California may have sent out as much as $11 billion in pandemic unemployment benefits to fraudsters, officials said Monday.
In addition, another 17 percent of those unemployment claims is under investigation after being flagged as suspicious.
"EDD is now working with some of the country's most successful fraud prevention businesses and law enforcement agencies to protect the state’s unemployment benefit system," said Julie Su, secretary to California's Labor and Workforce Development Agency. "We know that many Californians are waiting on payments, and EDD is working quickly to validate their claims and get their benefits to them."
Nationally, 35 percent of unemployment applications are fraudulent, according to ID.me, a Virginia-based security company hired by 21 states to investigate and combat the fraud.
"Currently, ID.me is blocking about $1B in fraud per week across the states we serve," said Blake Hall, founder and chief executive of the company. "The fraud rate for new claims is at least 35 percent and over ten times what we see at federal agencies. California should be commended for also moving early to screen high-risk claims filed prior to ID.me's introduction, preventing further loss to taxpayers."
Earlier this month, Hall warned that a lot of California's defrauded funds went to foreign crime organizations, which filed unemployment claims with stolen identity information, and used "money mules" in the United States to pick up benefit debit cards.
It was previously estimated that the EDD paid up to $4 billion to fraudsters, including a former EDD employee who collected $21,000 in unemployment benefits using the name and Social Security number of Democratic Sen. Dianne Feinstein. The scam wasn't exposed until Bank of America, which administers the EDD's benefit debit cards, flagged the unemployment claims made in the senator's name.
Moreover, hundreds of millions of dollars in unemployment benefits went to prison and jail inmates, many of whom weren't held in California, according to a law enforcement task force led by district attorneys.