Death Row inmates part of California's 'massive' unemployment fraud; totals could top $1B

SAN MATEO, Calif. - A team of prosecutors from nine counties on Tuesday announced a "massive fraud" investigation involving inmates at California prisons and jails who have successfully filed tens of thousands of jobless claims including high-profile names such as Scott Peterson, Cary Stayner and others on Death Row. 

Authorities said between March and August, 35,000 inmates filed unemployment claims while they were behind bars through the state's Employment Development Department.

Of that 20,000 claims were paid out totaling more than $140 million. But Sacramento County District Attorney Anne Marie Schubert said the full amount could be upwards of $1 billion. 

Schubert said EDD fraud is running rampant through California's prison system. 

"It exists in every CDCR prison. It encompasses every type of inmate." 

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So far, 135 California Death Row inmates have received jobless benefits including notorious serial killers housed at San Quentin State Prison like convicted serial killer Wayne Ford and Cary Stayner, who murdered two girls near Yosemite in 1999. A claim was also made in the name of Scott Peterson, convicted of killing his wife and unborn son in Modesto, also received unemployment benefits. 

For the month of August alone, $420,000 in benefits were paid to Death Row inmates. It's unclear if any of these inmates were able to cash the debit cards they received. 

Officials believe many of the inmates are working in conjunction with people on the outside to defraud the state's unemployment system, but some may be part of organized theft rings. Prosecutors from San Mateo County, where there was a similar but lower profile jailhouse scam, explained that in the government's haste to ensure that Americans got their unemployment checks quickly, few safeguards were placed on EDD forms to avoid bureaucratic hurdles. The end result, however, is that there has been massive EDD fraud. 

"Multiple cards sents to individual addresses both across the jails, the prisons, and likey from the outside. This is very, very organized theft rings to get billions of dollars," Schubert said. 

How authorities in San Mateo County were able to catch on to some inmates was through recorded jail calls. In a particular case, an investigator listened to a call between an inmate at San Mateo County Jail and someone on the outside. The two detailed the EDD scam that inmates at the jail and across the state were taking part in. 

"That's what caught the attention back in July here at the San Mateo County Jail of what's going on. So my inspector followed up on this. We got that inmate, and we took all the inmate names that were mentioned on the call and ran them through EDD," said San Mateo County District Attorney Stephen Wagstaffe.

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State and local agencies will try and recoup some of the money but there are limits on how much they could do, given that some of the inmates are on death row or serving life sentences. 

"The practical reality is—when you're talking about thousands of convicted felons engaged in this behavior, despite best efforts, the practical reality is the vast majority of this money will not be repaid," said El Dorado County District Attorney Vern Pierson. 

Schubert said the money will continue to flow to inmates if the state doesn't tighten up and regularly check for this type of fraud.

"We need to turn off the spigot," Schubert said. "Right now there is no cross-matching between the incarceration data and EDD on a routine basis like it's being done in other states," she said. 

Who bears the brunt?  Pierson said taxpayers and unemployed Californians who have yet to receive their benefits because of the state's backlog or they can't navigate the EDD system as easily as some of the inmates. 

"They don't know how to go through the process to get these things done," Pierson said. The district attorney said typically claims made by or on behalf of the inmates are processed quickly. 

"They [inmates] communicate with each other. They say 'this is how you fill the form out. This is the information you have to make sure is in there,'' Pierson explained.