EDD fraud involving California inmates: 6 things to know about the massive scam
Thousands of inmates accused of scamming EDD, claiming upwards of $1 billion in unemployment benefits
Thousands of inmates accused of scamming EDD, claiming upwards of $1 billion in unemployment benefits
Thousands of inmates accused of scamming EDD, claiming upwards of $1 billion in unemployment benefits
District attorneys across California, including Sacramento and El Dorado counties, announced widespread unemployment fraud within jails and prisons across the state.
The prosecutors said Tuesday this is one of the biggest cases of taxpayer fraud in state history. Tens of thousands of unemployment claims were filed with Employment Development Department in the names of inmates across the state.
Here are six things to know about the EDD scam:
1) What’s the fraud?
Sacramento County District Attorney Anne Marie Schubert, who heads the EDD Fraud Task Force, said tens of thousands of inmates are accused of scamming EDD, claiming upwards of $1 billion in unemployment already paid in their names.
2) Who was involved?
The task force said the fraud exists in every California Department of Corrections and Rehabilitation institution at the local, state and federal level -- and includes inmates who were convicted of various crimes.
Between March and August, 35,000 claims were filed in the names of inmates -- 20,000 of which have already been paid, totaling more than $140 million.
“These criminals, these murderers, these rapists,” Schubert said. “It encompasses death row inmates, inmates serving life or life without possibility of parole, individuals not entitled to these benefits that are so desperately needed.”
3) Who were some high-profile inmates with EDD claims?
The fraud includes the names of at least 133 death row inmates, including notorious convicted murderers like Scott Peterson, Wesley Shermantine from the “Speed Freak Killers” and serial killer Cary Stayner.
Fraudulent unemployment claims also span all of California’s 58 county jails.
Schubert said losses could amount to hundreds of millions of dollars.
4) How could this happen?
The task force said the fraud includes lone actors, organized rings and identity theft. Schubert believes the fraud was relatively easy because unlike 35 states, California did not regularly crosscheck EDD claims with prison rolls.
Kern County is home to five state prisons -- the most in the state. District Attorney Cynthia Zimmer explained friends or family of inmates on the outside would file EDD claims on their behalf, cash the bank cards and send a money order back to the inmate.
Employees within correctional facilities began to learn of isolated incidents by listening to jail communications and inmates talking amongst themselves of EDD workarounds.
“We found it was rampant. We found a few cases and it snowballed to, that snapshot in time in September, over 650 inmates with over $6 million in claims,” Sacramento County Sheriff Scott Jones said. “I would have no problem in believing that it is two or three times that in terms of number of inmates and dollar amount.”
5) Can the money be recouped?
Although inmates involved face additional punishments, and prosecutors are working to track down those involved outside of prisons and jails, recouping hundreds of millions of dollars is unlikely.
“We are owed hundreds of millions of dollars. But the practical reality is when you’re talking about thousands of convicted felons that are engaged in this behavior, despite best efforts, the practical reality is the vast majority of this money will never be repaid,” El Dorado County District Attorney Vern Pierson said. “I mean think about it. Someone who is already serving essentially a life term who is ripping off taxpayers. There is no practical way that money is going to be repaid by him.”
6) What’s next?
In a letter to Gov. Gavin Newsom, several district attorneys are demanding the state invest more resources into the EDD Task Force, as well as employing a crosschecking system that routinely checks unemployment claims against incarceration data.
“We have asked and implored the governor to turn the spigot off,” Schubert said.
The prosecutors warn that although fraud is known, it is likely continuing within prisons and jails.
“Because the EDD department is so dysfunctional, there has been a backlog and continues to be a backlog of many, many, thousands of people,” Pierson explained.
In a statement to KCRA 3, Newsom said in addition to the EDD Strike Team launched earlier this year to expedite unemployment payments, he now directed the Office of Emergency Services to set up a task force to coordinate state efforts and support investigations by local district attorneys.
EDD issued a statement to KCRA 3 as well. The department said it has been working with the U.S. Department of Labor and Office of Inspector General on crosschecking with inmate populations to identify suspect claims. They also are working collaboratively with state cyber-security experts.