Where's the Accountability For California's $31 Billion Unemployment Scandal?

AP Photo/Damian Dovarganes, File

It may be the largest fraud case in U.S. history — perhaps world history as well, although the oil-for-food scandal engineered by Saddam Hussein in the 1990s would give the Golden State fleecing of the unemployment system a run for its money.


The stupendous size of the unemployment claims scandal in California is purely the result of incompetence. Individuals, criminal gangs, hackers, and state actors siphoned as much as $31 billion away from the California government. It was a free-for-all that even had criminals locked away in California prisons stealing billions of dollars right under the noses of the guards.

Recommended: California Unemployment Fraud Scandal Might Involve $20 Billion in False Claims

Perhaps the most extraordinary element in this scandal is the lack of outrage not only from government officials, but from the people, as well. California politicians do not appear to be paying a price for this massive boondoggle.


Approximately 10 percent of the paid claims have been fraudulent, with another 17 percent under suspicion. This will be “the largest fraud investigation in the history of America,” according to one expert interviewed by CALmatters. Part of the blame, it notes, is from “the state’s own failure to cross-check unemployment applications with prison rolls.”

Who are these incompetents who are running this agency? The EDD says it is “one of the largest state departments with employees at hundreds of service locations throughout the state.” It has great pretensions, noting on its website—the same one that continues to crash and can’t process legitimate jobless benefits—that it has “connected millions of job seekers and employers in an effort to build the economy of the Golden State.”


“Although it would be unreasonable to have expected a flawless response to such an historic event, EDD’s inefficient processes and lack of advanced planning led to significant delays in its payment of (unemployment insurance) claims,” wrote California State Auditor Elaine Howle. Incredibly, the department’s call center only answered 1 percent of its calls. And there are still 1 million Californians waiting for determinations on their unemployment claims.

Somebody’s head should roll, right? But these are Democrats we’re talking about. California Democrats. Instead of getting canned, state Labor Secretary Julie Su is in line for a big promotion. She’s been nominated to fill the number 2 slot in the U.S. Department of Labor.

“So, while you may not be personally responsible for every case of fraud that happened, the fraud did happen on your watch,” Sen. Richard Burr (R–N.C.) said during a hearing on Su’s nomination, according to news reports. “You ordered the agency to eliminate some important safeguards to speed up payments, which led to even more fraud.”

Su’s confirmation vote is expected next week. She is expected to win confirmation going away.

Governor Gavin Newsom isn’t likely to get punished for this scandal, either.



Meanwhile, Gov. Gavin Newsom doesn’t seem to be paying any noticeable price for this matter either, even after he buried his bad-news EDD strike-team report showing that he won’t be able to clear up the backlog as promised. The [Sacramento] Bee chided him for dropping that report on a Saturday night, where it was unlikely to get much coverage. Nevertheless, Newsom’s approval ratings are improving, as are his chances to deflect a recall.

Other states like Illinois, New York, and New Jersey have their own massive problems with unemployment insurance claims fraud. When the final tally becomes known, thieves will probably have stolen enough to fund their own country. And the chances of getting any of it back are non-existent.


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