California EDD recovers more than $1 billion in fraudulently-paid unemployment funds
SACRAMENTO -- California's Employment Develepment Department (EDD) has recovered more than one billion dollars in unemployment insurance funds that were fraudulently paid out since the start of the pandemic.
In a press statement Tuesday, the EDD said the funds were located on some 780,000 inactivated benefit cards and will return to the federal government because the fraudulent claims were filed with the Pandemic Unemployment Assistance program.
The EDD also said it has recently thwarted and additional 47,000 potentially fraudulent claims worth up to $560 million. Last year the department hired a EDD fraud special counsel to work with law enforcement and prosecutors in the state to recover stolen funds.
The department has been under intense scrutiny over the amount of fraudulent unemployment claims approved and the ease in which legitimate claimants had their identities and funds stolen, often by prison inmates conspiring with others to obtain the pre-funded debit cards and cash them out.
In January, the EDD acknowledged it had paid at least $20 billion in fraudulent claims during the pandemic. Legitimate providers and claimants have been ensnared in the mass freeze of funds and have had to go through additional verification procedures before payments can resume.
The department was also dogged by customer service troubles, with personnel slow to respond to phone calls and ill-equipped to handle the flood of complaints about missing funds or claims that were delayed or rejected. Also in January, EDD Director Rita Saenz stepped down and was replaced by deputy director Nancy Farias, the third EDD chief in the last two years.
"Fraudsters and criminal organizations ripped off California, along with every other state, during one of the worst crises in history - we're taking aggressive action to return that money to the taxpayers," said Governor Gavin Newsom in a prepared statement Tuesday.
The EDD said Tuesday that within the past 15 months, there have been more than 1,500 fraud investigations, 467 arrests and $3.5 million seized in the counties reporting information to the state, along with 162 convictions.
The department also noted it has since deployed a new verification system for claimants, worked with Bank of America to issue new chip-enabled debit cards and set up a dedicated call center to help victims of identity theft.