Letter to Honorable Carolyn Malone, Chairwoman of the Committee on Oversight and Reform - Congressman Issa Leads Call for House Oversight Committee Hearing on California Unemployment Fraud
Letter
Dear Chairwoman Maloney:
We write to urge you to immediately schedule a hearing before the House Oversight and
Reform Committee to investigate recent reports and revelations of between $11 - $31 billion in
fraudulent unemployment benefits granted by the California Employment Development
Department (EDD), which administers California's unemployment insurance (UI) program.
The federal government's response to COVID-19 has included significant funding toward
administering and enhancing unemployment benefits, including $117 billion from the Families
First Coronavirus Relief Act and $12 billion in Coronavirus Aid, Relief, and Economic Security
(CARES) Act.
In December 2020, Congress further extended the Pandemic Unemployment
Assistance and Pandemic Emergency Unemployment Compensations by an additional 11 weeks,
and Federal-State Extended Duration (FED-ED) for up to 20 weeks of benefits.
According to reports issued on January 26 and January 28, 2021, by California State
Auditor Elaine Howle,4 EDD was unprepared to prevent payment for fraudulent claims filed under
the names of incarcerated individuals--which the EDD estimated to total about $810 million.
The reports also stated that "[e]ven as late as December 2020, EDD was allowing claimants to
continue to collect benefits using suspicious addresses because it did not establish payment blocks for their claims." Therefore, there is every reason to be concerned that this unprecedented fraud
may be ongoing even today. Improper payments have long been a direct concern of this
Committee, and identifying waste, fraud, and abuse of taxpayer money is at the core of this
Committee's mission.
Additional reports verify the state paid more than 35,000 claims under state prisoners'
names,
with one inmate collecting nearly $49,000. California also paid more than $421,000
to
133 Death Row inmates--including Scott Peterson,
a San Quentin prisoner found guilty of
killing his wife and unborn child. Still more fraudulent payouts went to organized crime sources
in Russia, China and other countries.
The Sacramento County District Attorney called it
"perhaps the biggest fraud of taxpayer dollars in California history."
According to the Howle audit, "these payments happened despite warnings from the U.S.
Department of Labor (DOL)." The DOL Inspector General cautioned EDD that California was
likely to see at least $1.2 billion in potential fraud. The real amount of fraud, however, appears
to be ten to twenty times that amount. The oversight California conducted was by all accounts
too late and wholly insufficient. In fact, on New Year's Day, the EDD paused benefits to 1.5
million claims, haphazardly looking to correct months of neglect. As a result, unsuspecting lawabiding Californians, locked at home by Governor Newsom, were no doubt put through
additional stress.
Needless to say, the evidence of unprecedented fraud, waste, mismanagement and
incompetence is too voluminous to briefly reference. By any objective measure, we believe this
Committee is obligated to schedule a public hearing to comprehensively examine what went
wrong in California, the steps being taken to recover the improper payments, and the steps being
taken to prevent it from happening again.
We look forward to your prompt response.
Sincerely,
Source