Author: ADAM BIM | Associated Press
SACRAMENTO – California has given out at least $ 20 billion in fraudulent unemployment benefits to criminals, state officials said Monday, confirming the figure is lower than initially estimated but still accounts for more than 11% of all benefits paid since the start pandemic.
Government officials blamed nearly all of this scam for a hastily congressional-approved unemployment benefit expansion that allowed people who were self-employed to receive weekly checks from the government with little guarantees to prevent people from receiving benefits that were not eligible for them.
“I don’t think people caught the huge amounts of money that were mistakenly given to unworthy people,” said MP Tom Lackey, a Palmdale Republican who brought with him an illustration of 29 dump trucks filled to capacity. to the brim with $ 100 bills, representing just over half of that money lost to fraud.
The pandemic has led to widespread fraud at unemployment agencies across the country, with states approving at least $ 87 billion in fraudulent payments, according to a June report from the Office of the Inspector General of the US Labor Department. In Arizona alone, state officials said fraudsters embezzled nearly 30% of all unemployment benefits.
In California, fraud was so widespread that state officials allowed at least $ 810 million in benefits to be paid out to the names of people who were in prison, including dozens of notorious murderers on death row. Government officials even sent $ 21,000 in benefits to a Roseville address under the name and Social Security number of U.S. Senator Dianne Feinstein, which is part of a total of $ 2 million in fraudulent payments that were sent to the same address.
But the administration of Governor Gavin Newsom on Monday tried to reassure state lawmakers that the pipeline to California’s fraud was closed. Employment Development Director Rita Saenz said the state has implemented new identity verification software that, along with other preventative measures, has prevented about $ 120 billion in fraud attempts.
Saenz told lawmakers on Monday during an oversight hearing that “2020 was an anomaly, a criminal attack on unemployment insurance programs across the country.”
“Last year we closed the door to this kind of scam,” she said.
In January, government officials estimated the fraud at $ 31 billion. But on Monday, state officials slashed that amount to $ 20 billion. The Newsom administration has hired former US Attorney McGregor Scott to assist in prosecuting the fraudsters, with the ministry saying the investigation is ongoing on Monday.
But the department still has other problems. When people apply for unemployment benefits, sometimes the information they submit to the state is different from what their former employer submitted. When this happens, government officials should interview these people to resolve these issues.
But people have to wait up to six months for these interviews. Saenz called this delay “unacceptable.” But she said the government has a new policy whereby people are paid benefits while they wait if they pass government fraud filters. Saenz said that about half of people waiting for interviews receive money.
“For some, the situation is not improving fast enough. There are still several challenges ahead, ”she said.
California has paid out more than $ 178 billion in unemployment benefits since the start of the pandemic, based on 25.5 million total claims. Saenz said this is four times the worst two years of the Great Recession combined a decade ago.
The sheer volume of demands overwhelmed the department, creating a huge backlog of orders and making it nearly impossible to get a response when people called the agency’s call centers. In January, a government audit accused the ministry of doing little to prevent fraud during the first four months of the pandemic, and accused the Newsom administration of “material mistakes and inaction.”
On Monday, the auditor’s office said the department has implemented 13 of the 21 recommendations so far.
“EDD has made measurable progress in addressing the problems we found in our audits. But important steps still need to be taken to address areas of risk, ”said Bob Harris, who led the department’s audit.
Saenz told lawmakers that the department did not miss any of the deadlines set by the auditor to make changes. The department plans to complete recruiting for the newly created fraud investigation unit by the end of November, she said.
But other changes will take longer. The department is working on a new system that will transfer unemployment benefits directly to people’s bank accounts, instead of sending them a check or debit card in the mail, which is more susceptible to fraud. But Saenz said it would take several years.
The delay has upset some lawmakers, who said they are concerned that people are losing faith in their government.
“When one of our government agencies fails, I believe it undermines public confidence,” said MP Cottie Petrie-Norris, a Laguna Beach Democrat.