California Money Recovery Program During the 2018 Pandemic: Investigation and Prosecutions of Fraud-Induced Unemployment Fraud
Since the start of the year, the state has recovered more than a billion due to freezes of EDD bank cards obtained through fraud, along with federal and local law enforcement.
Critics say that the California money recovery effort is weak with too few people held to account, and that the real fraud figure is much higher.
“It’s too late and too little, and even the systems they presently have can still be defrauded,” says Jim Patterson, a Republican state assemblyman and vice chair of the state’s Committee on Accountability and Administrative Review. That’s not good enough.
Congress passed an expansion of the program in March of 2020 and saw a rise in unemployment fraud. State unemployment agencies were overwhelmed with record number of claims and relaxed some requirements in an effort to get money out the door to those who had lost their jobs.
The goal was to put money out fast to ease the economic crisis and make it go away. That speediness also meant many claims weren’t verified.
The state hired Scott as special counsel for its Fraud Task Force to help coordinate the investigation and prosecution of pandemic-related unemployment fraud targeting the Employment Development Department or EDD.
The criminals were able to sell fraudulent applications on the black market because they have a large number of Social Security numbers.
California’s Fraud Task Force Reports Bank of America Debit Card Bills Have Billions in the First 6 Months of the H1N1 Epidemic
There are a bunch of balances on the Bank of America debit cards. According to Scott, they have returned over a billion dollars to the state.
He says California’s task force has learned that most of those committing the fraud were domestic and international organized crime rings, as well as prison inmates inside and outside the state. He said there were some run-of-the-mill grifters. “People who are not part of really sophisticated or organized criminal groups, but just sort of have made a living of stealing from government programs in various forms over the years. This was the most recent version of that.
More than 500 people have been arrested and 203 have been convicted as a result of the Fraud Task Force’s work, Scott says. Gabriela Llerenas, who also uses the name “Maria G. Sandoval,” was sentenced earlier this year to more than five years in prison and ordered to pay nearly $4.3 million in restitution.
The FBI is talking to local D.A. or EDD, so Scott makes sure they get what they need from the Bank of America.
The California EDD’s improper payment rate in the first six months of the H1N1 epidemic was nearly 40% according to the latest U.S. Labor Department audit report. Most believe the majority was made up of mistakes and not fraud.
The bigger issue is that the state has not put in place the necessary controls to protect against money being stolen, Talcove argues.
Why aren’t “pandemic fraud billions” in California?” Comment on California’s ID.me identity verification system, by Christopher Talcove, R.D. Patterson
The state of California says that its identity verification system called ID.me is highly secure. They also hired an outside data analysis firm, among other moves.
“They are still getting their pockets picked,” he says. Criminal groups that are stealing from the unemployment insurance agencies are tracked every day on the dark web. We can see it.
In just the past few weeks, he says he’s seen outside criminal groups from Russia and elsewhere boasting they could still cheat the state’s jobless program. The groups, Talcove says, “were advertising their sauce to get into the state of California, which included purchasing a fake driver’s license that gets through their system.
The state of California needs to stop being proud of its accomplishments. This is patchwork,” says Patterson, the Republican state Assemblyman. “We only got a billion back out of maybe 30 or 35 billion. That’s a terrible batting average. We’ve got to do better than that.
Patterson says his office today still gets flooded with calls from constituents having a terrible time getting their legitimate jobless claims filled while too few fraudsters have been convicted.
Taking an EDD Money From a Man Who Cheated on the Unemployment Program: The Case of Scott and the Sheriff’s Insights
A recently-signed bill in California allows police and prosecutors to take property from people who cheat the unemployment program.
“We’ve got a case going right now where the guy bought a motorcycle and we know he did it with EDD money,” special counsel Scott says. We’ve taken the motorcycle.
He says state expects to soon recover another large sum from unemployment debit cards that still have money on them but have been frozen because of fraud indicators.
Editor’s Note: Patrick T. Brown is a fellow at the Ethics and Public Policy Center, a conservative think tank and advocacy group based in Washington, DC. He is also a former senior policy adviser to Congress’ Joint Economic Committee. Follow him on Twitter. The views expressed in this piece are his own. View more opinion on CNN.
The Politics of Biden and the White House: What We Mean by “Informed Consequences of the Biden Administration”
The GOP is facing two years of struggling to set any kind of positive agenda because of a thin majority in the House. But one thing every elected Republican would agree on is the need to scrutinize the Biden administration.
This is business as usual. The White House will always be scored on for political points if there are any bureaucratic scandals. In return, Democrats’ instinctive reaction might be to circle up the wagons and seek to stonewall or downplay as many of these efforts as possible.
The Republicans are right to highlight those who took advantage of the programs. Democrats need to join them. People who deserve the benefit should be the ones who get it, and people who don’t should be the one who doesn’t. There is a concerted effort to crack down on wrongdoing and improve the function of the social safety net, which is a welcome breath of bipartisan air.
Dem Dem Demographers: The Importance of Expended Assistance to Address the Post-Post-Coronavirus Epidemic
As the initial wave of coronaviruses hit US shores, economists warned that we could be headed for a economic downturn. People stopped going about their day, stay-at- home orders went in effect, and businesses laid off workers as a result. The unemployment rate was the highest it had been in the post-World War II era.
Congress wanted to provide aid as quickly as possible; there simply wasn’t time to sit around and construct the ideal policies. The federal government used the state unemployment insurance systems to try to keep households from going broke.
Not doing that would cause distrust to grow. Some voters may lose faith in government after hearing stories about people who pretended to have farms or listed their names as N/A, and took advantage of theAssistance during the P.H. epidemic. The expanded assistance has helped the economy, so it doesn’t affect the fact that a few people took advantage of the system.
The updated estimate has been released by the House Ways and Means Committee.
GOPLawmakers at the Ways and Means committee frequently said the size of the fraud, loss of taxpayers and the trouble the theft has wreaked on employers were some of the things they said. Many, however, agreed with their Democratic peers that the enhanced jobless benefits were needed when the economy tanked at the start of the pandemic.
The pandemic relief packages that created these programs in 2020 passed Congress with bipartisan support and were administered that year by the Trump administration.
Implications of the 21st Century Pandemic Unemployment Assistance Program for the Workforce and the State of the Union: Secretary of Labor’s Under Inspector General Larry Turner
Inspector General Larry Turner told the committee that fraud accounts for at least $76 billion in improper payments, but stressed that the figure is likely to rise once the office has more data.
If we can’t reduce improper payments at the federal government and states, then there are problems when there are emergencies. I think it is important for this committee to continue their oversight and make sure that the Labor Department takes action on our recommendations so that we are better prepared next time.
In his State of the Union speech Tuesday, President Joe Biden called on Congress to beef up anti-fraud resources in an effort to find criminals and crack down on the schemes to steal relief money.
The Pandemic Unemployment Assistance program allowed some workers for the first time, including gig workers, to collect benefits which had been previously denied due to fraud.
The federal weekly supplement for those out-of-work Americans was a key part of the relief effort. The unemployment rate went down from April to July of 2020. Congress then revived the enhancement in late December 2020 but reduced it to $300 a week. That supplement expired in September 2021, though many states led by Republicans and one with a Democratic governor ended it earlier.
Lawmakers made the Pandemic Emergency Unemployment Compensation program to help those who maxed out their state benefits. Both pandemic unemployment programs also ended by September 2021.
According to the Department of Labor’s Office of Inspector General, more than $950 billion in federal and state unemployment benefits were paid between March 2020 and September 2021.