Vance Critiques California Over Pandemic Fraud
In a recent interview, Vice President JD Vance criticized California for the level of fraud encountered during the pandemic, comparing it to ongoing issues in Minnesota. He highlighted that the Small Business Administration has flagged approximately $7 billion in fraudulent payments in California alone.
“I think we have a fraud problem that is much worse in California than it is in Minnesota,” Vance noted during his conversation with Newsmax.
This $7 billion figure relates to suspected fraud linked to programs like the Paycheck Protection Program and Economic Injury Disaster Loans, which were part of federal COVID-19 relief efforts. Estimates from the Government Accountability Office suggest that fraud in unemployment programs could range from $100 billion to $135 billion, with some experts estimating the actual number might reach up to $400 billion when accounting for underreported cases.
California’s large population has led to heightened demand for relief funds, making it a prime target for organized crime from various countries, including Russia, China, and Nigeria.
Vance has characterized the recent scandals in Minnesota as a “microcosm” of broader concerns such as immigration fraud and welfare abuse, attributing these issues to Democratic policies. He claims that such fraud has enabled “literal terrorist groups” and has resulted in theft from ordinary citizens.
Moreover, the state has experienced significant abuse of small business loan programs, with many criminals submitting false applications for non-existent companies. The SBA’s inspector general has identified billions in improper loans, estimating California’s share to be about $7 billion, corroborating Vance’s statements.
The GAO has warned that weak identity verification processes allowed gangs to file bulk claims using stolen identities, resulting in substantial financial losses per scheme. Contributing factors included outdated technology and staff shortages, coupled with pressure to expedite claims during lockdowns, which worsened the fraudulent activities in California.
Specifically, the state’s Employment Development Department reported paying out between $20 billion and $32 billion in fraudulent unemployment benefits, amounting to around 11% to 18% of total funds distributed. Scammers utilized stolen identities, created phony names, and even filed claims from prisons or abroad, with approximately $810 million going to incarcerated individuals.
The state auditor has criticized the EDD for delaying the implementation of fraud detection measures, particularly the key identity verification safeguards that were postponed from April to August 2020. This delay is estimated to have led to around $1 billion in unverified payments.
So far, recovery efforts have managed to identify about $6 billion, though experts indicate that fully recovering the losses may be unlikely due to the complexity of the fraudulent operations involved.
Continuing his critique, Vance directed his frustrations at California Governor Gavin Newsom, suggesting that he needed to “look in the mirror” regarding the chaos at the state’s borders, claiming Newsom is at the heart of the problem. He has also ridiculed Newsom’s reasoning on law enforcement, referring to his associates in a disparaging manner.
Nationally, the SBA’s Office of Inspector General estimates potential fraud in the PPP and EIDL programs to be around $200 billion, highlighting California’s vulnerability due to the high volume of relief funds distributed. While California reportedly recovered about $1.9 billion in fraudulent unemployment claims by 2023, ongoing investigations by the DOJ aim to hold perpetrators accountable, pointing to long-term challenges in navigating this scandal.
