California's unemployment agency says it thwarted multi-million-dollar fraud scheme


UPDATED MAY 27, 2022 12:29 PM 

The Sacramento Bee

The state’s unemployment agency said Thursday it has halted an elaborate scheme to steal hundreds of millions of dollars in jobless benefits. The Employment Development Department, which has been fighting widespread fraud since the COVID-19 pandemic began more than two years ago, said it found crooks engaged in a new ruse. They flooded the agency with suspicious claims — an estimated 47,000 were filed in early May, officials said. 

EDD would normally receive about 7,000 applications for unemployment during that period. Most claimants file electronically. EDD did not pay the suspicious claims, which could have totaled as much as $560 million. The agency paid $115 million in benefits on established claims during the week of May 7, the latest data available. The scheme, though, is expected to make it more difficult for legitimate claimants and perhaps slow payment of their benefits. 

The agency is mailing notices to people who have filed to verify their status and their identity, as EDD continues to try to identify fraudulent claims. There was no word Thursday about who may be responsible for the fraud. The claim process could get complicated. If a scammer tried to file multiple claims in someone else’s name, which is not unusual, the legitimate claimants could get several notices from EDD requesting verification. 

Those who receive these notices are urged to respond right away so EDD can clear their claim as quickly as possible. 


The state has been battling massive unemployment fraud since the COVID-19 pandemic began in March 2020. The biggest abuses occurred in the federally-funded Pandemic Unemployment Assistance program (PUA), created early in the pandemic by Congress and President Donald Trump. It was intended to help those who did not qualify for traditional unemployment, such as independent contractors. 

An estimated $20 billion has been lost to fraudulent California claims, according to EDD estimates. All but $1.3 billion of that total involved claims from PUA and other federally-funded COVID relief programs, which ended last year. Other losses came from the state’s regular unemployment insurance program. Special Counsel McGregor Scott, named by EDD last year to coordinate investigations into the fraud, has cited several sources for the scams, including transnational and domestic organized crime, prison inmates and grifters, or people who constantly look for ways to steal from the government and others. Scott said Thursday he was proud of the latest action. 

“These criminals again tried to pierce the Department’s defenses but we stopped them dead in their tracks,” he said. EDD said scammers today seek victims by pretending to be banks, stores and government agencies, and communicate with potential applicants with phone calls, texts, regular mail and other devices. The current scheme involved the state’s remaining unemployment program, one that provides benefits to people who lost their jobs and worked for employers who paid into the unemployment system. 

This story was originally published May 26, 2022 4:22 PM.