How Much Did California Unemployment Fraud Cost? – NBC Los Angeles

California has given criminals at least $ 20 billion in fraudulent unemployment benefits, state officials said on Monday, confirming a smaller number than originally feared but which still represents more than 11% of all allowances paid since the start of the pandemic. .

State officials blamed nearly all of this fraud on a hastily-approved Congress-approved unemployment benefit extension that allowed self-employed workers to get weekly government checks with few guarantees to prevent unemployment. people to get allowances that were not eligible.

NBC4 I-Team: How California found itself at the center of a perfect storm for unemployment fraud

“I don’t think people have captured in their minds the enormity of the amount of money that has been distributed in error to undeserving people,” said Assembly Member Tom Lackey, a Republican from Palmdale. , which brought an illustration of 29 dump trucks filled to the brim with $ 100 bills representing just over half of that money lost to fraud.

The pandemic has sparked widespread fraud at unemployment agencies across the country, with at least $ 87 billion in fraudulent payments approved by states, according to a June report from the Office of the Inspector General of the U.S. Department of Labor. In Arizona alone, state officials said crooks pocketed nearly 30% of all her unemployment benefit payments.

In California, fraud was so widespread that state officials accepted at least $ 810 million in benefits on behalf of those in prison, including dozens of infamous killers on death row. State officials even sent $ 21,000 in benefits to an address in Roseville under the name and Social Security number of U.S. Senator Dianne Feinstein, part of the $ 2 million in total fraudulent payments that were sent. at this same address.

But Gov. Gavin Newsom’s administration sought to assure state lawmakers on Monday that the fraud pipeline in California had been closed. Department of Employment Development director Rita Saenz said the state had rolled out new identity verification software that, along with other preventative measures, ended around $ 120 billion fraud attempts.

Saenz told lawmakers in a monitoring hearing on Monday that “2020 was an anomaly, a criminal assault on the unemployment insurance program across the country.”

“We closed the door to this type of fraud last year,” she said.

In January, state officials estimated the fraud could reach $ 31 billion. But on Monday, state officials revised that figure to $ 20 billion. The Newsom administration hired former U.S. Attorney McGregor Scott to help prosecute the crooks, with the department saying Monday’s investigations were ongoing.

But the department is still plagued by other problems. When people apply for unemployment benefits, the information they file with the state sometimes is different from what their former employer filed. When this happens, state officials should interview these people to resolve these issues.

Here’s a detailed look at what went wrong and the fraud that disrupted ESD. Randy Mac reported on NBC4 News on Monday, January 25, 2021.

But people have to wait up to six months for these interviews. Saenz called the delay “unacceptable”. But she said the state has a new policy that pays people their benefits while they wait, as long as they pass the state’s fraud filters. Saenz said about half of those waiting for interviews are paid.

“Things are not improving fast enough for some. There are still challenges to overcome, ”she said.

California has paid more than $ 178 billion in unemployment benefits since the start of the pandemic based on 25.5 million total claims. Saenz said that was four times more than the two worst years of the Great Recession combined a decade ago.

The sheer volume of complaints overwhelmed the department, creating a massive backlog and making it nearly impossible to get a response when people called the agency’s call centers. In January, a state audit blasted the department for doing little to stop fraud during the first four months of the pandemic, accusing the Newsom administration of “significant missteps and inaction.”

On Monday, the auditor’s office said the ministry had completed 13 of its 21 recommendations so far.

“EDD has made notable progress in resolving the issues we discovered during our audits. But significant steps still need to be taken to address areas of risk, ”said Bob Harris, who managed the department’s audit.

Randy Mac examines how the money was paid poses a security risk and the quick fix that could help put money back safely in people’s hands, for NBC4 News on Friday, January 29, 2021.

Saenz told lawmakers the department hasn’t missed any of the auditor’s deadlines for making changes. She said the department plans to finish hiring people for its new fraud investigation unit by the end of November.

But other changes will take longer. The department is working on a new system that will deposit unemployment benefits directly into 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 will take a few years to implement.

The delay has upset some lawmakers, who have said they fear people will lose faith in their government.

“When one of our government agencies fails badly, I think it breaks public trust,” said MP Cottie Petrie-Norris, a Democrat from Laguna Beach.