The EDD’s Response to Fraud
At the EDD, we are dedicated to fighting fraud and protecting benefits for California workers in need.
During the COVID-19 pandemic, we experienced an unprecedented surge of fraud attempts, particularly in new, federal pandemic benefit programs, which lacked traditional safeguards in an effort to get benefits to workers who needed them. We responded by developing and implementing a strategic plan to:
- Detect and prevent fraud and other criminal activities.
- Investigate and prosecute criminals.
- Recover lost funds.
- Help victims of identity theft related to benefit claims.
Since 2020, our efforts have prevented more than $125 billion in attempted fraud.
We encourage our claimants to remain vigilant and safeguard financial and personal information to help prevent fraud, including identity theft. To learn more, visit Help Fight Fraud.
We work with local, state, and federal law enforcement to prevent fraud, hold fraudsters accountable, and recover lost funds for the Department and taxpayers.
Our Investigations Department investigates cases and partners with local, state, and federal investigators and prosecutors. Since 2020, with our assistance, law enforcement has opened more than 1,750 investigations, hundreds of suspects have been arrested, and many have been criminally charged and convicted.
California Governor Gavin Newsom appointed former two-time U.S. Attorney and elected District Attorney McGregor Scott to serve as our Fraud Special Counsel. Scott and his team help leverage our data sources and cutting-edge data analytics to identify and refer cases to law enforcement agencies for investigation and prosecution. To date, they have referred cases representing hundreds of millions of dollars in fraudulent payments.
In addition, the team:
- Advises our leadership, Investigations Department, and Legal Office on fraud prevention strategies.
- Enhances our ability to recover and return lost funds.
- Works closely with the U.S. Department of Justice and U.S. Department of Labor to identify and coordinate potential criminal investigations in California.
The Fraud Special Counsel works with the California Office of Emergency Services (CalOES) PUA/COVID Task Force. Through the CalOES, $5 million was provided to reimburse District Attorneys’ offices for expenses related to investigating and prosecuting pandemic unemployment fraud. In June 2022, the Legislature approved an additional $5 million to be distributed by the EDD to the District Attorneys’ offices. In addition, the Legislature approved a separate $5 million to be distributed to state and local law enforcement.
We have created investigative guides for law enforcement and offer technical assistance to our partners working these cases. We have set up regional contacts for each division of the State and work with agencies that need assistance with unemployment fraud cases.
New Technology and Tools
We have invested in new technology and tools to prevent fraud and catch fraudsters in the act.
To prevent identity fraud at the start of the application process, we launched a new identity verification system, ID.me. This new system has stopped more than $125 billion in attempted fraud.
In addition, our Special Counsel worked with ID.me to refer cases of fraudulent claims to law enforcement agencies. These cases represent more than $54 million in fraudulent payments.
We have partnered with vendors and data scientists to identify potentially fraudulent claims using cutting-edge data analytics and to refer these cases to law enforcement agencies for further investigation and potential criminal prosecution. To date, utilizing work performed by ID.me and Accenture, we have referred cases representing hundreds of millions of dollars in fraudulent payments.
We have partnered with Thomson Reuters to cross-check unemployment applications against law enforcement databases. Between October 2020 and January 2021, this effort stopped at least $60 billion in potential fraud.
Other actions that we have taken to fight fraud include:
- Setting up a 1099-G call center to help victims of identity theft deal with any tax-related questions.
- No longer printing Social Security numbers on mailed documents to reduce the risk of identity theft.
- Working with Bank of America to:
- Issue chip-enabled debit cards that enhance security.
- Strengthen fraud-prevention strategies.
- Working with the CalOES PUA/COVID Task Force on thousands of active investigations, arrests, and prosecutions for unemployment fraud.
- Delivering multiple customer alerts about text message and other phishing schemes.
Recovering and Returning Lost Funds
We seek restitution whenever possible. After a criminal conviction, we seek and are entitled to court-ordered restitution to compensate us as a fraud victim. This restitution can include the return of fraudulently obtained funds seized during a criminal investigation.
In addition, we are working with experts in restitution and asset recovery and upgrading our process to recover stolen funds by all available means. We will continue to seek and recover fraudulently obtained funds, including through administrative actions, forfeiture, and other means.
Money recovered to date includes $1.1 billion in unemployment funds from approximately 780,000 inactivated benefit cards. Most of these funds were related to the Pandemic Unemployment Assistance program and will be returned to the federal government. For more information, see "EDD Recovers $1.1 Billion in Unemployment Insurance Funds, with More Investigations and Recoveries to Come."
