California EDD under microscope after paying billions in fraudulent claims

California

SACRAMENTO, Calif. (KRON) – State lawmakers have the California Employment Development Department under a microscope after the agency paid out billions in fraudulent claims.

This as many Californians with legitimate claims are still waiting on their money.

“EDD has wasted billions of dollars and caused heartache for millions of Californians,” Assemblymember Cottie Petrie-Norris, D-Laguna Beach, said.

State lawmakers want to see major changes in the agency handling unemployment claims in California.

EDD’s recently appointed director testifying at a hearing on the department in the assembly Tuesday, acknowledging the workload ahead to improve.

“I remain as fierce and dedicated to serving the wellbeing of the people we serve as I have ever been,” EDD Director Rita Saenz said.

The agency is juggling a backlog of nearly one million claims coupled with an attempt to tackle fraudulent activity plaguing the department.

The amount collected from the EDD in fraudulent claims has now climbed to $27-billion but state legislative analysts and officials with Bank of America told lawmakers the fraud is not unique to California, noting the problem stems from the Federal Pandemic Unemployment Assistance Program.

“Fraud is challenging unemployment programs across the country. The size and scope of the California program attracted substantial fraud,” Faiz Ahmad, managing director of transaction services at Bank of America, said.

Before Tuesday’s hearing, the state auditor released findings of a months-long investigation into the department, finding a series of inefficiencies and missteps that have lead to an overwhelming workload for the EDD.

The report warned because of eligibility rule changes, some Californians who received unemployment benefits may have to pay the money back.

“Is a clawback at a time when they can barely make ends meet. It’ EDD creating this havoc in their lives. EDD should have been part of the solution. But for 2.5 million Californians, EDD will continue to be part of the problem,” Assemblymember Jim Patterson, R-Patterson, said.

The auditor later this week is expected to release another investigation into EDD fraud prevention.

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