California prosecutors say thousands of people, including inmates, fraudulently applied for stimulus money and may have cost the state $1 billion

Thousands of inmates throughout California -- including death row inmates -- may have bilked the state's unemployment benefits system of up to a billion doll...

Posted: Nov 25, 2020 4:11 AM

Thousands of inmates throughout California -- including death row inmates -- may have bilked the state's unemployment benefits system of up to a billion dollars in what prosecutors called "the largest ever taxpayer fraud to occur in this state's history."

Murderers, rapists, child molesters and serial killers are among thousands of prisoners implicated in a scam in which inmates -- or people using their identities -- filed for unemployment insurance and the $600 per week federal Covid-19 relief that accompanied it, according to Sacramento District Attorney Anne Marie Schubert, who outlined the issue at a news conference Tuesday.

Schubert described the scam as an all-encompassing effort that included every facility in California's Department of Corrections and Rehabilitation, including local, state and federal institutions.

"That money was stolen from the coffers of the California government," said Schubert, who was joined by district attorneys from Kern and El Dorado counties and a US attorney Tuesday.

But a large part of the scam involved federal government money "in the form of the $600 per week supplemental unemployment insurance," US Attorney McGregor Scott said at the news conference.

Schubert blamed the state's lack of a cross-matching computer system that would flag applications from those in prison. While 35 other states have such a program, California does not.

Death row inmates' names linked to scam

At least 133 death row inmates have claims made in their names. They include Scott Peterson, who was convicted in 2004 of killing his wife and unborn child in a case that gained attention worldwide.

Some inmates, or people using their IDs, filed more than one claim and even used fake names such as John Doe. Some of the instances may be prisoners working the system, but others may be victims of identity fraud, Schubert said.

For the prisoners, being involved in a fraud such as this would mean even more legal trouble, and an attorney for Peterson said he's confident his client had nothing to do with it.

"They are not making any accusations against Scott at all at this point," attorney Pat Harris told CNN. "There is no accusation that he did anything wrong. I am 100% confident they will find that Scott was in no way involved in anything fraudulent."

San Mateo has filed charges against 22 people, six of whom were outside of the prison system.

Four convictions in San Mateo so far

These cases have resulted in four convictions so far, according to San Mateo County District Attorney Steve Wagstaffe. Investigations are ongoing, but there may be as much as $500 million involved in the fraud in San Mateo alone, Wagstaffe said.

When alerted to the fraud, California's Employment Development Department told investigators it could not stop the payments until charges were filed. Schubert called on Gov. Gavin Newsom to intervene and immediately "turn off the spigot."

EDD is working with the US Department of Labor and Office of Inspector General on cross-matching with inmates to identify suspect claims, EDD spokeswoman Loree Levy told CNN.

"We're also pursuing how to integrate such cross-matches moving forward as part of enhanced prevention efforts during this unprecedented time of pandemic-related unemployment fraud across the country," Levy said.

Though efforts for restitution will be made, "the vast majority of the money will never be repaid," said El Dorado County District Attorney Vern Pierson.

In San Mateo, the scam came to light when an investigator working on an unrelated case in July was listening to jail recordings. The inmate began talking about a scam he had heard of regarding unemployment benefits, Wagstaffe said.

The investigator ran names through the Employment Development Department and found matches. Each inmate was also associated with people on the outside, according to Wagstaffe.

4,000 applications from Kern County

Kern County, which is home to five state prisons, the most in any California county, has filed one case so far. District Attorney Cynthia Zimmer said she anticipates "many, many more."

About 4,000 applications were made in the name of Kern County inmates, according to Zimmer, and 2,382 inmates have received benefits so far. The fraud there involves $16 million, she said.

"I have never seen fraud of this magnitude," Zimmer said Tuesday.

US Attorney McGregor Scott said "a handful of people" have been indicted by a grand jury in Sacramento and Fresno, and there are "lots and lots of open investigations on the federal side."

Those who have been indicted were not inmates, Scott said. He estimated "thousands at federal penitentiaries have likewise undertaken this fraud."

Earlier this year, Newsom directed the Employment Development Department to work with the state prison system and initiate a data match that would flag Social Security numbers of those incarcerated.

"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," said Newsom in a statement.

Oregon Coronavirus Cases

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Cases: 133851

Reported Deaths: 1803
CountyCasesDeaths
Multnomah28467459
Washington18734171
Marion16247239
Clackamas11698138
Lane8353109
Jackson693085
Umatilla679368
Deschutes499936
Yamhill319045
Malheur313552
Linn311646
Polk245540
Klamath242838
Josephine174333
Benton170514
Jefferson170525
Douglas168743
Union111416
Wasco108123
Columbia104918
Lincoln99617
Hood River95421
Coos93815
Morrow93810
Clatsop6865
Crook62110
Baker5685
Tillamook3652
Curry3245
Lake2305
Grant2131
Harney1754
Wallowa963
Gilliam511
Sherman470
Wheeler201
Unassigned00

California Coronavirus Cases

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Cases: 3015644

Reported Deaths: 33724
CountyCasesDeaths
Los Angeles102419013936
San Bernardino2540941560
Riverside2422062517
Orange2123892367
San Diego2117872103
Santa Clara935571076
Kern85362565
Fresno82039932
Sacramento801541080
Alameda67375764
Ventura61257412
San Joaquin57094748
Contra Costa52146449
Stanislaus42548749
Tulare41016501
Monterey35418250
San Mateo32186294
San Francisco29139262
Imperial25253463
Solano25216105
Santa Barbara24481231
Sonoma23871240
Merced23800296
Kings19254133
Placer17194173
San Luis Obispo15658128
Madera13328130
Santa Cruz12196113
Marin11569154
Yolo10519131
Shasta9594117
Butte9411121
El Dorado765944
Sutter760477
Napa752139
Lassen509413
San Benito494143
Yuba481827
Tehama397142
Tuolumne330438
Nevada317673
Mendocino311432
Amador300129
Lake257228
Humboldt232224
Glenn192419
Colusa16919
Calaveras160823
Siskiyou140813
Mono10914
Inyo92429
Del Norte8572
Plumas5735
Modoc3793
Mariposa3464
Trinity3024
Alpine730
Sierra700
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