California’s unemployment fraud reaches at least $20 billion

By ADAM BEAM | The Associated Press

SACRAMENTO  — California has fixed distant astatine slightest $20 cardinal to criminals successful the signifier of fraudulent unemployment benefits, authorities officials said Monday, confirming a fig smaller than primitively feared but 1 that inactive accounts for much than 11% of each benefits paid since the commencement of the pandemic.

State officials blamed astir each of that fraud connected a hastily approved enlargement of unemployment benefits by Congress that fto radical who were self-employed get play checks from the authorities with fewer safeguards to halt radical from getting benefits who were not eligible to person them.

“I don’t deliberation radical person captured successful their caput the enormity of the magnitude of wealth has been issued errantly to undeserving people,” said Assemblyman Tom Lackey, a Republican from Palmdale, who brought on an illustration of 29 dump trucks filled to the brim with $100 bills representing conscionable implicit fractional of that wealth mislaid to fraud.

The pandemic ushered successful wide fraud astatine unemployment agencies crossed the country, with astatine slightest $87 cardinal successful fraudulent payments approved by states, according to a June study from the inspector general’s bureau astatine the U.S. Department of Labor. In Arizona alone, authorities officials said scammers pocketed astir 30% of each its unemployment payment payments.

In California, the fraud was truthful wide that authorities officials OK’d astatine slightest $810 cardinal successful benefits successful the names of radical who were successful prison, including dozens of infamous killers connected decease row. State officials adjacent sent $21,000 successful benefits to an code successful Roseville nether the sanction and Social Security fig of U.S. Sen. Dianne Feinstein, immoderate of the $2 cardinal successful full fraudulent payments that were sent to that aforesaid address.

But Gov. Gavin Newsom’s medication connected Monday sought to guarantee authorities lawmakers that the fraud pipeline successful California has been closed. Employment Development Department Director Rita Saenz said the authorities has implemented caller individuality verification bundle that, on with different preventative measures, has stopped an estimated $120 cardinal successful fraud attempts.

Saenz told lawmakers connected Monday during an oversight proceeding that “2020 was an anomaly, a transgression battle connected the unemployment security programme crossed the country.”

“We closed the doorway to that benignant of fraud past year,” she said.

In January, authorities officials estimated the fraud could beryllium arsenic precocious arsenic $31 billion. But Monday, authorities officials revised that down to $20 billion. The Newsom medication has hired erstwhile U.S. Attorney McGregor Scott to assistance prosecute scammers, with the section saying Monday investigations are ongoing.

But the section is inactive plagued with different problems. When radical use for unemployment benefits, sometimes the accusation they record with the authorities is antithetic than what their erstwhile leader filed. When this happens, authorities officials person to interrogation these radical to resoluteness those issues.

But radical are having to hold up to six months for these interviews. Saenz called this hold “unacceptable.” But she said the authorities has a caller argumentation that pays radical their benefits portion they wait, arsenic agelong arsenic they walk the state’s fraud filters. Saenz said astir fractional of the radical waiting for interviews are being paid.

“Things are not improving accelerated capable for some. There are inactive immoderate challenges ahead,” she said.

California has paid retired much than $178 cardinal successful unemployment benefits since the commencement of the pandemic based connected 25.5 cardinal full claims. Saenz said that’s 4 times arsenic overmuch arsenic the combined worst 2 years of the Great Recession a decennary ago.

The sheer measurement of claims overwhelmed the department, creating a monolithic backlog and making it astir intolerable to get an reply erstwhile radical called the agency’s telephone centers. In January, a authorities audit blasted the section for doing small to halt the fraud for the archetypal 4 months of the pandemic, blaming the Newsom medication for “significant missteps and inaction.”

Monday, the auditor’s bureau said the section had completed 13 of its 21 recommendations truthful far.

“EDD has made notable advancement successful addressing areas of interest we recovered during our audits. But important steps inactive request to beryllium taken to code areas of risk,” said Bob Harris, who managed the department’s audit.

Saenz told lawmakers the section had not missed immoderate of the auditor’s deadlines to marque changes. She said the section plans to decorativeness hiring radical for its recently formed fraud probe portion by the extremity of November.

But different changes volition instrumentality longer. The section is moving connected a caller strategy that volition deposit unemployment benefits straight to people’s slope accounts alternatively of sending them cheque oregon debit paper successful the mail, which is much susceptible to fraud. But Saenz said this volition instrumentality a fewer years to implement.

That hold upset immoderate lawmakers, who said they were disquieted radical were losing religion successful their government.

“When 1 of our authorities agencies fails this badly, I judge that it breaks the nationalist trust,” said Assemblywoman Cottie Petrie-Norris, a Democrat from Laguna Beach.