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Jobless Benefits Scam Involving Prison Inmates Cost California Hundreds of Millions

Prison inmates at Oak Glen Conservation Fire Camp #35 in Yucaipa, California, November 6, 2014. (Lucy Nicholson/Reuters)

An unemployment insurance scam that used the names of prisoners to claim jobless benefits in California may have cost the state up to $1 billion dollars, a law enforcement task force led by California district attorneys announced on Tuesday.

A total of 35,000 unemployment claims were filed using the names of California state prison inmates, and more than 20,000 of the claims were paid, totaling at least $140 million in benefits, Sacramento County District Attorney Anne Marie Schubert said. The scam targeted the pandemic-related unemployment assistance provided by California’s Employment Development Department. The largest single claim made was for $48,600, and in some cases multiple claims were made in the name of a single inmate.

“The fraud is honestly staggering,” Schubert said, adding that the scheme could be “the biggest fraud of taxpayer dollars in California history.”

Fraudulent claims were filed under the names of several convicted serial killers, Scott Peterson, who was convicted of murdering his pregnant wife and their unborn son, and at least 133 prisoners on death row including Isauro Aguirre, who along with his girlfriend tortured and murdered her 8-year-old son.

Most of the claims were paid in the form of prepaid debit cards sent to addresses on the unemployment insurance applications, funds that were later deposited into inmate accounts, although in some cases the benefits from the claims were sent directly to the jails and prisons. Sometimes the benefits even made it into the hands of inmates’ relatives and friends outside the prisons.

“The vast majority of this money will never be repaid,” El Dorado County District Attorney Vern Pierson said.

Schubert said fraudulent claims were able to run rampant because California has no system that “cross matches” an individual’s prison information with their unemployment insurance claim.

Governor Gavin Newsom issued a statement commending the district attorneys for their work exposing the fraud and said his Office of Emergency Services would form a task force coordinate efforts to combat the issue.

“Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable,” the Democratic governor said.

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