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$11 BILLION UNEMPLOYMENT FRAUD IN CALIFORNIA UNCOVERED

The amount of fraud paid out by the California Employment Development Department, or EDD, is over $11 billion. That number comes from a media call by the state's unemployment department.

Rita Saenz, the EDD's new director, along with Labor Secretary Julie Su and ID.Me CEO Blake Hall, detailed the state's fraud and how they are trying to combat it, according to KCRA 3 News.


The state paid out $114 billion in claims so far and says 10% of that is fraud, amounting to $11 billion. But Su says that the amount could go up to as much as $30 billion after clearing an extra 1.4 billion claims flagged for fraud. This comes after nearly a year of unprecedented unemployment and equally unprecedented fraud.


KCRA 3 Investigates first began profiling the fraud, involving individual actors, international fraud rings and even prisoners inside California's prisons and jails, last year. The fraud is mostly run through the Pandemic Unemployment Assistance Program or PUA. The EDD hired ID.Me to help sift through the claims and verify legitimate claims while stopping false ones.


A side-effect of that process, however, has been increasing the state's backlog. After a strike team by Gov. Gavin Newsom issued recommendations that the department shut down for two weeks to address the nearly 1.5 million claims in limbo, the department did just that. The goal, according to EDD, was to reduce the backlog and eliminate it by the end of January.


EDD says that the current backlog of more than 900,000 claims is a different backlog from the original one set forth by the task force. That one, spokesperson Loree Levy says, is "99.9% eliminated." However, Californians reaching out to KCRA, as well as state legislators, have said that a backlog, however different in the type of claims, is still a backlog.


Julie Su said that the PUA program from the federal government opened up states like California for fraud as there was no actual employer to verify employment. This was a program designed to help contractors, like gig economy workers -- such as rideshare and food delivery drivers. She says more guidance from the federal government would have helped to prevent the fraud.


"That does not excuse EDD for being underprepared for them," said Su, adding that they are now working to shore up defenses and get benefits to Californians who need them.


Still, legislators, Congressional members and KCRA continue to get daily calls from Californians saying they cannot get their identities verified and cannot get through to EDD.


EDD and ID.Me said they are reducing wait times and the verification process is now down to roughly two hours to get a video verification for those flagged for extra ID verification.



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