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At least $ 11 billion has been looted from California coffers in a statewide unemployment fraud scheme, while a further $ 20 billion in possible losses is still under investigation .
California Labor Secretary Julie Su told reporters on a conference call Monday that of the $ 114 billion the state paid in unemployment benefits during the coronavirus pandemic, 10%, or 11, $ 4 billion, involves fraud and 17% are under investigation.
“There is no sugar in reality,” Su said at a press conference Monday. “California did not have sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation.”
Almost all of the fraudulent claims were paid under the federally funded Unemployment Pandemic Assistance Program. The program was approved by Congress to provide unemployment assistance to those who would not generally be eligible, such as independent contractors.
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Officials say the program’s broad eligibility requirements have made it an easy target for criminals, including from Russia and Nigeria. In December, 21,000 prisoners received more than $ 400 million from the state, including 100 on death row.
The California Department of Employment Development (EDD) froze the accounts of 1.4 million people relying on the aid earlier this month as it investigated the fraud. Last week, 1.2 million accounts were still on hold. EDD said other claimants “receive a questionnaire to complete to help EDD determine whether they qualify for continuing benefits, or receive a decision notice advising them of a disqualification and their rights of appeal. “.
The state has also tried to clear a persistent backlog of claims – more than 940,000 as of January 20.
While admitting that the state was unprepared, Su also said the Trump administration failed to provide advice to thwart sophisticated unemployment schemes.
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Su detailed an overdrive agency trying to deal with the explosion of new claims as businesses were closed. Some 19 million requests were processed by the ministry.
“It’s no surprise that EDD has been overwhelmed, as have the rest of the unemployment agencies across the country,” Su said. “As millions of Californians pleaded for help, international and national criminal networks worked behind the scenes, working tirelessly to steal unemployment benefits using sophisticated methods of identity theft.”
California House Democratic Speaker Nancy Pelosi and Senators Dianne Feinstein and Alex Padilla on Monday called on President Biden to create a federal task force designed to help states eliminate organized fraud in jobless claims .
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“California and many other states are experiencing fraud at a much higher rate than previously thought, perpetrated by international and interstate criminal organizations moving from state to state,” they wrote in a letter.
The Associated Press contributed to this report.
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