Massive fraud in jobless claims
Hundreds of millions lost in scams involving inmates
Scammers have made off with hundreds of millions of dollars meant for unemployed Californians using the names of jail and prison inmates, according to district attorneys across the state.
A letter from a task force of district attorneys asked Gov. Gavin Newsom for his personal involvement and significant resources to fight “what appears to be the most significant fraud on taxpayer funds in California history.”
The letter pointed to fraud in the federal Pandemic Unemployment Assistance program, created as part of a rescue package in the early days of the coronavirus pandemic. The program was designed for people out of work because of the pandemic who wouldn’t normally qualify for unemployment payments, such as gig workers.
“The word I’ve used is behemoth. ... There is money going out of this state; there is money going out of this country.” Sacramento County District Attorney Anne Marie Schubert
The officials said the stolen money amounted to hundreds of millions of dollars and that the fraudulent claims were paid out falsely using the names of tens of thousands of local, state and federal inmates.
Documented cases of fraud in jails and prisons in the past have seen inmates file false claims using their own Social Security numbers, with unincarcerated accomplices receiving the money. Some scammers may also have ripped off Social Security numbers sent through the mail, undisguised, by the state’s Employment Development Department.
Other schemes may have involved online identity theft, the letter said. The district attorneys cited media reports of criminals obtaining personal information from the internet and using it to file claims under the names of unwitting people.
“The word I’ve used is behemoth. This is massive.
There is money going out of this state; there is money going out of this country,” said Sacramento County District Attorney Anne Marie Schubert, whose office is part of the investigation, during a news conference Tuesday.
Schubert said the scams are ongoing and that attempts to work with top officials at the EDD have been unsuccessful.
Schubert said 35 other states have systems that crosscheck inmate data with unemployment claims, but California does not. “We need to do what other states are doing,” she said.
“Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable,” Newsom said in an emailed statement.
The governor created a strike team earlier this year to speed up unemployment claims processing and minimize abuse in the system after huge backlogs in the system caused public outcry. The huge increase in claims also created opportunities for fraudsters.
“When we saw evidence of fraud in correctional facilities, I directed the Employment Development Department to review its practices and to take immediate actions to prevent fraud and to hold people accountable when fraud is not prevented,” Newsom said.
Because of that, the EDD, along with the California Department of Corrections and the U. S. Department of Labor, began matching Social Security numbers used in unemployment claims to those of people in state custody.
The goal is to determine the size of the issue and take action to hold those responsible accountable, Newsom said.
“To expedite and strengthen these efforts, I have directed the Office of Emergency Services to stand up a task force to coordinate state efforts and support investigations by local district attorneys,” Newsom said.
EDD spokesperson Loree Levy confirmed in an email that the department had been working with the state and federal agencies to “identify suspect claims.”
“We’re also pursuing how to integrate such crossmatches moving forward as part of enhanced prevention efforts during this unprecedented time of pandemicrelated unemployment fraud across the country. In addition, EDD is working collaboratively with state cybersecurity experts,” Levy added.
Along with Schubert, the district attorneys for the counties of El Dorado, Lassen, Fresno, Monterey, Marin, Riverside, San Diego and Ventura signed the letter.
The district attorneys said payments had been made in the names of Death Row inmates, including serial killers Cary Stayner and Wayne Ford.
Jails and prisons have been a significant source of EDD fraud during the pandemic.
In September, San Mateo County District Attorney Steve Wagstaffe charged 21 inmates with running an unemployment fraud ring involving 16 claims and a quarter of a million dollars in stolen payments.
That case saw inmates taking out unemployment benefits with their own Social Security
numbers.
The Chronicle previously reported that the San Mateo County Sheriff’s Office was aware of criminals using the unregulated dark web — a set of websites accessible with special software that are less traceable and more anonymous than regular ones — to obtain Social Security numbers and file false claims.
The EDD has also come under fire recently for sending sensitive personal information, including Social Security numbers, through the mail, potentially leading to cases of identity theft.
Henry Bleeker, a detective with the San Mateo County Sheriff’s Office, previously said he had been in contact with other law enforcement agencies that saw false claims using stolen Social Security numbers that may have been obtained from EDD mail.
The state auditor sharply criticized the EDD in a report last week for sending out at least 38 million pieces of mail with undisguised Social Security numbers, despite being warned about the practice.