Waste, Fraud, & Mismanagement

EDD Intercepts Tax Refund From Victims of Unemployment Insurance Fraud

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The Employment Development Department, which is responsible for administering the state’s unemployment insurance benefits, recently intercepted more than $4,000 from a federal tax refund intended for two victims of unemployment insurance fraud, San Francisco’s ABC7 News reported February 14.

“Turns out a scammer had used the husband’s identity to file a phony unemployment claim during the pandemic,” ABC7 reported. “Three years later, the EDD tried to claw back that money – but took it from the ID theft victim. It’s not the first time EDD seized money from a blameless citizen.”

During the pandemic, the EDD was so swamped with unemployment claims that it loosened the rules – part of the reason criminals were able to claim an estimated $20 billion in fraudulent benefits.

“Many were using stolen identities to file phony claims,” ABC7 stated. “Now, identity victims say EDD is making them pay back money it gave to the crooks.”

“It feels like it was stolen from us,” Issac Biera said. “The state literally stole money from us.”

An IRS notice said the EDD took the funds due to “unemployment fraud,” but the Bieras said neither of them had claimed unemployment benefits. They had, however, reported EDD fraud roughly three years ago, after Issac’s employer asked about an EDD claim that Biera had not filed. Attempts to straighten out the problem with the EDD were fruitless, they said.

“EDD has intercepted tax refunds from other ID theft victims, too,” the news station reported. “More than a dozen came to ‘7 On Your Side’ for help over the past three years. EDD did not say how many citizens claim the agency unfairly seized their money.”

After the news station contacted the EDD regarding the Bieras, the EDD “realized it had been sending benefits to the scammer’s address, not Issac’s, and not just $4,000 – EDD told Issac it sent $30,000 to the scammer … and EDD might have tried to get that back from Issac, too. … EDD did not say why it kept sending money even after Issac’s boss reported the fraud three years ago.”

The EDD gave the Bieras their tax refund after the news station began asking questions about it.