California’s system for paying unemployment benefits is so dysfunctional that the state approved more than $140m for at least 20,000 incarcerated people, local and federal prosecutors said.
Law enforcement officials on Tuesday said more than 35,000 incarcerated people were named in claims filed with the California employment development department from March to August. More than 20,000 had been paid, according to Anne Marie Schubert, the Sacramento county district attorney.
At least 158 claims were filed for 133 people on death row, resulting in more than $420,000 in benefits paid.
The revelation is the latest controversy surrounding the state’s embattled employment agency. Already operating an archaic system, the department has been overwhelmed by more than 16.4m benefit claims since the pandemic began in March, resulting in a backlog that at one time totaled more than 1.6 million people. With so many Californias struggling to access work and navigate the state’s dysfunctional employment process, by the fall the backlog was growing by 10,000 cases a day. Californians reported they were struggling to file claims and hardly got through to the agency’s lines to ask questions.
The crisis has been particularly brutal for people of color and immigrants, and an audit found that workers not fluent in English faced insurmountable barriers to accessing aid, further exacerbating the racial inequities of the pandemic.
Some residents unable to get unemployment have reported burning through their savings and going without food as a result.
Prosecutors said that in its haste to approve benefits, the department did not check unemployment claims against a list of prisoners, as many other states do.
Stephen Wagstaffe, the San Mateo district attorney, said that when he notified the department about incarcerated people fraudulently receiving benefits, officials told him they could not cut off the payments until they were formally charged with a crime.
The problem was so bad that on Monday, nine county district attorneys sent a letter to California’s governor, Gavin Newsom, asking for him to intervene.
Newsom told the Associated Press he had learned of the fraud earlier this year.
Loree Levy, an employment development department spokeswoman, said the agency has been working with the labor department’s office of inspector general on cross-checking claims with incarcerated people, saying they are “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”.
Prosecutors said they learned of the scheme from listening in on recorded prison phone calls. They said the scheme always involved someone on the outside, usually friends or family members of the inmates, who would then receive the benefits.
In Kern county, home to five state prisons, one address was used to receive benefits for 16 inmates.
“In my nearly four decades as a prosecutor in this state, I have never seen fraud of this magnitude,” Cynthia Zimmer, the Kern county district attorney, said.
Prosecutors say the list of incarcerated people named in the claims includes Scott Peterson, who was sentenced to death after being convicted of killing his pregnant wife. The California supreme court recently overturned Peterson’s death sentence and has ordered a lower court to review his murder conviction.
Schubert confirmed there was a claim made in the name of Scott Peterson but declined to provide further details.
Peterson’s attorney, Pat Harris, said while Peterson’s name surfaced during the investigation, there is no evidence Peterson received unemployment aid from the state.
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“This investigation, when it’s completed, will show that he had not a thing to do with any kind of scheme to get fraudulent benefits,” Harris said.
So far, 22 people have been charged in San Mateo county, including six who were not in prison. Prosecutors said dozens of other investigations across the state were continuing.
The scandal comes as Covid has wreaked havoc on the state’s overcrowded prison system, infecting more than 19,000 incarcerated people and killing 85.
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