California’s payments to unemployment fraudsters reach $20 billion

October 26, 2021

By JOSH FRIEDMAN

The state of California has given at least $20 billion in unemployment funds to criminals since the start of the coronavirus pandemic, state officials said on Monday. [LA Times]

In January, then-California Labor Secretary Julie Su acknowledged the state paid out at least $11 billion in unemployment funds, and possibly as much as $31 billion, to fraudsters over the course of the coronavirus pandemic. The state now says the total has risen to at least $20 billion. More than 11 percent of the unemployment benefits paid out by the state went to fraudsters.

As part of the $20 billion given to fraudsters, state officials approved at least $810 million in benefits in the names of prison inmates, including dozens of infamous killers on death row. California officials also sent $21,000 in benefits to an address in Roseville under the name and Social Security number of Sen. Dianne Feinstein, which accounts for a small portion of the $2 million in fraudulent payments sent to that same address.

State officials blame almost all of the fraud on a hastily approved expansion of unemployment benefits by Congress, which allowed self-employed workers to receive weekly checks from the government with few safeguards preventing individuals who were not eligible from receiving them.

On Monday, Employment Development Department (EDD) Director Rita Saenz said the state has implemented new identity verification software that, coupled with other preventative measures, has stopped an estimated $120 billion worth of fraud attempts. During an oversight hearing, Saenz told lawmakers that 2020 was an anomaly in which there was a criminal assault on the unemployment insurance program nationwide, and California has since closed the door to that type of fraud.

Since the beginning of the pandemic, California has paid out more than $178 billion in unemployment benefits based on 25.5 million total claims. That totals four times the combined amount of the worst two years of the Great Recession a decade ago.

Fraud rings use various schemes to steal a victim’s identity and open a fraudulent claim under the person’s name. Then, they arrange to have payments mailed to a house in California where the claimant purportedly lives, officials have said.

Often crime rings seek to have a Bank of America debit card issued for unemployment payments, which is mailed to an empty house, perhaps one that is up for sale. The fraudsters use a “mule” to pick up the debit card for a cut of the stolen money and mail the bulk of the funds to the crime rings.

Criminals have also shared open-source code software on the dark web for hackers to use, which may have caused the crime wave to expand.

The EDD is working on a new system that will deposit unemployment benefits directly in recipients’ bank accounts, rather than sending them a check or debit card in the mail. The new system will take a few years to implement, Saenz said.


Loading...

14
Leave a Reply

Please Login to comment
copperhead

Sounds like it’s time to raise taxes!


Rambunctious

Washed dollars….now you know why elected officials retire (if they ever do) millionaires…deals cut in no smoking rooms are just as crooked as deals cut in smoke filled rooms….


mullyman

This shows you how inefficient government is and how they don’t care where your money goes. Everyone involved in issuing these funds should be fired. Biden now wants to spend Trillions and says it won’t cost the taxpayer anything its ! FREE ! and people actually believe it


Jon Tatro

The reason why these scumbags do this is because there is very little consequence in the liberal state of California justice. These politicians are just as crooked as the thieves. Whoever is in charge of distribution of these funds should be fired. Losing $20 billion is disgusting. Let’s go Brandon.


mazin

“In 2015, the [Labor Department] detailed the “systemic weaknesses” that make UI programs vulnerable to fraud. At least twice during the Obama administration, the Labor Department proposed reforms to Congress to address some of these inadequacies, primarily by boosting information sharing among states and federal agencies. Both times these efforts went nowhere. President Donald Trump included similar reforms in each of his four budget proposals to Congress. They, too, were never enacted.”

Prior to Biden.


commonsenseguy

Biden was, and still is a big part of the problem. To be “prior to Biden”, you would have to go back close to 50 years. The hapless soul has overstayed his welcome, especially the last ten months.


incompingov

The incompetence of government is staggering! $20 Billion wasted. Wasted! But they’ll always say they need more tax money and will never cut taxes. These people can never be trusted with your tax money.


Think twice next time they’re begging you to vote for increased taxes and predict disaster if the increase is voted down. It’s nothing but BS, lies and deceit.


mazin

Bounty hunter time?


shelworth

It’s not real dollars, it’s tax dollars. They can always get more.


jdchem

Headline should say billion.


info

$31 Billon to fraudsters? Yet we are concerned with the cost of a recall. Makes sense.


incompingov

Ah yes, the phony concern about money. The politicians care nothing about money except when they can use it as a political weapon.