$140 million in fraudulent unemployment claims made on behalf of thousands of California prison inmates, prosecutor says
At least 35,000 unemployment claims have been fraudulently made on behalf of prison inmates between March and August, costing the state $140 million in paid out benefits, California officials said Tuesday. The claims, which the Sacramento County district attorney called "one of the biggest fraud of taxpayer dollars in California history," even included one in the name of convicted murderer Scott Peterson.
In some cases, prosecutors were tipped off by listening in on recorded phone calls from prison as inmates bragged about how they were gaming the system to collect unemployment benefits.
Sacramento County District Attorney Anne Marie Schubert and other prosecutors said the problem was compounded by dysfunction at the California Employment Development Department, which they said does not check unemployment claims against a list of prison inmates, as many other states do.
"Quite frankly, the inmates are mocking us," Schubert said.
The list includes Peterson, who was sentenced to death after being convicted of killing his pregnant wife following a trial that riveted the nation. Others are Stayner, convicted of killing four people in Yosemite National Park in 1999; Susan Eubanks, a San Diego woman convicted of shooting her four sons to death in 1997; Isauro Aguirre, who was sentenced to death for the 2013 murder of 8-year-old Gabriel Fernandez in Los Angeles; and Wesley Shermantine, part of the duo dubbed the "Speed Freak Killers" for their meth-induced killing rampage in the 1980s and '90s.
Prosecutors said they learned of the scheme from listening in on recorded prison phone calls, where inmates would talk about how easy it was for everyone to get paid. They said the scheme always involved someone on the outside to facilitate the applications. In Kern County, home to five state prisons, one address was used to receive benefits for 16 inmates.
"In my nearly four decades as a prosecutor in this state, I have never seen fraud of this magnitude," Kern County District Attorney Cynthia Zimmer said.
In some cases, inmates used their real names. In others, they used fake names and even fake Social Security numbers. In one instance, an inmate used the name: "poopy britches," Schubert said.
Prosecutors declined to give more details about the claim associated with Peterson, citing an ongoing investigation. His attorney, Pat Harris, did not return an email or phone message from The Associated Press seeking comment. The California Supreme Court recently overturned Peterson's death sentence and has ordered a lower court to review his murder conviction.
Prosecutors blamed the Employment Development Department, which has been overwhelmed by more than 16.4 million benefit claims since the coronavirus pandemic began in March, resulting in a backlog that at one time totaled more than 1.6 million people.
But prosecutors said in its haste to approve benefits, the department did not check unemployment claims against a list of prisoners, as many other states do. San Mateo District Attorney Stephen Wagstaffe said that when he notified the department about 22 inmates fraudulently receiving benefits, they told him they could not cut off the payments until they were formally charged with a crime.
The problem was so bad that on Monday, nine county district attorneys sent a letter to Governor Gavin Newsom asking for him to intervene.
In an email to the AP, Newsom called the fraud "absolutely unacceptable." He said he first learned of the fraud earlier this year, which prompted him to order the department to "review its practices and take immediate actions to prevent fraud and to hold people accountable."
Newsom said he has ordered the Office of Emergency Services to set up a task force to assist prosecutors with their investigation.
"While we have made improvements, we need to do more," Newsom said.