A federal “strike team” is descending upon California amid fears that California’s Unemployment Insurance program is mired in a swamp of fraud and improper payments.
“Financial issues and potential fraud in California’s unemployment insurance program will be fully examined. The previous administration turned a blind eye toward failing Labor programs: This ends now,” Secretary of Labor Lori Chavez-DeRemer said in a Labor Department news release.
“Immediately, we are engaging a specialized strike team to uncover any potential fraud or abuse and quickly moving to protect the American worker and taxpayer,” she said.
“I look forward to restoring the California UI program’s integrity and financial health,” she said.
California’s Employment Development Department has been cited by the Labor Department for poor performance.
Further, California also has dipped into the UI trust fund, which holds state-collected payroll taxes to pay the state portion of unemployment benefits.
California has borrowed $21 billion from the federal government to keep its system afloat, which is triggering increased UI taxes for state workers.
The California state auditor ruled that the agency overseeing UI payments was a high-risk agency.
A recent audit report said that “EDD’s fraud prevention approach during the
pandemic was marked by significant missteps and inaction that led to billions of dollars in unemployment benefit payments that EDD later determined may have been fraudulent.”
“Further, we also reported that EDD has been unable to accurately quantify its inappropriate UI payments,” the report said.
“EDD is a high-risk agency because of its mismanagement of the UI program,” the audit said.
“Specifically, EDD is unable to reliably estimate improper payments under the UI program, thus adversely affecting the State’s financial statements as well as impairing efforts to independently evaluate the efficacy of EDD’s own fraud prevention activities,” the auditor wrote.
The report said “Substantial Fraud Risk Exists in EDD’s UI Program.”
“For example, the program did not block addresses used to file unusually high numbers of claims, and it removed a safeguard preventing payment to individuals who had unconfirmed identities,” the report said.
As a result, the report said, the department “allowed the payments of potentially fraudulent claims, estimated at tens of billions of dollars, most of which have yet to be recovered.”
California received about $290 billion in COVID relief, according to Fox News.
Inspector General Anthony D’Esposito said nationally, he nearly $1 billion in taxpayer funds is “at risk” nationwide due to COVID-related UI fraud, noting that prepaid debit cards issued to be used for pandemic-era UI benefits had $720 million unspent on them.
“My office has warned that, absent swift action, U.S. taxpayers risk losing nearly a billion dollars in fraudulently obtained benefits,” D’Esposito said in a statement. “This is taxpayer money — and it demands immediate attention.”
This article appeared originally on The Western Journal.
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