More than 130 California death row inmates received more than $400,000 in unemployment checks meant to help people during the pandemic — and they were not alone, according to prosecutors who announced the massive fraud scheme Tuesday.
Tens of thousands of inmates across California received unemployment benefits that could top $1 billion when the scope of the theft is fully realized.
“The fraud is honestly staggering,” said Sacramento District Attorney Anne Marie Schubert during a press briefing. “And the types of inmates is shocking, quite frankly.”
Federal prosecutors say some of the inmates involved in the scheme include Cary Stayner, a serial killer convicted for the murder of four women in Yosemite Park in 1999; Isauro Aguirre who, along with his girlfriend, was convicted in the torture and murder of her 8-year-old son in 2013; and Scott Peterson, the Modesto resident who was convicted of murdering his wife Laci and their unborn son in 2002.
From March through August, the names of 35,000 California inmates were filed to collect unemployment benefits through the California Employment Development Department (EDD). Of those, 20,000 collected more than $140 million from the state.
One inmate received 16 claims, Schubert said, calling the scheme a “behemoth” playing out across the California Department of Corrections and Rehabilitation prisons. Some of the benefit checks were sent directly to inmates whose real names and Social Security numbers were used, but other claims were filed with false names, including “Poopy Britches.”
Prosecutors say the scheme involved inmates and people outside of prisons and jails working together. The extent of the fraud remains unclear as some claims were made directly by inmates or by their family or friends, while others were made without the inmates’ knowledge.
More than 133 death row inmates received $420,000 in claims, with one inmate receiving nearly $20,000 according to prosecutors. The scheme is rampant and reported across all types of prisons and jails across the state.
“Quite frankly, the inmates are mocking us,” said Schubert, who leads a newly created task force to address the large-scale theft.
Investigators say they first became aware of the theft in August when guards overheard inmates in a San Mateo County Jail talking about fake claims.
Governor Gavin Newsom directed the state unemployment agency to work with the state prisons to match the Social Security numbers of every incarcerated inmate to see who applied for benefits.
The next month, police busted a fraud ring in Beverly Hills during which 44 people were arrested and more than $2.5 million in unemployment benefits in the form of pre-loaded debit cards were seized. Police said many of the people arrested were from out of state and traveled to California to collect the fraudulent cards and used them to rent luxury cars, lease short-term rentals and buy high-end items.
All of the money was meant for Californians who lost their jobs during the pandemic.
Like the rest of the nation, the Golden State saw large swaths of the economy grind to a halt as Covid-19 spread.
And too many viewed it as an ideal time to prey on the state’s efforts to assist the unemployed.
The scope of the scheme was too big for the EDD to handle, according to El Dorado County District Attorney Vern Pierson. Even worse, confidentiality policies blocked EDD officials from verifying that benefits were being paid to death row inmates.
Hundreds of investigations are ongoing and some charges have already been filed. But prosecutors say they will investigate other facilities like psychiatric hospitals to see if they are also host to the same scam.
The statewide fraud will require investigation by multiple agencies, according to a letter sent to Newsom’s office by the DAs of nine California counties and McGregor Scott, the U.S. Attorney for the Eastern District of California. All helped uncover the fraud scheme but say it’s likely the tip of the iceberg.
The task force asked the governor to routinely crossmatch unemployment claims with incarceration data and to seek legislative action.
In a statement, Newsom vowed the state’s cooperation.
“Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable,” he said. “We will continue to fully partner with law enforcement and direct as many resources as needed to investigate and resolve this issue speedily. While we have made improvements, we need to do more.
“Everything the state does will be done in partnership with the local district attorneys and I thank them for their commitment to resolving this issue as quickly as possible.”
News of the fraud drew outrage from both sides of the aisle in the Golden State.
Assemblymember Lorena Gonzalez, D-San Diego asked on Twitter how such a scam could happen.
“My constituents have struggled, they’ve been asked to prove and re-prove who they are. They’ve waited months for checks,” said Gonzalez. “These inmates used prison addresses and had no employment history and that wasn’t a red flag? For EDD or the prisons? This is a failure of the system.”
State Senator Melissa Melendez, R-Lake Elsinore, also took to Twitter calling for the ouster of everyone in the upper echelons of the EDD.
“I have constituents who STILL haven’t received the unemployment benefits they’re entitled to and now we learn death row inmates are getting benefits? Everyone top level administrator in EDD should be fired immediately,” Melendez said.
— By Nathan Solis, CNS