A Santa Clarita Valley woman became one of the more than 1,750 active investigations into fraud from the state’s unemployment department after she was hit with a $13,500 tax bill for Employment Development Department benefits she never applied for nor received.
The case involving a 49-year-old female victim was assigned to the SCV Sheriff’s Station in September, regarding alleged fraud from her 2020 tax return based on a 1099-G, according to court records dated Feb. 16.
The identity theft victim never filed for unemployment, but benefits in the form of an EDD Bank of America card in her maiden name were shipped to a residence in Compton, court documents indicate.
“Recently, there has been an overwhelmingly large amount of fraud being conducted on the California Employment Development Department as it pertains to unemployment insurance benefits and the retroactive payments being paid out due to the COVID-19 pandemic,” according to a sworn statement by Detective Kelley Barnes of the SCV Sheriff’s Station. “Single applicants have received as much as $20,000 for these retroactive benefits.”
Through a partnership with BofA, the department sent out debit cards that allow recipients to withdraw up to $1,000 at various ATM locations, according to investigators.
The benefits system has drawn concern from state and federal officials, who have expressed concern over the lack of oversight, which has led to a back-and-forth partisan blame game between the state and federal government, according to letters obtained by The Signal.
In January of 2021, the amount of fraud already detected by the state was estimated to be in excess of $10 billion, according to a report from the auditor’s office.
The House Committee on Oversight and Accountability sent a letter Jan. 13, 2023, that noted the state’s problems “cannot be blamed on COVID alone,” saying California’s unemployment agency “has known for years that it was unprepared for widespread job losses,” and citing the figure in Auditor Elaine Howle’s report.
Howle’s report blamed Gov. Gavin Newsom’s administration for “significant missteps and inaction,” according to the letter from James Comer, R-Kentucky, chair of the House oversight committee.
“Perhaps more disturbing are reports of unemployment benefits being doled out in the names of convicted murderers such as Scott Peterson and serial killer Cary Stayner,” according to Comer’s letter. “A California task force discovered that between March and August 2020, more than 35,000 payments were sent in the name of state prisoners, totaling over $140 million, with nearly $500,000 disbursed in the names of 133 death row inmates.”
A Jan. 27 letter written by EDD Director Nancy Faris in response to Comer two weeks later laid the blame at the feet of the Trump administration, saying:
“Unfortunately, the Trump Administration expressed no interest in establishing such coordinated national response when these programs were initiated in 2020, leaving states to fend for themselves against a clear pattern of sophisticated, international criminal syndicates at work.”
The lack of oversight, she claimed, was why most states reported widespread fraud, with about 14% of Texas claims deemed fraudulent, 30% of Arizona claims and, at one point, nearly 90% of Vermont’s claims.
The total amount of fraud, she said, was about $163 billion nationwide, which was only addressed once the Biden administration authorized the COVID-19 Fraud Enforcement Task Force to “to prosecute and recover stolen funds from domestic and international criminals exploiting pandemic relief programs.”
Faris also noted that private-sector partners, including ID.me, Thomson Reuters and Accenture have helped deploy new fraud fighting tools in the Golden State.
Locally, state Sen. Scott Wilk, R-Santa Clarita, introduced Senate Bill 58 in December of 2020, to try and fight the fraud by limiting the EDD’s ability to send out information with people’s Social Security numbers, but that effort died in committee, according to LegInfo.
To date, only about $1.1 billion of California’s fraudulent payouts have been recovered, according to EDD data. The state’s 1,751 investigations have resulted in 605 arrests and 278 convictions, according to the agency’s website.
To put the volume of the claims in perspective, from March of 2020 to January of 2021, California processed 19.5 million claims totaling about $114 billion in benefits. In 2010, which was considered the height of the Great Recession, there were 3.8 million claims.
Sheriff’s Station officials, who have requested EDD records as part of their investigation, confirmed Thursday there have been no arrests to date in connection with the investigation into $13,506 obtained in the name of an SCV woman.