Share and Follow
The Labor Department has dispatched a specialized “strike team” to California in response to federal reports highlighting issues of improper payments and suspected fraud within the state’s unemployment insurance (UI) program.
California’s UI trust fund has been significantly depleted, prompting the state to borrow $21 billion from federal resources to sustain the system. This borrowing, according to federal officials, has resulted in increased UI taxes for state employers to pay off the debt.
In their announcement, the department referenced an 83-page report from the California State Auditor, which identified the state’s UI system as high-risk. This designation stems from “insufficient fraud prevention and claimant service” within the employment development department (EDD), as well as a substantial number of overturned eligibility decisions in the UI program.
“We will thoroughly investigate the financial challenges and potential fraud within California’s unemployment insurance program,” stated Labor Secretary Lori Chavez-DeRemer. “The previous administration overlooked these struggling Labor programs, but that stops now.”
“We are promptly deploying a dedicated strike team to detect any fraud or misuse and swiftly safeguarding American workers and taxpayers. I am eager to restore the integrity and financial stability of California’s UI program,” she added.
Chavez-DeRemer added that the “strike team” will include Labor Department specialists from both its national and regional offices.
The secretary also wrote a letter to the EDD, citing increasing improper payment rates, insufficient timeliness, data accuracy and quality concerns, and questions about participants’ 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 team’s deployment, DOL Inspector General Anthony D’Esposito said he found nearly $1 billion in taxpayer funds “at risk” nationwide due to COVID-related UI fraud.
D’Esposito, 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,” D’Esposito said in a statement.
“This is taxpayer money — and it demands immediate attention.”
D’Esposito 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 Senate’s top Republican for comment.