CBSN Los AngelesWatch

'An Information Coverup': New Study Says California's EDD Fraud Could Top $8B

LOS ANGELES (CBSLA) — Unemployment insurance fraud in the state could top $8 billion, according to a new study from the California Center for Jobs and the Economy.

According to the report, billions of dollars in taxpayer funded benefits have gone to people who fraudulently filed claims and collected benefits, while many others have been unable to get much-needed financial relief.

“I think this is going to go down in history as one of the biggest demonstrations of big government incompetency in the history of California,” Assemblyman Jim Patterson, R-Fresno, said.

A previous investigation by CBS Los Angeles’ David Goldstein found children as young as 1-year-old collecting benefits — with claims filed on their behalf stating that they were unemployed actors or fashion models.

Patterson said he believes the California Employment Development Department was not being truthful about the extent of the fraud.

“I think this is rising to the level of not only a rat’s nest of incompetence, it is rising now to, essentially, an information coverup,” he said.

Assemblywoman Cottie Petrie-Norris, D-Newport Beach, said she was introducing a bill to have EDD crosscheck the names of inmates with those receiving benefits after a group of prosecutors found at least $400 million in fraudulent claims filed on behalf of people who were incarcerated.

“It’s completely unacceptable and completely horrifying,” she said.

Some of those benefits have even been paid out in the name of convicted murderers like Scott Peterson, whose name was used to collect weekly benefits. His identity was confirmed using a driver’s license that expired in 2004.

“Ensuring that we check our unemployment insurance claims against prison records, ensuring that we’re not verifying IDs that expired 15 years ago — those are really easy,” Petrie-Norris said. “Those are easy things to get right.”

A request for comment from EDD was not immediately returned.

In September, EDD shut down for two weeks to overhaul its system, but lawmakers said the changes were not enough to prevent ongoing fraud.