California EDD Deemed ‘Non-Responsive’ by Congressional Committee

A person in a coma is considered to be non-responsive.

Unironically, also considered to be non-responsive is California’s Employment Development Department (EDD) when it comes to answering Congressional questions.

The House Committee on Oversight and Accountability – which is looking into various aspects of the pandemic response, including its financial impacts – has deemed the EDD’s answer to a January information request as not nearly good enough.

“The EDD has not provided documents requested by Chairman (Kentucky Republican James) Comer,” said a committee spokeswoman. “We intend to have additional follow up on the document request.”

When asked by the Globe for a comment, the EDD provided a copy of a letter it sent to Comer’s committee in late January and did not address the current issue of their failure to provide the requested documentation.

Non-responsive, indeed.

The committee is attempting to get to the bottom of the massive fraud perpetrated against the EDD during the pandemic. The current estimate is that the EDD lost about $40 billion to illegitimate claimants, including prisoners (and not just from California prisons,) garden variety local scammers, and international fraud rings, all of whom simply walked right in to the department’s completely unprotected system.

While the EDD has claimed it did the best it could, it should be noted that the EDD – even though it could have purchased basic fraud protection software that would even work with its antiquated IT systems for about $5 million-  had no way to prove if an applicant was who they said they were until the end of 2020, months after the pandemic began.

The EDD also had no system to check to see if people in prison, people from out-of-state, and people from overseas – all ineligible for benefits – were getting benefits in the form of a chipless debit card pre-loaded with up to about $15,000 – each.

The EDD did not even cross-reference addresses to notice and potentially flag as fraudulent when a single home received dozens, if not hundreds, of cards (they used to have one but stopped paying for it when a federal grant ran out a few years ago.)

Particularly telling is that California has about 12% of the nation’s workforce, it saw more than 20% of the unemployment benefit fraud in the country, meaning that word spread very quickly in the fraud world that the state was an especially easy mark.

In January, the committee requested the following:

1. All processes and procedures related to the disbursement of unemployment insurance benefits during the pandemic, including policies and procedures intended to ensure payments are made to the proper individual, and to ensure that the individual is a qualified recipient of unemployment insurance;
2. All documents and communications between employees of the California EDD and employees of the U.S. Department of Labor regarding the state’s UI benefit program;
3. All documents and communications related to efforts to prevent payment of fraudulent UI claims;
4. All documents and communications related to efforts to recoup UI claims paid improperly;
5. All documents and communications related to identifying the total number of improperly paid UI benefits and documents sufficient to show whether those funds remain in the United States or were transferred to entities outside the United States.

The committee spokeswoman would not specify exactly how the EDD was “non-responsive” – for example, was the information missing or unrelated or gibberish – but stressed the agency remains very prominently on Congress’ radar.

In the January letter to the committee – the one that was re-provided to the Globe –  department chief Nancy Farias blamed the Trump administration for the massive fraud, stating, in part, “… we object to the Chair’s mischaracterization of California’s response to the UI fraud attacks and the Chair’s failure to acknowledge the inadequate response by the Trump Administration, which left neglected state UI systems fighting domestic and international criminal enterprises effectively on their own.”

In other words, the feds didn’t hold their hand tight enough.

Either way, this claim flies in the face of a California State Auditor’s report that states flatly that the feds “warned the state at least three times in the early months of the pandemic to beef up its fraud protections.”

The date for the next response deadline is not yet clear nor is exactly when Farias and other EDD employees will have to testify in front of Congress.

As of midnight Wednesday, the EDD – which, again, suffered a very preventable loss of $40 billion –  still owed the federal government a principal amount of $18,735,210,647.41 in addition to interest of $142,361,804.80.  

Finally, the state has increased unemployment insurance taxes on California businesses to make up the shortfall and it is not clear if anyone at the EDD has been fired for the failure; in fact, the person in charge at the time, Julie Su, could become, the next Secretary of Labor in the Biden administration.