State lost billions of dollars in fraudulent unemployment claims
The state’s unwieldy unemployment benefits program has paid out about 180 billion dollars during the pandemic, but at least 11 percent of those checks were siphoned off by fraud.
The state’s Employment Development Department, or EDD, manages unemployment claims. The director told an oversight committee of state lawmakers that 2020 was, QUOTE “a criminal assault on the unemployment insurance program across the country." UNQUOTE.
A U.S. Department of Labor report said 87 billion dollars in unemployment claims were lost due to fraud.
Many of the problems were blamed on the the expansion of unemployment benefits to the self-employed approved last year by Congress. This situation created a huge backlog of more than 25 million claims in California that overwhelmed the state government.
Fraudsters took advantage of the situation. An E-D-D’s inspector-general found that 810 million dollars in benefits went to people incarcerated in state prisons, including some on death row.
Governor Gavin Newsom assured lawmakers Monday that the fraud pipeline was closed. He said new software verifying identification had stopped $120 billion in attempted fraud. The state has also stepped up prosecution of suspected scammers.