About one-third of unemployment claims that California residents filed have been found to be fraudulent by the security company that the Employment Development Department (EDD) hired to investigate the scams.
While EDD only estimated the 30% fraud rate, the fake claims caused tax dollars to be stolen and led to legitimate claims being suspended or declined. The agency aims to stop fraudulent claims to provide its service to people who really need assistance.
The agency revealed its decision to coordinate with the security company to verify and figure out the identity of the applicants. The vice-president of Risk Fraud and Compliance at Thomson Reuters, Jon Coss, said the perpetrators found a breach in the system and took advantage of it. He added the criminals used the dark web to communicate and invaded the system.
Coss said there are several scams that target EDD claims, such as the “mom-and-pop” fraud that officials in the Los Angeles County city of Torrance faced. A couple of weeks ago, authorities discovered firearms, more than $150,000 in cash, and 130 EDD benefit cards after arresting 27 people.
The Torrance Police Department’s Captain Mark Athan said the criminals transported the items through mailboxes or PO boxes in an attempt to intercept them before they get to their actual destinations.
However, Coss believes that there is a much more sophisticated crime ring hiding online, with a reach extending across the world. He added they had seen fraud rings of similar goals in the UK, Nigeria, Russia, and other countries while some have begun to move in locally, ABC7 News reported.
Earlier this week, authorities arrested a resident from Tacoma, Washington, for allegedly filing fraudulent claims for disability insurance benefits in California. Officials sentenced the suspect to two years and six months and prison.
U.S. District Judge Kimberly J. Meuller sentenced the suspect, 49-year-old Angela Stubblefield, on Monday. Additionally, Meuller required Stubblefield to pay $219,871 in restitution for her crimes.
The defendant worked with another individual, Katherine Decker, for the EDD. Court documents revealed that the two suspects took advantage of their connections within the agency to file for multiple fraudulent disability insurance benefits from 2013 to 2017. Authorities also believed that the two illegally extended existing disability claims by making use of the identities of other people.
In a statement, EDD Director Sharon Hilliard said that the agency’s employees tirelessly worked to keep their customers anonymous and keep the Disability Insurance Program for Californians working properly and as intended, ABC10 reported.
The incident also comes amid EDD experiencing more than one million backlogged applications. The agency said a few weeks ago that it would be able to clear up the backlog before February.
Since the beginning of the pandemic, officials, legislators, and claimants have filed numerous complaints about EDD delays with their payments. The agency recently revealed that it had reduced the backlog by 48% between September and November.
A labor lawyer, Michael Bernick, said the situation was an optimistic turn of events. He noted that the successful reduction of the backlog was not seen since March and marked a very significant cut of delays.
EDD implemented new speed up systems after the Governor’s EDD Strike Force requested they clear their backlogs. Assemblyman David Chiu said that if the agency continued with its process, it could have a much better grasp on the claims by January.
Chiu added that the Bank of America was not able to properly control its backlogs and have not explained to the public why 350,000 of its debit cars were frozen. The incident arose as California residents attempted to access their benefits, KTVU reported.
