A couple of weeks ago we learned that California was shutting down its unemployment claims system due to large numbers of “irregularities” in claims being submitted. The layman’s translation of that explanation is that massive numbers of fraudulent claims were being filed, with many of them receiving at least some benefit checks before being discovered. And by massive, I mean numbers in the tens if not hundreds of thousands. That move was spurred by the investigative reporting of several local CBS News outlets, causing quite a bit of embarrassment for the state’s elected officials in Sacramento.
The team at CBS Los Angeles hasn’t dropped the ball on this story yet, though. They’ve continued digging into the records and interviewing people whose homes have been used as targets for collecting illicit unemployment checks. Not surprisingly, they’ve unearthed another 30,000 such cases of fraud. On top of the raw numbers, they’ve also identified a widespread pattern that demonstrates how the fraudsters have been so successful.
More than 30,000 California addresses have been targets of potential unemployment insurance fraud, according to Employment Development Department data obtained by CBS…
The EDD has acknowledged that perpetrators were using stolen identities to apply for benefits in victims’ names, and CBS Los Angeles found that a number of claims were being filed using addresses of homes recently put on the market.
But, due to EDD’s efforts to eliminate potential fraud from the system, [Mike] Weaver said he and his wife had now had their legitimate unemployment claims suspended. Both lost their jobs when the pandemic hit and made the decision to leave California due to the financial hardship.
The fraudsters, many of them operating from other countries, particularly in Africa, have clearly been running a mass-production operation. One address in Winnetka, California had 5,769 individual claims attached to it. Another house in Valley Village registered more than 2,800 claims. Two mansions worth tens of millions of dollars each had 479 and 322 claims respectively.
Here’s the common thread between these homes that were being inundated with bogus payments. The majority of them had all been recently put up for sale. And if you think about it, that makes a lot of sense for a savvy grifter. Homes that are put on the market are frequently vacant quite a bit of the time. And seeing a stranger showing up and looking around a property with a For Sale sign out front is hardly unusual, so neighbors are probably less likely to immediately call the police. The prospective “buyer” could simply look like they are checking out the front entry, make sure nobody is looking, and then surreptitiously go through the mailbox. If there’s a pile of unemployment checks in there… bingo. It’s payday.
The person quoted in the article excerpt above is named Mike Weaver. He and his wife are the owners of one of the homes in Canyon Country where names associated with 114 different social security numbers were receiving benefits, each under a different name. As a result, the Weavers had their legitimate unemployment claims canceled even though they had lost their jobs due to the pandemic. And the reason their home was on the market is no surprise either. It was already impossible for them to make ends meet with California’s insane cost of living. Now they are moving out of the state.
No matter how fast California manages to identify and cancel these fraudulent claims, almost all of them receive at least a couple of payments before the crime is detected. And most of that taxpayer money is gone for good. We saw the same thing in Washington State, where they’ve only managed to claw back roughly half of the estimated $600 million that’s been paid out to fraudulent claims. A similar situation was encountered in Chicago.
Most of the unemployment systems in the United States were unprepared to handle claims in the volumes we’ve seen during the pandemic. The stress has exposed weaknesses in our automated claims processing systems that must be upgraded and secured because criminals are obviously well aware of them and are exploiting them at a frantic pace.