Home>Articles>California EDD Sent Millions in Unemployment Benefits to Inmates in Jails and Prisons

Sacramento District Attorney Anne Marie Schubert. (Photo: saccountyda)

California EDD Sent Millions in Unemployment Benefits to Inmates in Jails and Prisons

EDD Strike Team made recommendations to reform EDD processes, but nothing to prevent or detect fraud

By Katy Grimes, November 24, 2020 4:57 pm

Tuesday District Attorneys from across California joined together for a press briefing hosted by Sacramento County DA Anne Marie Schubert and El Dorado County DA Vern Pierson, to expose the massive unemployment benefits fraud in jails and prisons in California. “This is perhaps the biggest fraud on taxpayers in California history,” DA Schubert said.

Joining them was San Mateo District Attorney Stephen Wagstaff, Kern County DA Cynthia Zimmer, and U.S. Attorney McGregor “Greg” Scott.  DA Vern Pierson is also the Board President of the California District Attorneys Association.

We’ve been hearing about fraudulent unemployment claims since the coronavirus pandemic lockdown was first ordered by Gov. Gavin Newsom in March. However, millions and quite possibly billions of dollars has been sent to inmates in California’s county jails, and state and federal prisons, while legitimate claimants are stiffed for months.

“District Attorneys, and Federal Prosecutors, along with local, state and federal law enforcement have discovered there is rampant and large scale pandemic unemployment assistance fraud occurring in our communities, in the jails, and in state and federal prisons,” the California District Attorney’s Statewide EDD Fraud Task Force said in a letter to Gov. Gavin Newsom Monday evening.

They sent the letter to the Governor asking him assistance to assist or facilitate stopping the flow of money going to inmates because unbelievably, the EDD says it does not have a mechanism to do so.

“The volume of fraud as well as the types of inmates involved is staggering,” the DAs said. Death row inmates, life and life without possibility of parole inmates, rapists, child molesters, human traffickers, and other violent criminals, are receiving unemployment benefits, and the DAs say many of the claim checks are also being sent out of state.

The DAs report California’s EDD agency does not cross reference payments with incarcerated inmates. But 35 other states not only cross-reference with inmate data, many states do it on a weekly basis. Twenty-eight states cross-match between claimants and county jail data. Six states cross match against federal prison data.

In July, Governor Gavin Newsom announced the formation of a “strike team” to solve numerous issues plaguing the Employment Development Department, the Globe reported. At that time, the strike team was expected to come up with a plan within 45 days to quicken the UI process, improve the EDD, as well as update current procedures.

The DAs noted that in September, the EDD Strike Team made several recommendations to reform EDD processes, but nothing to prevent or detect fraud.

Sacramento County Sheriff Scott Jones. (Photo: Twitter)

The Globe spoke with Sacramento County Sheriff Scott Jones after the press briefing. He said in September they documented 650 inmates in the Sacramento County Jail who were involved in the EDD benefits fraud and receiving checks. The population in the jail was low due to the COVID outbreak Jones said, and the 650 amounted to 25% of the jail population, totaling at the time, more than $6 million in fraudulent EDD benefits.

Because they monitor phone calls at the county jail, they heard some odd references to EDD benefits by inmates. An investigation found a large number of inmates receiving fraudulent EDD benefits checks. “How it happened and was kept secret… the folly here is the EDD,” Sheriff Jones said.

Jones told about an inmate at Mule Creek State Prison who filed 8-12 claims using the Social Security #123-45-6789, and they were paid. “There is no mechanism to stop it,” Jones said. “It’s $1 billion that we know of, and nobody is doing anything about it.”

The Globe spoke to several California unemployment claimants Tuesday who reported that for months they haven’t received their benefits, and are continually put off for additional weeks by EDD employees. One said he was told by the EDD he had to provide his 2019 Federal tax return before his claims could be processed.

Just last week, in a formal letter to Gov. Gavin Newsom, President pro Tempore of the Senate Sen. Toni Atkins, and Speaker of the Assembly Anthony Rendon, California State Auditor Elaine Howle sounded the alarm on EDD’s refusal to stop sending out full social security numbers through the mail, the Globe reported. “Although EDD made progress in removing SSNs from some of the forms we reviewed, it has not removed them from the three that it most frequently mails,” Howle said. “In March 2019, we recommended that EDD prioritize amending those three forms, which together accounted for nearly 10 million of the 13 million problematic mailings we identified.”

El Dorado DA Vern Pierson. (Photo: eldoradoda.com)

EDD benefits are still not being paid properly to more than a million Californians who are out of work. While legitimate workers can’t get benefits, officials say the EDD has paid a quarter-million dollars in benefits to inmates running a scam inside a Bay Area jail.

DA Schubert said the Beverly Hills Police Department discovered 129 EDD debit cards totaling $1.5 million used to rent luxury cars, pay for luxury hotel rooms, guns and cash. In all, 87 people were arrested in Beverly Hills. But this is happening in all 58 counties.

Schubert named more than 7 death row inmates who were receiving fraudulent EDD benefits checks including serial killers Cary Stainer and Wayne Adam Ford, Isauro Aguirre convicted in for the murder of 8-year-old Gabriel Fernandez, “Speed Freak” killer Wesley Shermantine, and even Scott Peterson.

How could this happen?

Schubert said that in the 58 counties, there are 72,000 inmates in local jails. She said they have very organized theft rings network throughout the state operating this fraud, along with with those involved on the outside noting, “Inmates are mocking us.”

With California EDD not using the cross matching data comparisons to inmate data, there is nothing to stop this massive fraud.

