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Fraud linked to California’s Unemployment Department may hit eight billion dollars and expands to other states

SANTA BARBARA, Calif. - Our series of Tipline reports about fraud in California’s unemployment system indicates the loss to taxpayers could hit a staggering eight billion dollars.

Some law enforcement officials have already confirmed the fraud has been linked to prisoners at every jail and prison in California. That massive and complex investigation is underway right now and it's expanding to other states.

Authorities are investigating inmates at prisons across the U.S. who've allegedly been scamming the system and getting money from California's Employment Development Department, the EDD, which oversees the state's unemployment benefit system.

In Florida for example, 2,000 inmates there, some convicted of murder reportedly received unemployment money from California. One inmate getting almost $11,000.

Now, investigators are tracing the stolen money to prisons all over the country. The EDD recently shut down 1.4 million accounts because of possible fraud. The NewsChannel has already heard from local residents who are entitled to benefits who’ve had their legitimate accounts frozen leaving them with no money to live on. Many are relying on credit cards, dipping into retirement savings, friends and family to get by.

Bank of America is being sued in a class action lawsuit for its alleged role in all of this.

The NewsChannel spoke with Brian Cota who’s heading up the investigation for the Santa Barbara County District Attorney’s Office. He said they are waiting on records from the EDD and Bank of America. But he said many other law enforcement agencies are asking for the same information not just in California but around the country. The volume of information is staggering and his office hopes to move into the next phase of the investigation once they get the requested documentation.

We also contacted officials at the EDD to find out if the eight billion dollars in estimated fraud losses is accurate or exaggerated. We have not received a reply. We will update this story if we do.

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C.J. Ward

C.J. Ward is the evening anchor for KEYT News Channel 3 and the station’s lead investigative reporter. To learn more about C.J., click here


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