Thousands of envelopes containing California Department of Employment Development fraudulent claims sent to residents across the state are part of several fraud schemes, according to a KCRA 3 investigation. According to KCRA 3 investigation, the schemes involve theft identity, the dark web and perhaps an international crime network – these are all details EDD has probably known for months. However, the agency revealed little about its investigation into what likely amounts to tens of millions of dollars in fraud. Jill Ayers said she started getting EDD letters in her mailbox weeks ago. “The whole stack was there on day one,” Ayers said. “I collected them (the letters) and I remember when it was because we were leaving the state the following day.”
Thousands of envelopes containing fraudulent claims from the California Department of Employment Development sent to residents across the state are part of several fraud schemes, according to a KCRA 3 investigation.
The schemes involve identity theft, the dark web, and possibly an international crime network.
These are all details EDD has probably known for months, according to the KCRA 3 investigation. However, the agency has revealed little about its investigation into what likely amounts to tens of millions of dollars of fraud.
Jill Ayers said she started getting EDD letters in her mailbox weeks ago.
“The whole stack was there on day one,” Ayers said. “I collected them (the letters) and I remember when it was because we were leaving the state the next day.”
Ayers is like other people who have contacted KCRA 3 Investigate the dozens and dozens of EDD fraudulent claims they received in their mailboxes. Like the others, none of the names in Ayers’ mailbox belonged to people living in his home in Modesto. Ayers and her husband are trying to sell their house so they can leave the state. He thinks this may have made his address a target.
“I have heard from many other people who have experienced this fact that people are looking for homes for sale,” Ayers said, pointing to the colorful “For Sale” sign in her yard, “because they know they will change owners and they know it is. easier to edit information “.
These letters, according to information uncovered by KCRA 3 Investigates, are part of the federal pandemic unemployment assistance program. The money comes from the federal CARES law, but EDD is responsible for distributing the funds. According to federal investigators, some scammers are using stolen identities to get money from EDD. Others are part of an international network of fraud against unemployment claims.
“That was the goal of my team. What we set out to do was try to identify within the underground dark communities … if there are other actors trying to take advantage of the chaos,” said the expert from Parker Crucq cybersecurity.
Crucq is with Recorded Future, which researches online fraud and threats, as well as consulting companies on the threats they may face regarding cybersecurity. After seeing news like the KCRA 3 investigation into EDD fraud, Recorded Future has begun to monitor possible fraud on the dark web. Crucq said the company found the scammers had filed for EDD for subsidy and were selling the accounts.
“It was interesting. Many times the balances within these unemployment accounts, technically a dollar value higher than the amount they try to sell it,” Crucq said of the accounts they found. “On many of these underground sources … our theory is that they are dealing with such a large volume that they would rather not deal with, you know, dealing with individual accounts on a case-by-case basis.”
A Recorded Future screenshot sent to KCRA 3 Investigates shows an account for sale. He has a balance of over $ 17,000.
Another Recorded Future message found by a scammer showed that they can file an application with EDD and “for sure get it approved”. The scammer claims that he has already submitted seven questions. Accounts loaded up to $ 20,000 at a time, all for sale on the dark web to the highest bidder.
“Law enforcement investigators are determining that these are crews operating within the state of California,” Crucq said. “They come, perhaps from other neighboring states, and set up shop.”
This is what Ayers thinks happened to Modesto. She believes someone was going through her inbox, even following her home after receiving the mail.
“As we walked back here to the courthouse, we noticed a car following us … that doesn’t belong on our street,” Ayers said. “He stopped behind our car and was typing information … and as soon as I got out of the car and walked over to ask him if he needed help with anything, he walked away.”
KCRA 3 Investigates has obtained court documents showing that the secret services have been investigating this type of fraud since at least May. An affidavit for the seizure of money in North Carolina details what they call an “unidentified criminal group” that filed for benefits in that state.
The criminal group used social engineering to lure US residents into an online romantic relationship. In fact, the criminal group convinced the victims to open their bank accounts and allow the transfer of unemployment funds. Once the money was there, either the people in the United States would transfer some of the funds overseas, or the criminal organization would simply empty the account.
The United States Attorney’s Office in North Carolina announced the seizure of nearly $ 50,000 from two credit union accounts in July.
For weeks, KCRA 3 Investigates worked to track down the people whose names were on envelopes sent to California mailboxes. By searching across the country, KCRA 3 was able to verify that some names belonged to people who lived in North Carolina and Florida. The investigation also found possible matches in Oklahoma, Wyoming and Arkansas. All the names belonged to real people.
