California may have sent out $10 billion in fraudulent unemployment benefits, with some of the funds even going to organized crime organizations in China and Russia.
California hired Blake Hall’s ID.me to investigate fraud in October, and he said that at least 10% of unemployment claims before that month were fraudulent. Hall puts the amount of fraud sent out at around $9.8 billion, from March to September 2020.
Hall added in his interview with the Los Angeles Times that a good amount of the fraud is due to organized crime gangs in foreign countries.
"When the Russians and the Nigerians and the Chinese are the players on the field, they are going to put up some points," Hall said. "This is a very sophisticated cyberattack that’s being run at scale."
The new director at the California Employment Development Department, Rita Saenz, told the Washington Examiner that she is working with law enforcement officials to hold criminals accountable for the fraud.
“International crime syndicates took advantage of the crisis by attacking unemployment systems across the nation, stealing billions of dollars in taxpayer money and delaying payments to residents who desperately need them. I am outraged at the unprecedented level of fraud that California has experienced, and I am focused on getting benefit payments to Californians who are eligible while working with law enforcement at the local, state, and federal level to hold these criminals accountable,” she said.
Hall’s firm found that since October, roughly 30% of claims investigated were fraudulent. Hall and his firm have since blocked 463,724 fraudulent claims, which would have tallied up to more than $9 billion paid out.
Overall, 10% of unemployment claims across the country are typically fraudulent. California has sent out $113 billion in unemployment benefits due to the coronavirus since March.
Initial estimations reported that around $4 billion was sent out fraudulently, meaning that number has doubled according to Hall’s findings.
The news comes as California Gov. Gavin Newsom faces a recall effort, which has gathered 1 million signatures of the 1.5 million signatures required by March to make it on the ballot.
Newsom refused to answer questions about the effort on Friday during a press conference.
“I’m focused on the vaccine issue,” Newsom said in response to questioning on the recall effort. “That’s my focus. That’s why I’m here.”
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