San Francisco Chronicle - (Sunday)
State’s unemployment mess
Given that Scott Peterson is on San Quentin’s Death Row for the infamous murder of his pregnant wife, it can at least be said that he is not employed in any traditional sense. And that covers most of what California’s Employment Development Department has gotten right lately.
Along with serial killers such as Cary Stayner and Wayne Ford, Peterson is among the most notorious of the tens of thousands of California prisoners, including over 100 on death row, whose names were on EDD debit cards worth hundreds of millions of dollars issued amid the worst unemployment since the Great Depression, according to prosecutors. The regrettable upshot is that an agency that has struggled to get assistance to those in need has been uncannily efficient in enriching criminals.
The nine district attorneys who alerted Gov. Gavin Newsom to the fraud in a letter last week strained for superlatives to describe its scope, writing that it “could near $1 billion” and “be the most significant fraud on taxpayer funds in California history.” Calling the problem “rampant,” “staggering” and “behemoth,” they wrote that claims had likely been successfully filed on behalf of inmates in all 58 county jails, prisoners in federal and state institutions, and sexual predators and others confined to state hospitals.
Inmates and identity thieves alike appear to have defrauded EDD into sending government debit cards to outofstate, institutional and other addresses. In San Mateo County, twentytwo people have been charged with crimes related to unemployment fraud since officers allegedly heard inmates discussing the scam at the county jail.
The fraud appears to be as brazen as it is rampant, having been detailed not just by media and government investigations but also in public accounts by prisoners and perpetrators. One defendant known as Nuke Bizzle was charged with procuring $1.2 million in fraudulent benefits after he rapped about defrauding the department in a composition candidly entitled “EDD.”
Responding to the prosecutors’ plea for his “personal involvement,” Newsom said he had ordered the state Office of Emergency Services to form a task force to support the fraud investigations. It’s not the first time this year that the governor has directed urgent assistance to the agency as it has floundered under a pandemicinduced crush of 13 million unemployment claims. In July, Newsom convened a “strike team” to help EDD address a backlog of about 1.6 million claims, since reduced to about 600,000 after a twoweek shutdown. The department’s director has announced her retirement at year’s end.
EDD’s inability to process genuine claims efficiently stems partly from its ineffectual efforts to prevent fraud. Critics such as Assemblyman David Chiu, DSan Francisco, have pointed out that the agency imposes bureaucratic barriers that frustrate those legitimately in need even as counterfeit claims are approved in droves.
The district attorneys who sounded the alarm, who are working in concert with federal authorities, wrote that a newly implemented system for quickly verifying unemployment claims “can be easily overcome” by those aiming to bilk the state. “Undoubtedly,” they added, “millions more will be paid to those who are not entitled to such benefits” as a result, and “those lawfully entitled to benefits will continue to suffer.”
While largescale unemployment insurance fraud has been documented in other states amid a surge of joblessness and federal assistance, it’s clear that the California agency’s dysfunction predates the pandemic. At a time when further federal aid is in doubt and economic pain persists, it’s incumbent on the governor to go beyond another task force and take personal responsibility for remedying a fundamental failure of his government.