More than $11 billion in unemployment benefits were stolen from California last year by professional hackers, identity thieves, and overseas criminal rings, but authorities fear more funds could be in question as the investigation continues.
On Monday, California Labor Secretary Julie Su announced during a conference call that the state’s unemployment benefits, which totaled $114 billion, had 10% of which, around $11.4 billion, was confirmed as fraudulent money.
Fraudulent Unemployment Benefit Claims
Su added that they were suspicious of an additional 17%, or about $20 billion, was, for the most part, thought to be fraudulent. “There is no sugarcoating the reality. California did not have sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation,” she said.
Officials said the majority of the fraudulent funds were claimed through the Pandemic Unemployment Assistance program set up by the federal government. Congress approved the program as a means of distributing unemployment benefits to residents amid the COVID-19 pandemic.
However, authorities noted that the program had far little security and guarantee that fraudulent claims were recognized and blocked. They said that several third parties, including from Nigeria and Russia, took advantage of the situation and filed for money that was not theirs.
The Trump administration was also at fault for the massive money fraud, Su said. She argued that officials did not properly guide state leaders on how to detect and block sophisticated fraud rings. Su noted that last year, authorities put up sufficient security measures that would have prevented similar incidents from happening.
“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,” Su said.
Recovering the Money
Additionally, California was struggling to finish its backlog of claims, amounting to more than 940,000 as of January 20. Officials said that the fraud issues were prevalent in other areas across the United States.
Officials said Washington state was one of the firsts that fraud claims targeted, which were believed to have been part of a West African fraud ring. More than $600 million was stolen using 122,000 fraudulent claims. However, authorities were able to reclaim about $357 million after working with federal law enforcement and financial institutions in the U.S.
In recent months, prosecutors have been focusing their attention on unemployment benefits fraud. Orange County District Attorney Todd Spitzer on Monday said they had charged two business owners who allegedly filed false unemployment claims. Additionally, he announced that eight people had been prosecuted, six of which were state prisoners, the Associated Press reported.
House Speaker Nancy Pelosi and California Senators Dianne Feinstein and Alex Padilla advised President Joe Biden to fight organized crime by putting together a federal task force.
“California and many other states are experiencing fraud at a much greater rate than previously understood, perpetrated by international and interstate criminal organizations moving from state to state,” they said.