California Benefit Fraud COVID-19 Could Reward $ 9.8 Billion

According to a security firm hired to investigate the fraud, California may have paid out nearly $ 10 billion in fraudulent claims for unemployed coronavirus unemployment – more than double the previous estimate.

At least 10% of the claims filed with the state’s Department of Employment Development prior to the imposition of controls in October were potentially fraudulent, ID.me founder and CEO Blake Hall told the Los Angeles Times.

The Times said on Friday that it would work out $ 9.8 billion from the benefits paid from March to September.

The money went to people who lost their jobs when the state began locking up businesses in an effort to curb the COVID-19 pandemic that is currently overwhelming hospitals, hundreds of deaths a day.

A woman wearing a face mask enters a building where the Department of Employment Development has its offices in Los Angeles, California, on May 4, 2020. (Photo by Frederic J. BROWN / AFP via Getty Images)

California, the country with the largest population, has processed more than 16 million claims for unemployment benefits since March and paid out $ 113 billion. The Department of Employment has struggled to keep up with demand, and has come under tremendous pressure to work out a backlog that once numbered more than 1.6 million people.

The payout includes $ 43 billion from a federal accelerated aid program for independent contractors, gig workers and the self-employed who are less secure, the Times said.

The state has acknowledged that the department has donated hundreds of millions of dollars in COVID-19 unemployment funds to fraudsters, including some in the name of U.S. Senator Dianne Feinstein. Others were sent to prisons and prisons, including some in California’s death struggle.

Hall’s company was hired by the Department of Employment and since October, his firm has blocked nearly 470,000 false claims.

RELATED: California EDD suspending unemployment checks considers it high risk

Typically, 10% of unemployment claims nationwide are fraudulent, Hall told the Times.

He said much of the COVID-19 fraud in California and other states was committed by criminals in about 20 states.

Hall said criminal rings claim claims using stolen identity information and then send out ‘money mules’ to pick up debit cards developed by the Department of Employment, often to vacant homes.

“When the Russians and the Nigerians and the Chinese are the players on the field, they are going to score some points,” Hall said. “It’s a very sophisticated cyber attack that is being carried out on a large scale.”

RELATED: EDD needs months and years to better protect social security numbers

The U.S. Department of Labor’s inspector general’s office warned in November that as much as $ 36 billion of the $ 360 billion in federal COVID-19 support payments could be improper or fraudulent.

Rita Saenz, who became the new director of the Department of Employment Development this month, calls it an unprecedented criminal assault on the benefits system.

Saenz told the Times she could not comment on the possibility of $ 9.8 billion in fraud because the department was still trying to determine how much fraud had been committed.

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“My intention is to do everything we can, together with our law enforcement partners, to catch someone who does this and bring them to justice,” she said.

Last month, the Department of Employment suspended the payment of 1.4 million claims until it could be confirmed.

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This story was corrected to show that the Los Angeles Times reported that a 10% fraud rate for unemployment benefits in California, paid from March to September, could amount to $ 9.8 billion, not $ 98.8 billion .

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