Mollie Battle’s name was on an envelope with a fraudulent EDD letter sent to a California resident.
“I live in Snow Hill, North Carolina,” said Battle.
However, according to EDD, Battle lives in California.
Battle said he found that his identity was stolen because he was having trouble with his jobless claim in North Carolina. When he stopped receiving unemployment benefits, Battle called the North Carolina Unemployment Department.
“He told me he was like, ‘Well, you have one in California,'” Battle recalled of his conversation with a North Carolina official. “I said, ‘California ?!’ I said, “No, I only have one here in North Carolina.” But she said, “You have a card with $ 21,900 to be paid to you.”
The battle then called California EDD. She said the operator wanted her to verify her California address on the account, which she couldn’t do because her address was allegedly changed by a scammer. Battle was told to call EDD’s anti-fraud division. She tried but says she never got to contact the department.
“So, I was like, ‘No, this is what I’m trying to do,'” Battle said. “Someone has my identity there in California and is using it to get all this money! And, I have to stop them.”
However, the EDD made no mention of this widespread fraud until September. The agency commented on this only after multiple requests from KCRA 3 Investigates.
The only arrests announced so far have been by the Beverly Hills Police Department. So far, the department has arrested 94 people for fraud. Investigators found that 90% of those arrested did not live in California, most had arrived in the state, had rented expensive sports cars and were shopping for high-end merchandise on Beverly Hills’ exclusive Rodeo Drive.
The expensive shopping sprees attracted the attention of the police department and led to arrests. Those arrested had used EDD debit cards to purchase merchandise in stores, something the employees deemed suspicious and called the police. Additionally, Maserati, Lamborghini and other stops produced piles of EDD debit cards, weapons, cash, and money orders.
All that matched a description given by Recorded Future to KCRA 3 Investigates about the fraud.
The high-end spending is also a variation of what the secret services described in the July mandate in North Carolina.
However, EDD said little about the fraud; how much was paid; or how effective their efforts have been to stop it.
“I’m not surprised,” said Assemblyman David Chiu, D-San Francisco. “Unfortunately, EDD has failed in so many different ways and what you’re saying is incredibly troubling, but it’s not a surprise.”
Chiu, along with dozens of other lawmakers in California, sent a letter to Governor Gavin Newsom calling for deeper changes to the EDD. Newsom created a strike team to go in and investigate problems within the department. The fraud, however, was not part of the strike team’s investigation.
The strike team, however, commented on the frauds, finding major problems within EDD. The report states that EDD has focused intensely on fraud, but on minor details in the reports. However, when the Pandemic Unemployment Assistance portal was targeted, the fraud swept through the system.
Beverly Hills police said some of their informants were able to get EDD benefits within two to three days.
All this while 1.6 million people are stuck in a backlog, waiting to know if their requests have been processed.
“EDD’s anti-fraud efforts have failed to prevent real fraud by criminal syndicates and allow honest Californians to reap their benefits,” Chiu said. “I believe EDD has known this for many months.”
That still leaves the people whose names are on these letters, people like Mollie Battle, trying to figure out what to do with the fraud on their own.
“Next year, when it’s time to declare taxes or whatever, they’ll say, ‘Oh, we paid you $ 21,900,’ and I’ll be responsible,” Battle said. “So that’s one of the reasons I’m trying to get all the help I can now.”
Officials did not address what identity theft victims should do, most of whom may have no idea their names were being used for fraud. Neither EDD nor Newsom’s office representatives responded to multiple requests to address what KCRA 3 found in our investigation.
EDD’s weekly press releases talk about their efforts to fight fraud, but the statements give no indication of how far it was sent. The agency also does not target those whose identities have been stolen or what they should do.
The Internal Revenue Service, however, has provided some information. Those who may have gotten their identities stolen should at least attempt to contact EDD, the IRS said. Knowing that phones are often overloaded, people may need to call local law enforcement. Victims of identity theft can also file a complaint with the Federal Trade Commission. The IRS also has an identity theft portal. Both are important to ensure that money sent to people who commit fraud doesn’t show up on your income taxes next year.
Fraudulent EDD letters keep arriving in California mailboxes. While KCRA 3 Investigates interviewed Ayers, he opened his mailbox and found three more letters, totaling a dozen letters – so far.
EDD had closed all new claims for two weeks in order to reduce the backlog in unemployment claims and to address possible fraud. However, the department did not tell KCRA 3 Investigates how many requests were approved nor how much federal CARES Act money may have been sent to the scammers.