Thousands of Inmates Scammed Unemployment Fund For Millions

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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.

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.

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.

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.

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Mark Horowitz is a graduate of Brandeis University with a degree in political science. Horowitz could have had a job at one of the top media organizations in the United States, but when working as an intern, he found that the journalists in the newsroom were confined by the anxieties and sensibilities of their bosses. Horowitz loved journalism, but wanted more freedom to pursue more complex topics than you would find on the evening news. Around the same time, he began to notice that there was a growing number of independent journalists developing followings online by sharing their in-depth analysis of advanced or off-beat topics. It wasn't long before Horowitz quit his internship with a large New York network to begin publishing his own material online.