Putting the Unemployment Prison Fraud in Context

Bay Area newspapers are reporting a first-of-its kind unemployment fraud, in which unemployment claims were filed, and paid, on behalf of prisoners. The latest in the series is this article from the Sac Bee, which purports to explain “How inmates pulled off giant California unemployment scam.” But even having read it, I’m unclear on what exactly happened, and especially on what they mean by “a spider web.” Here’s what we know:

Court records show a handful of inmates contacted friends and relatives on the outside, supplied them with Social Security numbers and other information, and persuaded them to file for pandemic relief on behalf of 30 different inmates. The outsiders had the unemployment payments — in the form of Bank of America debit cards issued by EDD — mailed to them.

“The cards came pre-loaded with upwards of $20,000,” said Sean Riordan, deputy district attorney in San Mateo.

Riordan said the outside accomplices then went to ATM machines and withdrew their pre-arranged cut — usually $3,000 or $4,000 — and arranged for friends or family to deliver the cards to the inmates at the jail. In one case, an outsider was found to have used an ATM in Las Vegas to collect his cut.

“It was thousands of dollars,” Riordan said.

Accomplices arranged for the remaining funds to be delivered to the inmates’ jail accounts, which could be used to buy extra toiletries or other items.

That people commit fraud, behind bars and on the outside, is not difficult to understand, and I’m sure the COVID-related deprivations and difficulties produced the kind of conditions that act as a Petri dish for these kinds of schemes. What I don’t understand is this: to what extent were the people whose names were used in this fraud (the New York Times story names Scott Peterson, convicted murderer of his wife Laci Peterson) part of the fraud? When the article say that people’s “names were used,” was it with or without their consent?

Moreover, how does all of this map onto the bigger picture of COVID relief structures? We already know that CARES Act relief is available for prisoners, because it took a lawsuit to make it happen. I also know from family members of incarcerated people that several facilities are interfering with their population’s ability to complete the claim forms. In one case I heard of, when the family member called the San Joaquin County Jail, they were told the jail would not accept any check if the IRS mails it inside, and that “they [jail staff] don’t care what law was passed.” If this is a widespread problem, as the lawsuit suggests, unemployment fraud scams appear a lot less surprising. What I want to know, though, is whether there’s some connection between the two phenomena, and whether the financial scales of the CARES Act sabotage and the unemployment fraud are on par.

If you, or a family member, are having difficulties with prisons or jails undermining your CARES Act stimulus claim, email me and tell me your story, or post it in the comments.