California officials have criticized the Trump administration’s initiative to investigate unemployment fraud as “purely political,” attributing the financial losses to federal mismanagement.
According to a report, the U.S. Department of Labor is sending a “strike team” to look into allegations of fraud during the pandemic that involves California’s Employment Development Department.
State estimates suggest that California may have lost tens of billions of dollars due to fraudulent unemployment claims.
Labor Secretary Lori Chavez Delemer stated that the Biden administration ignored the issue of the misappropriated funds, committing to a comprehensive investigation of the theft, which took place in the early pandemic stages.
“This is it,” she asserted.
Officials from EDD have mentioned their proactive measures against fraud, initiating over 2,300 investigations and achieving 670 felony convictions with assistance from Special Counsel for Fraud, McGregor Scott, a former U.S. attorney.
An EDD representative described the recent announcement from the Trump administration as politically motivated, noting that the fraud resulted from a flawed federal program that enabled large-scale issues across the nation.
They emphasized that they had already been working to address fraud and criticized the hurried rollout of the unemployment program, which lacked adequate guidance and support from federal authorities.
“This left states to defend themselves against global criminal organizations,” the spokesperson added.
They also pointed out that the crisis related to the pandemic has lessened, as the widespread fraud tied to the federal Pandemic Unemployment Assistance program had ceased several years prior, stating this occurred because of a lack of typical safeguards in the federal program.
Federal investigators will join in from both national and local levels to further address fraud cases, similar to what was seen in Minnesota, where up to $9 billion is believed to have been lost.
During the pandemic, California received around $290 billion in relief funds, making the EDD one of the largest recipients.
State officials noted that California’s improper payment rate stands at 12.06%, which is slightly better than the national average of approximately 14%.
“We possess various tools to combat fraud, and we hope for continued support from the federal government for our extensive anti-fraud efforts,” the EDD representative remarked. “We appreciate the ongoing cooperation as we strive to minimize fraudulent activities.”
