The Labor Department has dispatched a “strike team” to California in response to reports of improper payments and suspected fraud within the state’s unemployment insurance (UI) program.
California’s UI trust fund has been significantly drained, forcing the state to borrow $21 billion from federal sources to maintain operations. Federal authorities state this situation has resulted in increased UI taxes for local employers to cover the debt.
According to an 83-page report from the California State Auditor, the state’s UI system is considered high-risk. This assessment stems from issues such as insufficient fraud prevention and claimant services within the Employment Development Department (EDD), as well as a high frequency of overturned eligibility decisions.
Labor Secretary Lori Chavez-DeRemer emphasized, “The financial challenges and possible fraud in California’s unemployment insurance program will be thoroughly investigated. The previous administration overlooked failing Labor programs, but this will change now.”
“We are promptly deploying a specialized strike team to identify any potential fraud or misconduct and swiftly safeguard American workers and taxpayers. My goal is to restore the integrity and financial health of California’s UI program,” she stated.
Chavez-DeRemer noted that the “strike team” will comprise specialists from both the national and regional offices of the Labor Department.
The secretary also wrote a letter to the EDD, citing increasing improper payment rates, insufficient timeliness, data accuracy and quality concerns, and questions about participantsâ eligibility and the use of taxpayer funds.
California received about $290 billion in COVID relief, part of which helped what The California Post described as “rapidly implementing expanded unemployment benefits.”
At least one California UI steward was convicted of using her position to file nearly $860,000 in fraudulent UI claims, while some civilians were convicted of creating nonexistent businesses to claim UI.
Just prior to the strike teamâs deployment, DOL Inspector General Anthony DâEsposito said he found nearly $1 billion in taxpayer funds “at risk” nationwide due to COVID-related UI fraud.
DâEsposito, a former NYPD officer and ex-congressman from Long Island, said in a statement that an analysis of 6.5 million prepaid debit cards used for COVID UI benefits still had $720 million loaded on them.
“My office has warned that, absent swift action, U.S. taxpayers risk losing nearly a billion dollars in fraudulently obtained benefits,” DâEsposito said in a statement.
“This is taxpayer money â and it demands immediate attention.”
DâEsposito said fraud is not a victimless crime and that every misspent dollar is one that an actual needy family could use.
“When we root out fraud, we protect taxpayers and lower the real cost of living,” he said.
Fox News Digital reached out to Newsom and the state Senateâs top Republican for comment.
