Newsom’s California failed to stop theft of around $20 billion in fraudulent unemployment claims

California Gov. Gavin Newsom’s (D) name has increasingly been tossed around as a potential 2024 presidential nominee — if President Joe Biden declines to seek a second term — but a major scandal that is still developing could derail Newsom’s future political ambitions.

It has been estimated that upwards of $20 billion in unemployment benefits was stolen in California during the pandemic in 2020 via identity fraud and Newsom’s administration has been saddled with the bulk of the blame for the fraudulent thefts, the Washington Examiner reported.

The governor’s office recently touted the fact that it had recovered approximately $1.1 billion of the stolen funds, but it is estimated that the vast majority of the stolen funds will never be recovered, nor will the thieves be identified and held accountable for their crimes.

Identity theft and fraudulent unemployment benefits claims

The Associated Press reported in January 2021 on a state audit that had been launched in 2020 to investigate reports of widespread identity theft to fraudulently obtain unemployment benefits in California via the emergency federal unemployment assistance program in response to the pandemic.

At the time of that report, auditors directly blamed Newsom’s administration for “significant missteps and inaction” that had resulted in — again, at that time — an estimated $10.4 billion being stolen via identity theft and fraudulent claims submitted to and processed by California’s woefully understaffed Employment Development Department.

The auditors further found that roughly a thousand warnings per day, whether from individuals or the federal government, were summarily ignored or never even addressed, and that even after state officials had been made fully aware of the ongoing problem, fraudulently claimed benefits were still sent out to criminals, including inmates on death row.

Most of that stolen money is gone for good

Now nearly a year and a half later, the AP has further reported that it is now estimated that at least $20 billion was stolen by way of the fraudulent unemployment benefit claims and that experts believe that “most of that money is gone for good” due to the difficulties in actually finding, much less prosecuting, the likely tens of thousands of identity thieves behind the scam.

Meanwhile, Gov. Newsom’s administration cheered the news this week that it had recovered roughly $1.1 billion of those stolen funds that were on about 780,000 debit cards the state had mailed out to alleged recipients that had never been activated and used.

The announcement from the governor’s office further claimed that its efforts to address the issue had prevented an additional 47,000 potentially fraudulent claims worth around $560 million from being processed.

To date, the 15-month probe launched by California and led by former federal prosecutor McGregor Scott has completed 1,525 investigations, made 467 arrests resulting in 162 convictions, and has seized at least $3.4 million believed to be linked to the fraud.

Newsom accountable for massive fraud

The Examiner noted that the fraudulent schemes appear to have largely targeted the emergency federal program to provide unemployment benefits to independent contractors who are otherwise ineligible, and the fraud was exceptionally rife in California due to that state’s further relaxing of its rules to swiftly process claims made during the height of the pandemic-related lockdowns in that state.

Gov. Newsom may once have had a potential path to the White House — and perhaps still does, given the current weak bench of presidential contenders for the Democratic Party — but that path is likely much narrower now in light of this costly and exceptionally scandalous fraud that occurred under his watch.

Latest News