Three convicted Yolo County murderers — including a sheriff’s deputy’s killer condemned to death row — are among tens of thousands of California inmates who unlawfully received pandemic unemployment benefits in their names under a statewide scam believed to have cost taxpayers as much as $1 billion.
“We believe this is the largest fraud of California taxpayers ever uncovered,” Yolo County District Attorney Jeff Reisig said Tuesday, just hours after four California district attorneys and a U.S. attorney held a news conference detailing the fraud scheme they described as “offensive” and “staggering.”
Tuesday’s revelation has put the state’s already-beleaguered Employment Development Department back in the hot seat. In addition to its dysfunctional response to the coronavirus pandemic, it’s earning new criticism for failing to cross-check the names of unemployment applicants against those of California prison inmates, even though similar efforts are being made in 35 other states.
According to Sacramento County District Attorney Anne Marie Schubert, that comparison wasn’t made until early November, when the California Department of Corrections and Rehabilitation provided its inmate list to prosecutors, who then cross-checked it with a compilation of EDD unemployment insurance claims.
The data showed that, between March and August, some 35,000 fraudulent claims were filed in inmates’ names, in some cases more than once. Of those, just over 20,000 were approved, resulting in payouts of more than $140 million — including the $600 federal weekly benefit that expired back in July, Schubert said.
Reisig said participants include an “all-star list of Yolo County prison inmates,” such as Marco Topete, sentenced to death for the 2008 fatal shooting of Yolo County Sheriff’s Deputy Tony Diaz; William Gardner, serving life without the possibility of parole for the 2013 shooting death of his ex-girlfriend Leslie Pinkston in Winters; and Oscar Cervantes, the shooter who killed two men and injured two girls in Woodland’s 2002 “Halloween homicides.”
Also on the list: 133 death-row inmates including Scott Peterson, convicted of killing his wife Laci and their unborn son in 2002; and Cary Stayner, the so-called “Yosemite Killer” who murdered a mother, her daughter and a family friend in 1999.
Similar fraud is underway in California’s 58 county jails, where the state paid upwards of $10 million in inmates’ names, Schubert added. All told, losses are expected to reach the $1 billion mark.
“The fraud is honestly staggering,” Schubert said at Tuesday’s news conference. “It encompasses every type of inmate. …Clearly individuals who are not entitled to these benefits that are so desperately needed by the working families here in this state.”
Reisig said his office is in the process of investigating more than 130 state prison inmates from Yolo County who are believed to be involved in the scheme, along with inmates serving time at the county level. His office, along with others across the state, is seeking additional investigative resources from Gov. Gavin Newsom.
“This never should have happened,” said Reisig, who serves on a state EDD fraud task force launched in response to the scam. “There has been a massive failure of process and fraud prevention at the state level.”
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So how did it happen?
Prosecutors say the scam went something like this: inmates from local, state and federal correctional facilities, using their own internet access or with help from friends and relatives on the outside, completed online applications claiming losses of self-employment income due to the pandemic.
Approved applications led to the deliveries of pre-loaded EDD debit cards, some directly to correctional facilities, others to conspirators on the outside — both in California and out of state — who withdrew the cash to enrich both the inmates and themselves.
Schubert said while the inmates themselves oftentimes were involved in the fraud, in other cases the false claims may have been the result of identity theft. Some applications won approval despite the use of false Social Security numbers and names, including one filed under the name of “Pookie Britches.”
Details of the fraud came to light back in July, said San Mateo County District Attorney Steve Wagstaffe, when one of his investigators listening to recorded jailhouse calls for a pending case overheard an inmate discussing “a scam that he had heard about.”
“We determined there were 22 individuals who had pulled this scam off,” both from inside the jail and out, Wagstaffe said. “Like any pandemic, it spread all over our correctional facilities.”
As San Mateo prosecutors went about filing charges in those cases, accounting officials at a Kern County state prison noticed something amiss as well: large money orders coming in for inmates’ books, some totaling thousands of dollars.
“This was very abnormal,” said District Attorney Cynthia Zimmer of Kern County, which is home to five California prisons. State prison investigators later determined that roughly 4,000 EDD claims had been filed there in inmates’ names and 2,382 paid out, totaling more than $16 million.
The deception went undetected for months at EDD, which has only 17 investigators statewide assigned to fraud. While they’ve been cooperative, higher-ups have been “slow to nonexistent” in their reaction, Schubert said.
“We’ve made a number of efforts to reach out to top-level management and haven’t really had any response from that,” she added. The next step: a letter to Newsom requesting his personal involvement in halting the rampant losses.
“As taxpayers, all of us need to be really angry about this,” El Dorado County District Attorney Vern Pierson said Tuesday. While further investigations and prosecutions are forthcoming, “the reality is the vast majority of this money will never be repaid.”
— Reach Lauren Keene at lkeene@davisenterprise.net. Follow her on Twitter at @laurenkeene