Unemployment fraud for California prisoners is estimated at $ 400 million


State investigators have so far found that $ 400 million was paid for some 21,000 unemployment benefits wrongly filed on behalf of California inmates, officials said Monday when state representatives requested legislative hearings over the massive fraud.

Debit cards issued by the State Department for Employment Development, which contain millions of benefits, have since been frozen, while another $ 80 million in potential payments have been blocked when about 10,000 other claims have not been approved, says Crystal Page, the state’s deputy secretary of labor. and a labor development agency.

The new amount is nearly three times the $ 140 million in damages estimated last week in California, a group of nine district attorneys and a federal prosecutor.

Local prosecutors said prisoners were admitted to the EDD, including a prisoner at San Quentin State Prison, Scott Peterson, who was convicted of killing his wife and unborn son, and Cary Stayner, who was convicted of killing two women and two girls. Near Yosemite in 1999.

On Monday, lawmakers, including state senator Jim Nielsen (R-Gerber), called for a legislative hearing to determine how the fraud took place – which included lawsuits filed against the names of 133 prisoners sentenced to death.

Nielsen noted that hundreds of thousands of unemployed in California are still waiting for EDD payments based on legitimate needs.

“We just learned that this huge amount was sent to the criminals,” Nielsen said. “It’s an absolute outrage. There needs to be more accountability and supervisory hearings about this. “

Assembly spokesman David Chiu (D-San Francisco) also said he supported the legislative hearings.

“It’s extraordinary that my constituents are making a single misspelling error that sustains EDD benefits for months,” while paying claims to death row inmates, Chiu said in a statement.

Governor Gavin Newsom last week announced a task force to investigate incorrect payments, saying “unemployment fraud between local prisons and state and federal prisons is completely unacceptable.”

Investigators working with the State Task Force are still trying to determine how many of the identified lawsuits were filed from prison, how many were filed on behalf of inmates by people who are not incarcerated, and how many fraudsters filed using inmates ’identities. without their permission, state officials said in a briefing with The Times on Monday.

The investigation will also look at whether the perpetrators were assisted by employees of the EDD or the California Department of Correction and Rehabilitation, said Brian Ferguson, a spokesman for the California governor’s emergency service.

According to EDD officials, no internal involvement has yet been found.

The problem came to light in mid-August when public prosecutors in San Mateo County indicted 21 people for part of a fraud ring that stole $ 250,000 by making false claims on behalf of inmates in the county jail – officials said.

“At that point, we started to investigate internally what our exposure was,” said one administrative official who spoke about the background because the investigation is ongoing.

The state also took steps to prevent new fraudulent claims.

On September 20, the EDD announced that it would suspend acceptance of new claims for two weeks while installing a new system that requires claimants to provide live proof of identity and submit documentation such as utility bills. This new system should prevent prisoners from approving the demands, officials said.

To coordinate criminal investigations by state and local prosecutors and law enforcement agencies, the governor has appointed a task force that includes officers from the EDD, the Correctional Department, and the California Highway. It is chaired by Mark Ghilarducci, director of Cal OES, and Tom Osborne, deputy director of homeland security at Cal OES.

So far, no one has been arrested on suspicion of fraud involving state prison inmates, state officials said.

With only 17 investigators in the EDD fraud unit, the task force is likely to move people from other state investigative units to help, officials said.

A group of district attorneys that unveiled prison-related fraud last week complained that the state is slow to prevent fraud involving detainees by crossing personal information from claims to the list of detainees, as many others do. state also does.

Administration officials said the cross-check only took place after the San Mateo case because personal data, including detainees ’social security data, were confidential and could not be legally shared with the unemployment agency.

“The CDCR Act prohibits a detainee from disclosing his or her social security number unless it is forwarded to another law enforcement agency or through a valid subpoena,” the agency said in a statement Monday.

To temporarily resolve the problem in the current investigation, state officials said an application had been filed with the U.S. Department of Labor’s Office of the Chief Inspector of Federal Unemployment Funds and a subpoena was issued in late September, forcing the state prison agency to provide inmates.

But the subpoena only favors the investigation, so government officials say they are exploring other legal options to continue cross-matching the data in the future, with a legal issue expected to be resolved soon. Once permanent data sharing has been approved, the state will manually verify the data until it can insert it into a computer system that automatically verifies the information, officials said.

Nielsen said the need for confidentiality to prevent cross-matching was a “convenient avoidance” of responsibility and called on government officials to resolve the problem immediately.