CA EDD Fraud Has Now Reached 9 BILLION, With International Crime Syndicates In The Mix

Paul Sakuma

I, and my other RedState colleagues have done our best to stay on top of California’s Employment Development Department fraud. You can read more details here, here, and here.


But the corruption is like an avalanche. Once the earth underneath is moved, it snowballs downward, until the entire mountain falls.

And in regard to California’s Unemployment Insurance fraud the mountain is falling fast:

“While millions of Californians are battling each day to put food on the table amid the idled COVID-19 economy, payments from the state earmarked to help them have been ripped off to the tune of nearly $10 billion, according to a security firm hired to investigate the fraud.”

As it the Porkulus COVID II bill wasn’t enough, some of your tax dollars have been used by international crime syndicates:

“Blake Hall, founder and CEO of told the Los Angeles Times, that California may have paid out nearly $10 billion in phony coronavirus unemployment claims — more than double the previous estimate. Some of that money has gone to organized crime in Russia, China and other countries.

“At least 10% of claims submitted to the state Employment Development Department before controls were installed in October may have been fraudulent.”

As referenced above, is the security company Governor Gavin Newsom brought in to staunch the flow, and take control of this fraud.

Here’s what its founder and CEO Hall found:

“ ‘Much of the COVID-19 fraud in California and other states was perpetrated by criminals in some 20 countries,’ he said.

“Hall said criminal rings submit claims using stolen identity information and then send ‘money mules’ out to pick up debit cards issued by the Employment Development Department, often to vacant houses.

“ ‘When the Russians and the Nigerians and the Chinese are the players on the field, they are going to put up some points,’ Hall said. ‘This is a very sophisticated cyberattack that’s being run at scale.’ ”


Once again, California leads the way.

Governor Newsom, the California Legislature, and the former heads of the EDD are scrambling and pointing fingers, some of them blaming Bank of America, who is the distributor of the debit cards and manager of the UI payments. However, as CalMatters reports,

“ ‘If it turns out that California should not have approved all these claims,’ said Mason Wilder, a research specialist at the Association of Certified Fraud Examiners, ‘then regardless of what their agreement says with Bank of America about debit cards, I would think that ultimately the taxpayers are going to be on the hook for California’s errors.’ ”

Who continues to suffer because of the Governor’s incompetence and CA EDD’s malfeasance? The people who desperately need their unemployment benefits. Because of the widening fraud, in early January CA EDD suspended UI payments to people who already had existing claims.

“A widening fraud probe has prompted the state Employment Development Department to suspend unemployment payments to some California workers even as coronavirus-linked business shutdowns have left people without a job.

“The halt in payments for an unknown number of workers comes at a time when the EDD is reporting that its backlog of unpaid unemployment claims is again swelling. The agency, criticized for antiquated technology and a call center that can’t handle the volume of workers who need help getting their money, may have sent out an estimated $2  billion in fraudulent claims.”


Shameful is right. Another hashtag that comes to mind is #SMDH—”Shaking My Damn Head”.

According to the local Bay area KPIX 5 report, since March more than 16 million unemployment benefits claims have been processed, totaling over $113 billion in payouts. Now, $43 billion of that is federal, and was slated for independent contractors, gig workers, and the self-employed. Money that many of those self-employed and gig workers never saw because of CA EDD’s targeted audits in order to enforce AB5.

That’s billions that came out of all American taxpayer pockets, not just California taxpayers, and it has all gone down the drain. What does that mean for those who don’t live in California? Your taxes will increase in order to shore up my state’s malfeasance and poor management.

Many in the nation have written off California, and we are maligned and accused of getting the government we deserve. Some of us did not vote for this government, but that’s a point for another day. What people fail to realize is that any sucking tax hole in one state is going to affect the rest of the country. It’s like an infection or cancer in one part of the body. If left unchecked, it eventually destroys the rest of the body, and eventually leads to death.


With a new Biden administration, Governor Gavin Newsom is looking to get that federal bailout he’s been hoping for since this pandemic began. If anything portends death of a nation, it’s that.

It’s time to start caring about what happens to California. And for those who can, support the remaining sane constituents in our battle to take our state back.




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