The pandemic wiped out 3 million jobs in California.
Then why did the Employment Development Department send out 9 million unemployment benefit debit cards?
Since almost all of the cards were sent out in the first 10 months of the pandemic, it would seem logical that someone at the EDD would have wondered why they were giving benefits to three times the number of unemployed people.
Of course, as we know and $40 billion dollars in fraud later, it seems it did not occur to anyone at the EDD to realize the basic reality that 9 is in fact bigger than 3.
The EDD did not respond to requests for comment regarding this mathematical conundrum; the questions they did not answer as, as per Globe practice, listed at the bottom of this article.
The EDD itself did not mail the cards – that task was done under contract by Bank of America. However, the bank had little or no control over to whom it sent cards – essentially it got lists from the EDD and shipped them out as directed. It should be noted that the EDD lists included thousands and thousands of out-of-state, even out-of-country, addresses, something that should have been a fraud red flag to the agency.
B of A, however, did notice the fraud potential early on in the pandemic and told the EDD of their concerns. Despite being a contract conduit for the cards, the bank has certain legal and regulatory requirements it must adhere to, hence the fraud warnings to the EDD.
In February, 2021, the bank said it had prompted the EDD to freeze thousands of accounts the previous fall. It did not, however, have anything to do with the New Year’s Eve Massacre that saw 1.4 million accounts frozen overnight. That shutdown closed countless (countless because the EDD will not say) legitimate accounts, leaving Californians waking up to something far worse than a hangover New Year’s Day, 2021.
With the addition of an identity security system – something that could have been done near the beginning of the pandemic for less than $10 million – in late 2020/early 2021, the new fraud problem began to taper off, though the remaining EDD problems, like claimants literally waiting 25 hours on hold for agency customer service, continued.
As to the cards themselves, they contained significant amounts of immediately available (pick your PIN and go) cash. For example, rapper Nuke Bizzle – who went to prison for felony stupid after posting a song on YouTube about stealing from the EDD, pulled in over $1.2 million dollars on only 95 cards.
The initial amount on the card depended upon how many “back weeks” of unemployment you claimed when applying. If you applied in the summer for example, you could claim benefits back to the end of March. That was a minimum of $764 per week (usually higher), up to about $15,000.
Per card. And that does not include the going forward weekly benefits.
The backdating option was not halted until the fall of 2020.
Not all of the 6 million extra cards – each of which represent an unemployment claim approved by the EDD – were not necessarily fraudulent. Some were legitimate replacement cards, but that percentage was rather, um, low.
The bank said that by February, 2021 it had paid out about $105 billion dollars on those 9 million cards.
Doing basic math – something the EDD cannot do – that means the fraudapalooza losses had already far surpassed their initial public claims and that the current $40 billion estimate could go even higher.
The lesson of the story?
Always remember that 9 is bigger than 3 and if you already know the answer is 3, stop there.
As referenced above, the questions to the EDD:
- In reading through employment statistics, it is my understanding that approximately 3 million Californians were unemployed during that time period (in which 9 million cards were mailed.)
- Is the 9 million card number correct?
- Is the 3 million unemployed number correct?
- When did B of A first flag potential fraud issues to the EDD?
- How did the EDD respond to those warnings?
- Should not the EDD have noticed it was sending out way more cards than the number of Californians who could actually be unemployed?
- How many cards were mailed out of state?
- San Diego Association of Governments Axes Politically Toxic Vehicle Miles Tax - September 27, 2023
- 14th Amendment Does Not Bar Trump from Ballot - September 26, 2023
- Decarceration Through the Side Door: The Effect of Zero Bail - September 25, 2023