisions [we]re made to

insure [that] due process [wa]s satisfied,” see id. R994‐508‐109(11).

¶16 At the hearing, the ALJ confirmed that Erickson had earlier received most of the

documents that the Department intended to rely on and asked Erickson about “10 or 12

more pages [he may have received] via e‐mail.”  Erickson indicated that he had not

received those pages, and the Department then explained that it had only sent them to

Erickson an hour before the hearing.  The ALJ asked Erickson to retrieve those

documents from his e‐mail and “take a moment to look through them.”  After Erickson
4.  While Erickson challenges his untimely receipt of these documents, he fails to

provide any descriptive information or record citations to identify exactly the

documents with which he takes issue.  Because of ambiguities in how the exhibits and

documents are described in the transcript of the ALJ hearing and how those exhibits

and documents appear in the record, we are unable to definitively determine exactly

which documents Erickson now objects to.  But based on the transcript of the hearing

before the ALJ, we presume that those ten or twelve documents are most likely checks

made out from Eire to Erickson.

20110309‐CA 7

had done so, the ALJ questioned him about the documents‐‐apparently checks written

from Eire to Erickson4‐‐and Erickson responded to those questions, particularly by

explaining what the checks were meant to pay for, without protest or any apparent

difficulty.  Based on our review of the record, Erickson was given an opportunity to

review the documents and was able to answer questions about the documents.

Erickson makes no argument that he was harmed by the untimely delivery of these

documents, and there is no indication in the record that he suffered any prejudice.

¶17 Accordingly, we decline to disturb the Board’s decision.

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Stephen L. Roth, Judge

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¶18 WE CONCUR:

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Carolyn B. McHugh,

Presiding Judge

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Michele M. Christiansen, Judge