Garden Grove Men Charged With Defrauding State Unemployment Agency for $500,000

January 25, 2021 Updated: January 25, 2021

Two business owners are being prosecuted for allegedly facilitating false unemployment claims for COVID-19 relief money through California’s Employment Development Department (EDD).

Orange County District Attorney (OCDA) Todd Spitzer made the announcement during a Jan. 25 press conference, where he said nearly $500,000 in cash and bank accounts was recovered during the investigation.

Spitzer said the men opened a Garden Grove storefront with the sole purpose of defrauding taxpayers.

The prosecution of eight more people, including six state prisoners, involved in two other unemployment schemes to “defraud California taxpayers of tens of thousands of dollars,” was also announced by Spitzer and Assemblywoman Cottie Petrie-Norris.

Among those charged with filing false unemployment claims are two convicted murderers who claimed the COVID-19 pandemic had impacted their ability to work. The OCDA’s office said the fact that the two men are serving sentences of up to life in prison is the true reason they were prevented from being gainfully employed.

Both Spitzer and Petrie-Norris said they’re ready to investigate further into the false unemployment claims submitted to the EDD for COVID-19 relief.

“When you have this kind of fraud going on that we detected in a relatively short period of time through intensive investigation techniques, we know that there are other cases out there,” Spitzer said during the press conference.

“Because this is a statewide problem, it needs a procedure and a remedy outlined by agencies that are part of the State of California. I can tell you with complete accuracy that the California district attorneys, the 58 of us, we’re all ready and prepared to assist whatever agency or whatever system is set up by the state to continue to go after these cases.”

Spitzer said the fake unemployment claims are not solely an Orange County problem, but a statewide problem.

“I am beyond disturbed that while we are grappling with a worldwide pandemic that has killed millions of people, forced unemployment rates to levels not seen since the 1930s, and left families across America struggling to feed their children and themselves, that opportunists and profiteers are taking advantage of California’s unemployment system to steal money that is meant to help hardworking Californians survive these stressful times,” he said.

“This is a statewide problem that has cost California taxpayers nearly $10 billion dollars in fake unemployment claims. Money that should have gone to out-of-work hairstylists, waiters, and other out-of-work Californians instead ended up in the pockets of cold-blooded murderers and businessmen who saw an opportunity to make a quick buck and took it—at the expense of taxpayers.

“These investigations are not the end; they merely scratch the surface of the depth of unemployment fraud in the state of California. All my fraud investigative resources have been dedicated to EDD fraud over the last few months, leaving no resources for our regular fraud cases. It is simply not sustainable—and it is not fair to the victims of fraud in Orange County, and it is not fair to the taxpayers of the state of California.”

Petrie-Norris said that fraudsters and criminals have stolen billions of dollars from California taxpayers.

“This is massive, organized fraud, and the state needs to mount a massive, organized response. This will require a dedicated effort, clear ownership, and adequate funding,” she said.

At an assembly budget committee subcommittee hearing Jan. 26, Petrie-Norris—as assembly accountability and administrative review chairwoman—will question the director of California’s Employment Development Department, which administers the state’s unemployment benefits, and directors from Bank of America, which has been contracted to electronically pay out unemployment benefits.