California Labor and Workforce Development Agency Secretary Julie Su announced Monday that, in 2020, fraudsters stole at least $11.4 billion in unemployment benefits from California.
Su also noted that another $20 billion may have also been stolen by identity thieves and foreign criminals, possibly making as much as 27% of all EDD unemployment benefits being sent to fraudsters last year.
The current confirmed number, $11.4 billion, or around 10% of all unemployment funds given out, dwarfs the previous released amount, which was at $2 billion in early January. While there were some concerns that it could go as high as $8 billion, no estimate had even come close to $11.4 billion until Su’s announcement Monday.
“There is no sugarcoating the reality,” explained Secretary Su said. “California did not have sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation.
“It should be no surprise that EDD was overwhelmed, just like the rest of the nation’s unemployment agencies. As millions of Californians applied for help, international and national criminal rings were at work behind the scenes working relentlessly to steal unemployment benefits using sophisticated methods of identity theft.”
According to Su, nearly all the fraudulent claims were made through the Pandemic Unemployment Assistance Program. The program, which gives unemployment benefits to those who would otherwise not receive them, such as independent contractors and gig workers, had been giving warning signs of mass fraud for some time now, with reports last week warning of a huge rise in fraudulent cases. Some Californian officials played down the warnings, while others, like former EDD heads, said that the figures would be very high.
Su, who is expected to be elevated to Deputy Secretary of Labor in Washington by President Joe Biden soon, also played down the large rise on Monday, noting that fraud was happening nationwide, and that some states, such as Washington, have seen $600 million worth of fraudulent claims.
At least $11.4 billion lost
Financial experts told the Globe that what happened in California is incomparable to anywhere else.
“This is inexcusable.” explained Linda Ballard, a Los Angeles-based accountant who has been helping people affected by the COVID-19 recession. “10%, or over $11 billion, is way too much. If it is worst case, at over $30 billion, that’s incomprehensible how that could have happened.”
“A lot of people are willing to give the EDD some slack for the early days. They were honestly unprepared for such a flood of new claims, and early on in the pandemic, it was all about getting assistance out fast.”
“But that goodwill ends when they stopped looking into claims and doing quick checks on claimants to see if they were incarcerated, were toddlers, or were dead. But they didn’t. Neither did they questions claims where hundreds of other EDD cards were being sent address-wise or those using obvious fake names.”
“The EDD was underprepared, which was not entirely their fault, then never given immediate corrective support. The legislature, the Governor, someone could have put out the emergency call or sacrificed speed for accuracy, but it never happened. The government could have eased on the restrictions a bit to allow more jobs being open, but that didn’t happen either. So now the state is out billions. Tens of billions. Eleven figures.”
While Su did place some blame on the Trump Administration for not giving fraud support or putting in assistance safeguards, many lawmakers from both parties squarely put the blame on the state’s handling of it on Monday.
In addition to the $11.4 billion fraud figure, Su also noted that the EDD backlog of unfilled claims, once estimated to have been completed by the end of January, still had nearly 1 million uncompleted claims on Monday, sitting at 941,019. While new claims are undergoing more scrutiny, coupled with recent climbs in unemployment, the slowdown of clearing the backlog from 2020 continues to keep many Californians away from receiving quick unemployment benefits.
“The cherry on top of the news on Monday,” added Ballard. “People like Newsom are barely hanging on by a thread right now. This news, which replaced the reopening news from earlier today, is not going to help their situation.”
More accurate EDD figures are expected later this week from audits by State Auditor Elaine Howle.