California may have paid out-of-state inmates job benefits

More than $40 million in California funding intended to help people left jobless by the coronavirus pandemic probably went to inmates in out-of-state jails and prisons, officials said.

The state has acknowledged that its Employment Development Department was bilked out of hundreds of millions of dollars in COVID-19 unemployment funds that went to fraudsters, including some in the name of U.S. Sen. Dianne Feinstein.

But a December analysis commissioned by the state’s EDD found that the department approved more than 6,000 claims totaling more than $42 million involving people who probably were incarcerated out of state, including at least 2,000 Florida county jail and state prison inmates that included a man serving time for second-degree murder who received $10,800 in payments from California, the Los Angeles Times reported after reviewing the analysis.


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California, the nation’s most populous state, has processed more than 16 million unemployment benefits since March, a byproduct of the pandemic that prompted Gov. Gavin Newsom to order businesses to close. The Employment Development Department has struggled to keep up with the demand, facing intense pressure to work through a backlog that at one time numbered more than 1.6 million people.

But the agency’s haste to approve claims, coupled with expanded benefits Congress approved with few safeguards, has made it much easier for criminals to game the system.

Last month, Bank of America, which issues EDD benefit cards, told state lawmakers it had identified about 345,000 fraudulent claims worth about $2 billion, although that figure is expected to go higher.

The analysis by Sacramento-based Pondera Solutions compared a database of inmates at more than 2,000 facilities across the country and cross-matched it against nearly 10 million people on the state’s COVID-19 unemployment rolls, the Times said.

RELATED: Ex-California EDD worker filed fraudulent claims under Dianne Feinstein's name: feds

The analysis found more than 20,000 claims that it considered at moderate or high risk of having been paid to someone in jail or prison in California or other states. If all the claims were phony, the payout would total around $96 million, the Times said.

The state already has acknowledged that it has paid about $400 million in the names of 21,000 California prison inmates, including some on death row.

The database used in the new analysis covered only 33 of California’s 58 county jails and also didn’t include all states, lacking information from Pennsylvania, Montana and North Dakota among others, the Times said.

The analysis outraged some state lawmakers.

"Absurd fraud policies have made California’s EDD a target for prisoners nationwide. What a shameful waste of taxpayer dollars," said Assemblywoman Cottie Petrie-Norris, D-Laguna Beach, who chairs the Assembly Committee on Accountability and Administrative Review.

Last month, Gov. Gavin Newsom appointed Rita L. Saenz to oversee the EDD, replacing retiring director Sharon Hilliard. In his announcement, Newsom said he was confident that Saenz could stop fraud in the system.

On Sunday, the department announced it was halting payments on some approved claims until they could be verified. The department hasn’t said how many claims were suspended.

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