Jail inmates in San Mateo County were allegedly part of an unemployment fraud ring. (Rick Loomis/LA Times)

Jail inmates in San Mateo County were allegedly part of an unemployment fraud ring. (Rick Loomis/LA Times)

Unemployment fraud ring filed bogus California jobless benefits for inmates, officials say

In California’s first major case involving unemployment fraud during the COVID-19 pandemic, authorities allege 21 people in Northern California were part of a fraud ring that stole $250,000 by submitting bogus claims on behalf of jail inmates.

The ring was allegedly operated out of the San Mateo County jail and discovered when law enforcement officers overheard inmates talking about fraudulent claims, officials said Monday.

Investigators with the county sheriff’s office and district attorney’s office discovered that fraudulent claims had allegedly been filed using the names of 30 inmates, according to sheriff’s Det. Rosemerry Blankswade.

On Saturday, investigators in San Mateo, San Francisco and San Joaquin counties served warrants and arrested seven people while confiscating $150,000 in cash. Fourteen others allegedly involved in the fraud ring were already in custody at the jail and were rebooked, Blankswade said.

The ring operating out of the San Mateo County Maguire Correctional Facility allegedly filed 16 fraudulent claims between June 9 and July 30, but the investigation is ongoing, the detective said.

The probe, which has been forwarded to the district attorney, was aided by an investigator from California’s Employment Development Department, which last week issued an alert that it has been involved in a separate national investigation of unemployment fraud tied to the pandemic.

With millions out of work because of shutdown orders aimed at slowing the spread of the coronavirus, the EDD has processed 10.2 million claims for unemployment benefits since March and paid out $63 billion.

The unprecedented number of claims filed and the decision early on to temporarily suspend some security measures has made the EDD vulnerable to fraud, experts say.

“I think they [EDD] should look at their system to see what they can do differently,” Blankswade said, adding that it is concerning that $250,000 “was essentially squandered due to some lack of oversight.”

EDD representatives did not immediately respond to a request to comment on the investigation.

The agency has also come under criticism from legislators including Assemblyman Jim Patterson (R- Fresno) for delays that have prevented benefit payments on more than 1 million claims.

“We know you can guard against fraud while still paying out benefits in a timely manner, but EDD seems incapable of chewing gum and walking at the same time,” Patterson said Monday.

Sean Gallagher, an assistant district attorney for San Mateo County, predicted similar fraud schemes are taking place elsewhere in the state. “I expect it is not localized to San Mateo County,” he said.

By Patrick McGreevy, Los Angeles Times

Bay Area NewsCaliforniaCrime

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