DA Pierson said about five years ago, District Attorneys met with the head of the EDD to see about cross referencing data- looking at jail and prison data and information, and compare to see if any of them apply for EDD benefits. “The program exists, but is not used in California,” Pierson said. “The dysfunctionality is within the EDD.” Pierson said there are only 17 EDD fraud investigators statewide. He said they are very good, but as the DAs have gone up the chain of command in the EDD, there have been resignations and retirements.

California attorney Harmeet Dhillon noted that the EDD has fewer investigators “than the alcohol and cosmetics investigators the governor sicced on struggling California businesses.”

The DAs noted that the California Department of Corrections and Rehabilitation has been vastly different, very cooperative and supportive of the DAs in clamping down on this fraud.

US Attorney McGregor Scott said the federal government is involved because of the CARES Act funding going to the state, being used to supplement unemployment payments. His office has received authorization from the U.S. Department of Justice for a U.S. Attorney investigator dedicated to this massive fraud in California, noting that there already are several open investigations on the federal side involving the FBI, DOJ and other agencies.

U.S. Attorney McGregor “Greg” Scott. (Photo: justice.gov)

He also said this involves aggravated identity theft, which is a mandatory minimum two years in the federal penitentiary, along with other likely crimes tacked on.

DA Wagstaff noted that the California Legislature hasn’t been receptive to increasing the punishment for this fraud, but perhaps might now.

“As a taxpayer, everyone needs to be really angry about this,” DA Pierson said. “Hundreds of millions in fraud… and the EDD continues to be dysfunctional.”

Here is the District Attorney’s letter to the Governor:

EDD Letter
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35 thoughts on “California EDD Sent Millions in Unemployment Benefits to Inmates in Jails and Prisons

  1. I wonder if this fraud went towards voter fraud. Democrats have been using government money to fund all their illegal enterprises for decades.

    1. CW: I’ve even been wondering if this latest fraud was a ‘mistake.’ When EDD (taxpayer) funds have been disbursed too conveniently into the wrong camps it begins to look like it is not mere incompetence. Remember many people received huge checks (e.g., the ones who went on a spending spree on Rodeo Drive) while others who needed and deserved the relief are still waiting for it. Is it possible that people inside the department are getting kickbacks? Is this latest outrage a way to funnel funds to prisoners who may be let out soon —- because of “COVID”? I’m sorry to say it but nothing would surprise me about an EDD under Newsom & Co.’s governance. Given what we’ve seen from this administration I think we are justified in having such suspicions.

  2. Comrades

    Gulags don’t run on air…..a few bucks here or there to keep em “happy” is like those motels for the homeless thingees so popular these days….throw in a little amnesty too….so progressive.

  3. At 19 years old the recently fired EDD Director, Sharon Hilliard, was hired by her father into the EDD. He was a long time EDD manager (41 years at the EDD). This EDD generational nepotism policy has realized management hiring, and supporting the hiring, of family and friends of EDD management for decades resulting in super incompetent and unqualified managers throughout the EDD, which result is these current problems. Almost all management from the top (Ms. Hilliard) to the first-line management are involved in this generational nepotism. Speaking of fraud, I’m curious if someone hired via nepotism into state government has perpetrated fraud on the taxpayers, too? Then if for the entire time they worked for state government, if their salary and benefits earned would be considered assets gained via fraud. If so, someone who was hired via nepotism who realized an almost four decade paycheck and benefits would have, in effect, likely felony fraudulently gained millions of taxpayer dollars (not to mention the enormous cost to taxpayers via the waste caused by the incompetent management running the EDD because of the generational nepotism policy). Perhaps this should be looked into, too?

  4. Naturally. COVIDfornia is now officially a banana Republik – successful only at corruption, incompetence, and disregard by those in power.

  5. And that’s not all….Prisoners incarcerated in California took in $3.5 million in Social Security payments from taxpayers. The inspector general for the agency reported 123 inmates received the disability and retirement payments despite the Social Security Act prohibiting payments to individuals “confined to a jail, prison, or certain other public institutions for committing a crime.” The report also found flaws in the Social Security Administration’s database of prisoner information, as only 69 percent of prisoners’ personal information matched SSA records.
    “We identified 123 inmates who received approximately $3.5 million in improper payments while they were incarcerated in [California Department of Corrections and Rehabilitation Facilities],” the inspector general said. “In 49 cases, the Social Security Administration’s (SSA) Prisoner Update Processing System (PUPS) did not contain the inmates’ most recent confinement information.” In 74 other cases, the database contained accurate information that the beneficiary was incarcerated, but nothing was done to shut down their benefit payments. The audit was based on data from the California Department of Corrections of 188,000 prisoners obtained by the inspector general in October 2016. Revelation 14:7

    1. The California Department of Corrections and Rehabilitation. Thanks you for asking – I meant to spell it out in the article. I’ve done that now with a link to the CDCR.

  6. This has got to be a a psyop. The EDD is very old fashioned (which is good) – they mail the form to claim benefits. These have got to be intercepted by prison censors – I’ve had letters returned from the Santa Rita jail because I put the wrong type of postage stamp on – these censors are brutal. Why are the bringing up Scott Peterson now? Congressman Dannemayer? This whole thing stinks.

  7. When the H**l are people going to demand that the officials responsible for these atrocities be held accountable?
    (Answer:never) It’s really sad, no, infuriating. No wonder most Californians have no trust of the government. We’re truly close to “banana republic” status.

  8. Comrades

    Do you really think anyone cares about the poor, ravaged service workers, frontline Covid warriors?
    A billion dollars lost and no political and administrative purges…..
    And the chumps and deplorables continue to vote for their incompetent masters…..

  9. I wonder if all these addresses where multiple checks were sent to were ACORN (or other leftist voter fraud organizations)?

    Is any actually investigating this? I know that no one in California government wants the truth.

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