California Authorities Bust Pandemic Unemployment Fraud Ring Run From San Mateo Jail

An outside view of the Metropolitan Detention Center in Los Angeles, on May 12, 2020. Valerie Macon/AFP via Getty Images

California officials said that over 20 people have been arrested in connection with a pandemic unemployment insurance scheme run out of a San Mateo prison that scammed more than $250,000 worth of fraudulent claims.

The San Mateo County Sheriff’s Office said in a press release Aug. 15 that investigators traced 16 bogus unemployment claims to a “large-scale Pandemic Unemployment Assistance fraud ring” that was run out of San Mateo County’s Maguire Correctional Facility.

“Proactive investigators overheard inmates conversing about these fraudulent claims which initiated the investigation,” the department said in the release, adding that this is the first time a fraudulent ring of this type involving inmates at the Maguire Correctional Facility was discovered.

Scammers filed the bogus claims between June 9 and July 30, the department said, netting in excess of a quarter of a million dollars in unlawful payments.

“Somebody, either in March or early April, said, ‘Hey we can put in for this and get some free money,’” said Stephen M. Wagstaffe, the San Mateo County district attorney, in remarks to The New York Times. “Fairly soon after that point, the money was flowing.”

Gang and narcotics task force agents were among the law enforcement units conducting a raid on Aug. 15, which led to the arrest of 21 suspects and the recovery of $150,000 cash. The sheriff’s office said other fraudulent payments are still under investigation, potentially leading to more arrests.

“We’re probably going to find many, many more,” Wagstaffe said. “We think it had at least been going on since fairly soon after the crisis set in, which in California would be March.”

The personal information of 30 inmates was used to file the unlawful claims, the department said, which could put the total number of people involved at over 50.

Inmates currently in custody at the Maguire Correctional Facility who were involved in the scam were rebooked on new charges, officials said.

“We are grateful to have caught this scheme when we did and that our personnel are so proactive,” the sheriff’s office said in the release.

California Employment Development Department, which processes unemployment claims, said in a recent press release that in the week ending Aug. 10, the agency paid an average of $686 million a day in benefits, which is about $600 million more than the daily average paid at the height of the Great Recession.

The department has warned that filing unemployment claims based on false or misreported information is an act of fraud that is punishable by fines and jail time.