Safeguarding state's unemployment pay

During the worst, early months of the COVID-19 pandemic and its consequent societal lockdowns, the state of California got ripped off six ways to Sunday by fraudsters milking government unemployment insurance benefits. We can't unring that bell. But the — in this case — not merely partially but entirely hapless government in Sacramento can certainly learn something from the fiscal disaster that resulted in the theft of hundreds of millions of taxpayer dollars by grifters, including already incarcerated ones.

And that something is: Don't let it happen again.

Because there will be a next time, some future statewide, nationwide, worldwide emergency that will trigger a government financial response.

The next time, let's just be a little more ready for the rip-off artists, Sacramento. Because it simply wasn't that hard to see them coming or to put at least a little dent in their ability to fleece our state.

The impulse that led to the thievery on a mass scale was certainly charitable: Millions of Californians were suddenly out of work and the federal government opened up its large pocketbook to help out.

But on the state end of things, in accepting those monies for distribution, California's Employment Development Department dropped almost all of its filters that would have detected fraud in its rush to ensure incomes for out-of-work Californians.

That's why it allowed at least $20 billion to be improperly paid, as the Sacramento Bee reports. To prisoners, including inmates at the Central California Women's Facility in Chowchilla, some of whom sent their own names into the EDD claiming to have been previously self-employed, although they couldn't have been, seeing as they were in prison. It doesn't take a genius of a bureaucracy to crosscheck claimants' names with those who are incarcerated.

A little bit tougher to suss out may have been the transnational organized crime figures who applied. McGregor Scott, the state's special counsel trying to prosecute the thefts, told the Bee that they were “probably the most significant” bandits involved, with their syndicates using the dark web, he said, to access Social Security numbers available for purchase.

California street gangs also were involved.

But, however sly the criminals were, again, overwhelming management smarts were not required to detect, for instance, the fact that fully 1,700 of the unemployment claims came from one street address.

Members of the now Republican-led House Oversight and Accountability Committee, which last week began investigating California's lax oversight of pandemic payouts, have understandably keyed in on a January 2021 report from then-state Auditor Elaine Howle, who found “the federal government warned the state at least three times in the early months of the pandemic to beef up its fraud protections.”

The audit said that as late as December 2020 the agency was “allowing claimants to continue to collect benefits using suspicious addresses because it did not establish payment blocks for their claims.”

Some of the money is being clawed back. As of late last year, about 1,700 investigations into fraud have been opened, with 296 convictions and more than $1.1 billion recovered, the Bee reports. And the EDD has created an identity verification system, ID.me, and believes it has prevented more than $125 billion in attempted fraud because of it. So that's good.

There is some merit to Democrats' claims this week as the hearings opened that the GOPled committee is only investigating California, New York and Pennsylvania, which have Democratic leadership, over pandemic rip-offs. Republicans now say they agree that it was a problem in all 50 states. But California has a lot to answer for. Sacramento needs to take the criticism to heart, and never let such fraud happen again.