Tens of thousands of inmates in the state of California, even serial killers, and high profile murderers like Scott Peterson, were able to defraud the government of roughly a billion dollars through pandemic unemployment benefits. In court on Tuesday, prosecutors said that this was possibly the largest fraud scheme in California history.
“The fraud is honestly staggering,” Sacramento County District Attorney Anne Marie Schubert said.
Schubert said that between March and August, inmates across every California prison filed 35,000 claims totaling around $1 billion. $140 million in benefits had already been sent out.
San Quentin inmate Scott Peterson, convicted of killing his wife and unborn son, received CA unemployment benefits in recent months, according to a group of state and federal prosecutors who have been investigating fraud in the pandemic relief system https://t.co/yAiQOcnGtC
— 🌵 Michelle Mendoza 🌵 (@Chicana74) November 24, 2020
Some of the payments were made to friends and families of the inmates, while others were paid directly to the inmates inside the prisons. 133 of the state's 700 death row inmates also filed for benefits under their real names, including high profile murderers like Cary Stayner, who murdered four people near Yosemite National Park in 1999, Susan Eubanks, who murdered her four sons in 1996; and Peterson, who killed his wife and unborn son in 2002.
In Kern County, district attorney Cynthia Zimmer said investigators noticed that something was wrong when prisoners across the state began receiving money orders. The forms that were filled out to receive the benefits included fake social security numbers and fake names like John Doe, John Adams or, in one case, “poopy britches.”
“Quite frankly, the inmates are mocking us,” Schubert said.
California has 17 fraud investigators for EDD -- fewer than the alcohol and cosmetics investigators the governor sicced on struggling California businesses...California’s ‘dysfunctional’ EDD was unresponsive amid inmate unemployment fraud, prosecutors say https://t.co/0euNel3DXG
— Harmeet K. Dhillon (@pnjaban) November 24, 2020
She said inmates were able to pull this off because California lacks a system that “cross matches” prison and jail data with unemployment claims. Only 35 states in the US currently has one of these systems, which means that widespread fraud could have taken place in other states as well.
In a statement, Loree Levy, deputy director of the state’s Economic Development Department, said it was “pursuing how to integrate such cross-matches moving forward as part of enhanced prevention efforts during this unprecedented time of pandemic-related unemployment fraud across the country.”
Earlier this year, a man from Florida was arrested after he was caught scamming the COVID relief fund out of $3.9 million and spending the money on a variety of different personal items and expenses. 29-year-old David T. Hines fraudulently applied for over $13 million in Paycheck Protection Program (PPP) loans for a few different companies.
INMATE EDD FRAUD | “It has been said that there is no honor among thieves, and there is no better example of this than the massive EDD fraud that is occurring within our jails, in our prisons here in California,” Sac County DA Anne Marie Schubert says. https://t.co/M5qPx4HPYR pic.twitter.com/YWeq6qZybn
— kcranews (@kcranews) November 24, 2020
Due to the rushed nature of the PPP program and the urgency of the pandemic, the government was sending out funds to pretty much anyone who applied, without checking IRS records first. However, the agency is starting to catch up with many of these scammers as they go back and evaluate which recipients qualify for the loan forgiveness. Numerous cases of PPP scammers have been reported across the country.
52-year-old David Staveley was recently arrested by the U.S. Marshals Service in Alpharetta, Georgia, after he faked his own death to avoid fraud charges for the $500,000 he received from the government through fraudulent PPP loan applications.
Large corporations like Shake Shack and Ruth’s Chris Steakhouse received millions in PPP loans, but were later forced to return the money after a massive public outcry was sparked by their applications. Over 9,000 Catholic churches were approved for the loans as well, even though they are exempt from taxes.