RELEASE: Bill to Address Rampant Unemployment Insurance Fraud Passes First Committee

AB 110 Enables EDD to Prevent Fraudsters from Stealing Benefits

For immediate release:

SACRAMENTO – With broad support from law enforcement and prosecutors, legislation preventing fraudulent unemployment claims has passed out of the Assembly’s Consumer Privacy and Protection Committee. AB 110, authored by Assemblywoman Cottie Petrie-Norris, will require the Employment Development Department (EDD) to cross-check incarceration records in order to prevent paying fraudulent benefits.

“In the midst of this terrible crisis, fraudsters and criminals spotted an opportunity to bilk California taxpayers for billions of dollars,” said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach). “AB110 is a simple, common sense step to stop unemployment insurance fraud involving California inmates.”

Over the past year, district attorneys across California have uncovered multiple fraud rings involving state prisoners who coordinated with non-incarcerated accomplices to file unemployment benefits under the federally funded Pandemic Unemployment Assistance Program. The California State Auditor discovered that between January 2020 and November 2020, EDD paid $810 million in benefits associated with incarcerated individuals. Nearly one billion taxpayer dollars were lost because EDD does not have a system to regularly crossmatch unemployment claims with information from correctional facilities.

Cross-checking lists of unemployment benefit claimants against incarceration data is a common fraud prevention process practiced in other states and was encouraged by the Federal government. However, current California law restricts the inmate information that can be shared with other state agencies. AB 110 will enable EDD to easily cross-check claimants’ information against inmate records maintained by the California Department of Corrections and Rehabilitation.

AB 110 is supported by CalChamber, California State Sheriffs’ Association, Orange County Business Council, Orange County District Attorney Todd Spitzer and the Orange County Sheriff's Department.

This bill is jointly authored by Assemblymembers Phillip Chen (R-Yorba Linda), David Chiu (D-San Francisco), Chad Mayes (I- Rancho Mirage), Adrin Nazarian (D-Van Nuys), Rudy Salas Jr. (D-Bakersfield) and Miguel Santiago (D-Los Angeles); and co-authored by Assemblymembers Richard Bloom (D-Santa Monica), Rebecca Bauer-Kahan (D-Orinda), Tasha Boerner Horvath (D-Encinitas), Wendy Carrillo (D-Los Angeles), Cristina Garcia (D-Bell Gardens), Jesse Gabriel (D-Woodland Hills), Mike A. Gipson (D-Carson), Adam C. Gray (D-Merced), Brian Maienschein (D-San Diego), Al Muratsuchi (D-Torrance), Jim Patterson (R-Fresno), Bill Quirk (D-Hayward), Phil Ting (D-San Francisco), Carlos Villapudua (D-Stockton) and Senator Ben Allen (D-Santa Monica).

AB 110 will next be heard in the Assembly Insurance Committee later this month.  

WHAT OTHERS ARE SAYING
“Failure to protect against fraud undermines the public’s confidence and encourages criminal activity. AB 110 puts important protections in place that will ensure unemployment benefits only go to eligible unemployed individuals. Cross-checking lists of unemployment benefit claimants against incarceration data is a common-sense fraud prevention measure that will protect taxpayer dollars,” said Orange County Sheriff Don Barnes, Orange County Sheriff’s Department and California State Sheriff’s Association.

“When the criminals are running out of places to put their money and hard-working Americans can’t pay their bills because their unemployment benefits have been frozen, you have a major problem,” said Orange County District Attorney Todd Spitzer. “This isn’t just an Orange County problem. It isn’t just a California problem. This is a breakdown of catastrophic proportions that has failed the American taxpayer – and we are grateful Assemblymember Petrie-Norris is leading the charge in crafting thoughtful legislation like AB 110 to address these serious loopholes and prevent the continued theft of taxpayer dollars.”

“The backlog in claims and fraudulent unemployment payments are an embarrassment to California and its workforce when it needs help the most. Assemblywoman Petrie-Norris’ AB 110 is an important part of a package of reforms needed for EDD. This bill assures a better flow of information between EDD and the Department of Corrections and Rehabilitation to prevent unnecessary fraudulent spending, directing State dollars to those in need,” said Lucy Dunn,  President and CEO, Orange County Business Council.

“The fraud on California’s UI Fund that has been widely reported throughout this pandemic is unacceptable.  The California Chamber of Commerce is glad to support Assemblywoman Petrie-Norris’ AB 110, which would facilitate sharing of information between the EDD and California’s correctional system to ensure that fraudsters do not utilize inmates’ information to steal money from California’s Unemployment Insurance Fund.  We would also note that other states’ already employ this basic safeguard, and are glad to see a common-sense solution being imported into California,” said Rob Moutrie, Policy Advocate, California Chamber of Commerce.

"The breadth of the EDD fraud is staggering.  Inmates stole money rightfully for those in need, defrauding the state for their own personal gain.  AB110 helps close this loophole, exploited by tens of thousands of inmates to the tune of hundreds of millions of dollars in taxpayer money.  This bill will direct local and state jails and prisons to provide inmate identifying information to EDD so EDD can identify and deny these fraudulent claims," said   Jeannine M. Pacioni, Monterey County District Attorney.