Newsom Denies Allegations Administration Failed To Stop Prison EDD Fraud

LOS ANGELES (CBSLA) - California Gov. Gavin Newsom is fighting back allegations that his administration didn't do enough to stop prison inmates from filing fraudulent unemployment claims.

Investigative reporter David Goldstein reports the governor said he was deeply alarmed when he found out about the fraud, and he claims his administration acted as soon as it found out.

Investigators have so far identified $400 million of fraudulent unemployment claims filed in the names of inmates statewide - including Scott Peterson, who's convicted of murdering his wife Laci and their unborn child.

We obtained these internal EDD files showing someone filed a claim saying Peterson made $20,000 last year as an area sales rep. And weekly unemployment benefits were paid. Even though Peterson is in San Quentin.

Estimates are the fraud could eventually top a billion dollars.

"It's that big. This was in every jail in California," said Fresno assemblyman Jim Patterson, who is on a committee overseeing EDD. "I think this is the biggest embarrassment, the biggest failure for California that I have been aware of."

Last week, a group of district attorneys who uncovered the fraud put the blame on Newsom - and now he's fighting back. The governor says it's the federal system which mandated that for the first time people who were self-employed could get benefits.

In a letter to the Sacramento DA, he said: "While this helped many individuals in need during this pandemic, bad actors took advantage of the crisis to abuse the system."

And he said his administration acted properly.

"When fraud was detected in correctional facilities, I directed EDD to take immediate steps to prevent and eliminate fraud," said Newsom.

But Sacramento DA Anne Marie Schubert put some of the blame on the fact that
unlike other states, California doesn't crosscheck the names of inmates with unemployment claims.

"EDD is overwhelmed with claims, the system is overwhelmed and the system had not been set up to do these crosschecked," she said.

The state is working with the feds to check the names and put a stop to all the payments.