Former California Employment Department Employee Admits to Fraudulent Unemployment Claims
A former California Employment Development Department (EDD) employee has admitted to fraudulently obtaining over $768,000 in COVID-19 unemployment payments for dead people and unsuspecting, ineligible claimants.
Guilty Plea
Phyllis Hope Stitt, 61, of Carson, and her former boyfriend, Kenneth Earl Riley, 64, of South Los Angeles, pleaded guilty to one count of conspiracy to commit mail fraud and bank fraud for filing at least 29 phony unemployment insurance claims.
Criminal Activity
According to a plea agreement with federal prosecutors, the pair carried out the fraud from March 2020 to September 2021 while Stitt was employed by the EDD. Her job duties included determining claimant eligibility for unemployment benefits and processing claims.
Conspiracy Involves Multiple Victims
The conspiracy involved at least 10 victims who did not authorize the filing of unemployment claims on their behalf. Stitt acquired the names, dates of birth, Social Security numbers, and other identifying information of individuals applying for unemployment benefits. She then filed fraudulent EDD applications for unemployment and COVID-19 benefits for individuals who were ineligible because they were employed, not unemployed due to the pandemic, or were deceased.
Falsified Information
To have EDD approve the fraudulent applications, Stitt submitted false information indicating claimants had worked in California, had become unemployed due to the pandemic, and were entitled to benefits. She also provided the EDD with phony employment histories and driver’s license information for the claimants.
Benefits Distribution
Stitt backdated the unemployment claims to maximize benefits and gained control of payments by including on the fraudulent applications return mailing addresses that Riley could access. Debit cards and accounts created as a result of the fraudulent applications were used by Riley and others to make ATM cash withdrawals in Los Angeles and San Bernardino counties, as well as bank transfers and retail purchases.
EDD’s Failure to Detect Fraud
The California State Auditor noted in a 2021 report that the EDD’s failure to bolster its fraud detection efforts until months into the pandemic resulted in at least $10.4 billion paid out for claims that may be fraudulent. The report states that even as late as December 2020, nearly a year after the first COVID-19 case was reported in the U.S., EDD was allowing claimants to continue to collect benefits using suspicious addresses because it did not establish payment blocks for their claims.
EDD’s Response
EDD has since obtained restitution orders stemming from criminal convictions for nearly $20 million in pandemic-related fraud. In a statement, the agency said, “EDD has a zero-tolerance policy on fraud. Not only do we conduct thorough background checks on EDD and any related system vendor staff, but we also have strict protocols and training in place for governing staff access to program and customer information, as well as upholding requirements to properly protect confidential information.”
Conclusion
The case against Stitt and Riley serves as a stark reminder of the need for strict measures to prevent fraud and protect the integrity of government programs. The EDD’s failure to detect and prevent fraud has resulted in significant financial losses and highlights the importance of robust fraud detection mechanisms in place to safeguard public funds.
FAQs
Q: How much was stolen in this fraud?
A: Over $768,000 was stolen in this fraud.
Q: How many victims were affected?
A: At least 10 victims were affected, along with several others who may have been victims of identity theft.
Q: What was the motive behind the fraud?
A: The motive behind the fraud was to obtain financial gain by filing fraudulent unemployment claims for dead people and unsuspecting, ineligible claimants.
Q: What are the penalties for those involved?
A: Stitt and Riley face a maximum of 30 years in prison when they are sentenced on May 9.