Fraud News and Quotes
"Inland Empire Woman Pleads Guilty to Using Prison Inmates’ Names to Fraudulently Obtain Over $500,000 in COVID Jobless Relief"
– Department of Justice, January 23, 2023
"Orange County Man Pleads Guilty to Using Stolen Identities to Apply for More Than $1 Million in COVID Jobless Benefits"
– Department of Justice, January 23, 2023
"Los Angeles Man Pleads Guilty to Federal Charges for Stealing Nearly $5.5 Million in COVID Jobless Relief and for Drug Trafficking"
– Department of Justice, November 14, 2022
"Attorney General Bonta Announces Arrest of EDD Fraud Suspect Alleged to Have Stolen Identities of Scott Peterson, Cary Stayner"
– Department of Justice, October 19, 2022
"Employment Development Department Reminds Californians to Guard Against Identity Theft “ Smishing ” Scams"
– Employment Development Department, October 18, 2022
“Rapper Who Bragged About COVID-Related Jobless Benefits Scam Agrees to Plead Guilty to Federal Fraud and Firearm Charges”
– Department of Justice, July 6, 2022
“Six Defendants Arrested on Federal Grand Jury Indictment Alleging They Fraudulently Obtained $2 Million in COVID-19 Jobless Benefits”
– Department of Justice, July 6, 2022
“Mail carrier and Valencia man arrested on suspicion of scheming to steal $800,000 in unemployment benefits”
– Los Angeles Times, May 26, 2022
“Woman Serving Life Prison Sentence Allegedly Led Ring that Used Stolen Identities to Apply for Pandemic Unemployment Benefits”
– Department of Justice, May 17, 2022
"Justice Department Announces COVID-19 Fraud Strike Force Teams"
– Department of Justice, September 14, 2022
"California recovers $1.1 billion in unemployment aid amid fraud investigation”
– Los Angeles Times, June 21, 2022
"We will continue working with law enforcement to put fraudsters behind bars and recover every stolen dollar that we can.”
– Fraud Special Counsel McGregor Scott, June 21, 2022
“Criminals will probe for weakness every day of the year and EDD will keep blocking them…EDD will continue to strengthen its fraud fighting capability and remind Californians to guard against identity theft.”
– Fraud Special Counsel McGregor Scott, May 26, 2022
"Fraudsters attacked California and every state in the country with unprecedented criminal activity in 2020…These criminals defrauded taxpayers and stole benefits from workers in need. California responded aggressively with new anti-fraud measures that blocked billions of dollars in fraud attempts. We are now engaged in a monumental effort to uncover these complex fraud schemes and deliver investigations to law enforcement and prosecutors across California.”
– Fraud Special Counsel McGregor Scott, April 12, 2022
“State unemployment systems last year were under attack by sophisticated international and domestic organized fraud schemes…We look forward to working with EDD, Cal OES, and local, state, and federal prosecutors to identify, investigate and prosecute those who stole benefits that rightly belonged in the pockets of Californians in need.”
– Fraud Special Counsel McGregor Scott, July 20, 2021
“Through the joint agency fraud task force put in place by the Governor and coordinated by the Governor’s Office of Emergency services, hundreds of investigations, arrests, and prosecutions have already occurred or are underway—with much more to come.”
– Cal OES Director and task force chair Mark Ghilarducci, July 20, 2021
Investigations, Arrests, and Prosecutions
Since 2020, over 1,750 investigations have opened, hundreds of suspects have been arrested, and many have been criminally charged and convicted.
Only certain counties respond to the State's request for information. As of November 2022, those counties have reported:
Total investigations: 1,751
Funds Seized or Recovered
As of December 2022, $1,127,250,938 in unemployment funds have been seized or recovered.
Fraud Cases Referred
The EDD's Fraud Special Counsel McGregor Scott and his team identify and refer cases of fraudulent claims to law enforcement agencies.
Hundreds of millions of dollars in suspected criminal fraud has already been referred to local, state and federal law enforcement agencies. EDD’s special counsel continues leading complex data analytics work to uncover even more complex criminal conspiracy cases for the newly-formed federal fraud task forces.
Fighting Fraud at the EDD
See McGregor Scott, our Fraud Special Counsel, discuss fraud prevention and restitution.