Once it all boiled over in the spring of 2020, California got the worst of both worlds: tens of billions of dollars lost to fraud, and workers who lost their financial stability, their homes or, in extreme cases, their lives. Nowhere was the challenge more daunting - and the fallout more widespread - than in California.Ī year-long CalMatters investigation found that the EDD was primed for disaster by years of failing to heed red flags, stalling reforms and abruptly abandoning a pre-pandemic effort to get ahead of exploding online fraud - issues that rose to the top of political agendas and budgets around recessions, but were never really fixed as governors, legislators and federal regulations changed. A staffer for San Francisco Assemblymember Phil Ting pleaded for help for a constituent so distraught about “the runaround” from EDD that she was suicidal.Īll across the country, states were dealing with their own versions of this race to prevent a modern-day Great Depression by getting money to laid-off workers, fast. Gavin Newsom’s office emailed the state’s then-Labor Secretary Julie Su asking what to do about someone fraudulently using his Social Security Number to file for unemployment. “Everybody is moving at the speed of light.”īut soon, Bank of America, the EDD’s unemployment debit card contractor, warned that it might not have enough plastic to print the millions of cards that the agency needed. “This is bigger than anything we have ever experienced,” then-EDD Director Sharon Hilliard wrote in an email the day before California shut down in mid-March 2020. Emails and emergency meeting notes detail how the long-troubled California Employment Development Department became the focal point - and then the punching bag - for state efforts to stave off economic collapse while contending with a historic wave of fraud. “It felt,” Ramos said, “like this was just a big old scam.”Īs California unemployment claims spiked 2,300% in the early months of 2020, the state’s top labor officials ricocheted from crisis to crisis, internal communications obtained by CalMatters show. Along the Pacific coast in Carlsbad, Danny Ramos was one of millions of real California workers realizing that something was going very wrong, as weeks or months went by without the unemployment benefits they badly needed. At a desert state prison in Imperial County, an inmate used personal data bought on the dark web to funnel unemployment money to his wife for a $71,000 Audi and a down payment on a house. In Nigeria, an oil company IT engineer was allegedly filing for unemployment in California and 16 other states with a slew of fake Gmail accounts. By the first COVID summer, no one knew who was who.

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