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 nearly 1,800 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 more than $223 million 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 through the High Technology Theft Apprehension and Prosecution Program.
The Biden Administration established three COVID-19 Strike Force teams across to country to target pandemic fraud with an emphasis on transnational and organized crime rings. One of the Strike Force teams is in California and consists of representatives from various federal law enforcement agencies including the U.S. Department of Labor – Office of Inspector General and the FBI. EDD’s Investigations Department is the only state or local agency on the Strike Force team and its participation enables the California Strike Force to quickly and effectively identify and prosecute pandemic fraud.
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. We have also set up a system where out-of-state state and local law enforcement agencies can obtain information from EDD to investigate and prosecute UI fraud in their jurisdiction.
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, Accenture, and Thomson Reuters Special Services, we have referred cases representing more than $223 million 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 including setting up agreements to ensure seamless sharing of information.
- Delivering multiple customer alerts about text message and other phishing schemes.
Recovering and Returning Lost Funds
After a criminal conviction, we seek and are entitled to court-ordered restitution to compensate the EDD as a fraud victim. This restitution can include the return of fraudulently obtained funds seized during a criminal investigation. To date, we have obtained restitution orders for nearly $20 million in pandemic-related fraud.
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 also includes unemployment funds from inactivated benefit cards. Most of these funds were related to the federal Pandemic Unemployment Assistance program and under President Biden’s Pandemic Anti-Fraud Proposal, the EDD will be able to continue recovering funds. For more information on President Biden’s proposal, see the fact sheet on the WhiteHouse.gov.
Fraud News and Quotes
“Two Nigerian Nationals Based in Maryland Sentenced for Schemes to Steal California and Other States’ Unemployment Insurance Benefits”
– U.S. Attorney’s Office, Eastern District of California, Oct 10, 2023
“Nigerian National Based in Maryland Sentenced to 4 Years and 9 Months in Prison and Nigerian House Ordered Forfeited for Schemes to Steal Unemployment Insurance Benefits ”
– U.S. Attorney’s Office, Eastern District of California, July 25, 2023
“California Resident Sentenced To Prison For Committing Unemployment Insurance Benefits Fraud ”
– U.S. Attorney’s Office, District of Nevada, July 25, 2023
“Suspect Arrested on Charges for EDD Fraud After Thorough Investigation by District Attorney’s Bureau of Investigations”
– Kern County District Attorney, July 24, 2023
“Hospital Employee Sentenced to 3 Years in Prison for Using Patient Information to Steal Pandemic Unemployment Benefits ”
– U.S. Attorney’s Office, Southern District of California, July 21, 2023
“San Diego Couple Charged with Stealing Stimulus Payments During Pandemic and Purchasing Luxury Mercedes-Benz and Jewelry ”
– U.S. Attorney’s Office, Southern District of California, July 17, 2023-
*Note the couple was charged with crimes related to fraudulent UI applications to EDD even though not mentioned in the headline
“Romanian National Pleads Guilty to $5 Million Covid Relief Fraud ”
– U.S. Attorney’s Office, Southern District of California, July 11, 2023
“Convicted Murderer Who Ran $1.5 Million COVID Jobless Benefits Fraud from Behind Bars Sentenced to 7 Years in Federal Prison ”
– U.S. Attorney’s Office, Central District of California, July 10, 2023
“Victorville Woman Sentenced to 2½ Years in Federal Prison for Using Inmates’ Info to Illegally Obtain Over $500,000 in COVID Jobless Aid ”
– U.S. Attorney’s Office, Central District of California, June 26, 2023
“New Jersey Man Sentenced to 6.75 Years in Prison for Schemes to Steal California Unemployment Insurance Benefits and Economic Injury Disaster Loans ”
– U.S. Attorney’s Office, Eastern District of California, May 22, 2023
“L.A. Man Sentenced to More Than 24 Years in Prison for $5.5 Million COVID Jobless Benefits Scam, Tax Fraud and Drug Trafficking”
– U.S. Attorney’s Office, Central District of California, March 6, 2023
"Romanian Citizen Arrested and Charged in $5 Million Covid Relief Fraud"
–U.S. Attorney’s Office, Southern District of California, March 2, 2023
"Two Nigerian citizens indicted for attempting to defraud the United States of over $25 million"
– U.S. Attorney’s Office, Western District of Washington, February 22, 2023
“Two Men Plead Guilty To COVID-19 Unemployment Insurance Benefits Fraud Conspiracy”
– U.S. Attorney’s Office, District of Nevada, February 17, 2023
“Woodbridge Man Pleads Guilty to Pandemic Unemployment Insurance Fraud”
– U.S. Attorney’s Office, Eastern District of Virginia, February 16, 2023
“Two Euclid Men Charged with Stealing COVID-19 Pandemic Unemployment Insurance Benefits”
– U.S. Attorney’s Office, Northern District of Ohio, February 15, 2023
"Kern County Resident Sentenced to 9 Years in Prison for Role in Disability Benefits Fraud Scheme and Money Laundering"
– U.S. Attorney’s Office, Eastern District of California, February 13, 2023
“Fresno Man Sentenced to 2 Years in Prison for Unemployment Benefit Fraud Scheme and Possession of Stolen Mail”
– U.S. Attorney’s Office, Eastern District of California, February 9, 2023
"Inland Empire Woman Pleads Guilty to Using Prison Inmates’ Names to Fraudulently Obtain Over $500,000 in COVID Jobless Relief"
– U.S. Attorney’s Office, Central District of California, January 23, 2023
"Orange County Man Pleads Guilty to Using Stolen Identities to Apply for More Than $1 Million in COVID Jobless Benefits"
– U.S. Attorney’s Office, Central District of California, January 23, 2023
“New Jersey Man Pleads Guilty to Fraudulent Schemes to Steal California Unemployment Insurance Benefits and to Steal Economic Injury Disaster Loans”
– U.S. Attorney’s Office, Eastern District of California, January 9, 2023
"Justice Department Announces Results of Nationwide COVID-19 Fraud Enforcement Action"
- U.S. Department of Justice, Office of Public Affairs, August 23, 2023
"Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat COVID-19 Health Care Fraud"
- United States Attorney's Office Central District of California, April 20, 2023
"Tackling the biggest fraud in US history – pandemic relief"
- The Christian Science Monitor, April 3, 2023
"Justice Department Announces COVID-19 Fraud Strike Force Teams"
– U.S. Attorney’s Office, Eastern District of California, 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 2,000 investigations have opened, hundreds of suspects have been arrested, and many have been criminally charged and convicted.
Only some counties respond to the State's request for law enforcement information. As of September 2023, they have reported:
Total investigations: 1,951
Funds Seized or Recovered
As of September 2023, $1,865,791,309 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.
In coordination with EDD’s leading data analytics partners, Fraud Special Counsel has referred cases representing more than $223 million in fraudulent payments to local, state and federal law enforcement agencies.
Fighting Fraud at the EDD
See McGregor Scott, our Fraud Special Counsel, discuss fraud prevention and restitution.