California’s unemployment fraud reaches at least $20 billion

SACRAMENTO, Calif. (AP) — California has given away at least $20 billion to criminals in the form of fraudulent unemployment benefits, state officials said Monday, confirming a number smaller than originally feared but one that still accounts for more than 11% of all benefits paid since the start of the pandemic.

State officials blamed nearly all of that fraud on a hastily approved expansion of unemployment benefits by Congress that let people who were self-employed get weekly checks from the government with few safeguards to stop people from getting benefits who were not eligible to receive them.

“I don’t think people have captured in their mind the enormity of the amount of money has been issued errantly to undeserving people,” said Assemblyman Tom Lackey, a Republican from Palmdale, who brought along an illustration of 29 dump trucks filled to the brim with $100 bills representing just over half of that money lost to fraud.

The pandemic ushered in widespread fraud at unemployment agencies across the country, with at least $87 billion in fraudulent payments approved by states, according to a June report from the inspector general’s office at the U.S. Department of Labor. In Arizona alone, state officials said scammers pocketed nearly 30% of all its unemployment benefit payments.

In California, the fraud was so widespread that state officials OK’d at least $810 million in benefits in the names of people who were in prison, including dozens of infamous killers on death row. State officials even sent $21,000 in benefits to an address in Roseville under the name and Social Security number of U.S. Sen. Dianne Feinstein, some of the $2 million in total fraudulent payments that were sent to that same address.

But Gov. Gavin Newsom’s administration on Monday sought to assure state lawmakers that the fraud pipeline in California has been closed. Employment Development Department Director Rita Saenz said the state has implemented new identity verification software that, along with other preventative measures, has stopped an estimated $120 billion in fraud attempts.