Six months after the California Labor and Workforce Development Agency first announced that up to $31 billion had been stolen by unemployment fraudsters in 2020, state officials announced Tuesday that a former federal prosecutor had been selected so serve as a special counsel in the fraud investigation.
McGregor Scott, who was the Chief Federal Prosecutor for the Eastern District of California until resigning in February of this year and had previously been a U.S. Attorney and District Attorney of Shasta County, will in addition to the fraud cases, look into specific claims made by criminals outside the U.S. and from prison inmates in California.
Scott was largely chosen due to his long career in California, his history of prosecuting fraudsters, and his prior experience in the case. In November 2020, Scott was the initial leader of a task force that initially looked into the Employment Development Department unemployment fraud cases, then only estimated at $2 billion.
“State unemployment systems last year were under attack by sophisticated international and domestic organized fraud schemes,” said Scott in a statement on Tuesday. “We look forward to working with EDD, Cal OES, and local, state, and federal prosecutors to identify, investigate and prosecute those who stole benefits that rightly belonged in the pockets of Californians in need.”
With the EDD fraud now up to just over $11 billion in confirmed cases, and possibly being as high as $31 billion in cases, Californians and lawmakers have been demanding action to be taken for months. With Scott now on board, many Californians, including many critics of the stagnating investigation, said that Scott was a step in the right direction.
Fraud special counsel McGregor Scott
“There has been a huge blame factor going on over this for a long time,” attorney Ashley Ford, who has previously gone after unemployment fraud cases in two other states, told the Globe on Tuesday. “The EDD is easy to blame, but they, like every unemployment agency around the world, had not been prepared for so many going on unemployment at once. It was bedlam there for weeks and months, and they were getting in as many people as possible because so many needed help. Some blame, yes, because they had not updated claims for a long time amongst other things, but you can’t solely pin it on them. Lawmakers either, or state officials. They all pushed for the EDD to hurry up, but they also allowed the claims to go by without as many background checks. They did that, and so many fraudulent cases went through.”
“It’s a bit more complicated than that, but in a nutshell, that’s what happened. You can’t really blame Californians themselves. So many were out of work suddenly, and they needed money from a system they had paid into.”
“For a long time, not much has been done. But with a surprise election coming in a few months, and the EDD fraud being a big sticking point, something needed to be done. So Scott comes in.”
“Putting aside that political point and just looking on merit, Scott is a really good choice. He’s not really beholden to any person in power, so he can go into this with an even head. He’s actually a Republican too, so any party objections to him would probably come from Democrats. They just needed a neutral guy digging up just the facts like Joe Friday, and they found the one.”
The director of the EDD, Rita Saenz, also agreed with the choice of Scott Tuesday, saying that his hiring is a major step to cracking down on the fraud.
“California took broad action last year to identify and stop criminal unemployment fraud from continuing — and with McGregor Scott’s aid we are taking another major step toward empowering prosecutors to crack down on those who engaged in this criminal activity,” said Saenz.
No serious objections were made to Scott on Tuesday by lawmakers.
Scott will join the California fraud task force as a fraud special counsel and will be part of the group for an indeterminate time.