California inmates tied to ‘staggering’ jobless aid scam worth over $140 million

SACRAMENTO, Calif. (KTXL) — Convicted killers, rapists and child molesters are among the names on fraudulent jobless benefit claims worth hundreds of millions of dollars of California taxpayer money made since the pandemic began, Sacramento County District Attorney Anne Marie Schubert announced Tuesday.

“The fraud is honestly staggering,” Schubert said. 

Schubert said that between March and August there have been 35,000 claims filed by inmates to Employment Development Department and more than $140 million paid out.

She said, at least 158 claims have been filed for 133 inmates on death row, including infamous prisoners such as convicted murderer Scott Peterson. 

Other convicted murderers, including Cary Stayner, who killed four people in Yosemite National Park in 1999; and Susan Eubanks, a San Diego woman found guilty in the murders of her four sons in 1997, also had files claimed in their names.

Isauro Aguirre, who was found guilty of torturing an 8-year-old boy for months before finally beating him to death in a shocking case that made national headlines, was allegedly approved for an unemployment debit card.

“Quite frankly, the inmates are mocking us,” Schubert said. Aggregate combined losses could be in the hundreds of millions of dollars and “may well amount to upwards of a billion dollars having already been paid in their names.”

Schubert said she predicts it will be “one of the biggest frauds of taxpayer dollars in California history” once the final amount of money scammed from taxpayers is totaled.

San Mateo County District Attorney Steve Wagstaffe said his county learned of the fraud through an inmate phone call in July. 

In many cases, they believe prisoners are working with family and friends on the outside who file the claims on their behalf. 

The conspirator then collects the bank card, cashes it and sends a money order to the inmate. 

“It’s open and notorious in the correctional facilities, being discussed about how everybody is getting paid,” said El Dorado County District Attorney Vern Pierson. 

Some of the claims are filed under false names. 

“John Doe or John Adams, or in one case somebody had the audacity to put their name as ‘Poopy Britches,’” Schubert said.  

These district attorneys are calling on Gov. Gavin Newsom to step in and institute new measures to fight this fraud. 

They say California should have a system to cross-reference incarceration data against EDD claims like more than 30 states across the country already do. 

Newsom said after learning of the first fraud case in San Mateo, he told EDD to work with the California Department of Corrections and Rehabilitation to start a data match of social security numbers.

Newsom issued a statement later Tuesday:

Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable. Earlier this year, I launched a strike team to expedite unemployment payments and to minimize abuse of the system. When we saw evidence of fraud in correctional facilities, I directed the Employment Development Department to review its practices and to take immediate actions to prevent fraud and to hold people accountable when fraud is not prevented. Based on that direction, EDD and CDCR, in partnership with USDOL worked to match social security numbers of those in state custody to identify the scope of the problem and to hold people accountable. To expedite and strengthen these efforts I have directed the Office of Emergency Services to stand up a task force to coordinate state efforts and support investigations by local District Attorneys. We will continue to fully partner with law enforcement and direct as many resources as needed to investigate and resolve this issue speedily. While we have made improvements, we need to do more. Everything the state does will be done in partnership with the local District Attorneys and I thank them for their commitment to resolving this issue as quickly as possible.

Governor Gavin Newsom