California Paid Unemployment Claims in Prisoners' Names, Prosecutors Say--Update
By Christine Mai-Duc and Alejandro Lazo
California paid out more than $140 million for fraudulent
unemployment claims made in the name of inmates in its state
prisons and county jails, according to state and federal
prosecutors who have been investigating the fraud for months.
Among the people who filed claims with California's unemployment
agency were death row inmates Scott Peterson, convicted of
murdering his wife and unborn son, serial killer Cary Stayner, who
is at San Quentin, and Isauro Aguirre, who was convicted of
murdering an 8-year-old in a high-profile child abuse case.
In a letter to Gov. Gavin Newsom, a Democrat, the district
attorneys of nine California counties called it "the most
significant fraud on taxpayer funds in California history" and
asked for additional resources to expedite investigations. They
said more than 35,000 claims have been made in the names of inmates
at facilities run by the California Department of Corrections and
Rehabilitation and more than half of those were paid out through
August of this year.
The prosecutors estimated that the total amount of the
fraudulent payments already made could be close to $1 billion
"In my nearly four decades as a prosecutor in this state, I have
never seen fraud of this magnitude," Kern County District Attorney
Cynthia Zimmer, who was part of the investigation, said at a press
In some cases, prisoners may have been victims of identity
theft, according to the prosecutors, with fraudulent claims made in
their names for which other people received the money. But in other
instances, they said, prisoners conspired on the fraudulent claims
with people on the outside who then sent them money in jail.
McGregor Scott, U.S. attorney for the Eastern District of
California, said several federal investigations into potential
fraud were being conducted, with involvement of the Federal Bureau
of Investigations and the Department of Labor. He said there are
potentially thousands more inmates in federal prisons in California
involved in fraudulent claims who have not yet been identified and
a deputy U.S. Attorney has been hired to focus on the issue.
Mr. Newsom said later Tuesday he had instructed the state's
Office of Emergency Services to create a task force to coordinate
efforts to combat unemployment insurance fraud and assist the
In July, Mr. Newsom announced a "strike team" tasked with
finding ways to modernize the state's unemployment system. That
team said in its report, which was issued in September, that they
were aware of reports of inmates receiving benefits but that the
agency's fraud detection measures had failed to discover them.
"Unemployment fraud across local jails and state and federal
prisons is absolutely unacceptable," Mr. Newsom said. "We will
continue to fully partner with law enforcement and direct as many
resources as needed to investigate and resolve this issue
The revelations come amid ongoing pressure on California's
Employment Development Department, which handles unemployment
benefits and has been overwhelmed by a flood of claims during the
The agency said last week it has processed $110 billion of
unemployment benefits from a total of 16.4 million claims since
March. Officials said they were also cutting into a backlog of
claims in which people who have filed for benefits have waited for
more than 21 days. That backlog has been a major source of ire for
lawmakers in California.
In August, 61 California lawmakers sent a letter to the governor
saying more than 1.1 million unemployment claims had been unpaid,
and that the EDD was rife with problems and an inability to resolve
the backlog. The agency, which has said it won't clear backlogged
claims until at least January, has been dogged by reports that
claimants have had to call hundreds of times before connecting with
an agent and are at times hung up on.
In September, the EDD said fraud attempts have increased during
the pandemic and that it had spent months working with local, state
and federal investigators to find offenders.
Write to Christine Mai-Duc at firstname.lastname@example.org and
Alejandro Lazo at email@example.com
(END) Dow Jones Newswires
November 24, 2020 20:09 ET (01:09 GMT)
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