Gov. Gavin Newsoms staff at one point emailed LWDA [Labor and Workforce Development Agency] Secretary Julie Su to notify her that an individual was using the governors Social Security number to file fraudulent claims, explains Examining Widespread Fraud in Pandemic Unemployment Relief Programs, a recent report from the House Oversight Committee that is packed with bombshell revelations.
One individual used the name Mr. Poopy Pants on his official application and received an approved claim. Rapper Nuke Bizzle filed 92 fraudulent applications and posted a video about the ease of ripping off Californias Employment Development Department (EDD) that gets a lot of attention in the Widespread Fraud report.
EDD, under leadership of Labor and Workforce Development Agency (LWDA) secretary Julie Su, made the decision early in the pandemic to pay and chase after she was informed that keeping integrity checks in place would lead to a backlog in processing claims largely due to EDDs outdated IT, the report says.
Californias EDD also failed to cross-reference applicants with databases of incarcerated individuals and lost around $810 million to these fraudulent claims. Convicts who made fraudulent claims included convicted murderers Scott Peterson and Cary Stayner. Death row inmates accounted for at least 158 claims landing more than $420,000 in benefits.
As the Widespread Fraud report notes, while EDD seemed able to get benefits out to fraudsters and identity thieves without delay, EDD unnecessarily delayed benefits for several million applicants, allegedly due to missing documents. And, according to the report, EDD wrongly denied claims to at least one million beneficiaries at the same time they were paying billions of dollars to fraudsters. In one case, EDD continued to garnish wages and freeze the state tax return of a victim of identity theft for six months after EDD had verified the individuals identity.
Under Labor and Workforce Development Agency boss Julie Su, EDD did not make substantive changes to its fraud detection practices until July 2020 when it finally began stopping automated payments on fraudulent claims. However, EDD still delayed in responding when there was clear evidence of fraudulent activity and even when state auditors identified claims as suspicious. And so on. Its hardly the profile for a federal labor secretary, but the BidenHarris administration wanted Julie Su for the post.
Last September, a ruling by the Government Accountability Office (GAO) allowed Su to continue as acting labor secretary without confirmation by the Senate, a troubling development for independent workers. As Californias Labor Commissioner, Su supported Assembly Bill 5, an assault on workers from rideshare and truck drivers all the way to freelance writers and editors. Asked if AB-5 was a good law, Su said I dont know what you mean.
In June of 2023, when Su was asked if she accepted responsibility for more than $30 billion in unemployment fraud, Su replied, I think an unemployment insurance system that truly delivers in times of crisis should be the goal of everybody. During the pandemic crisis, Su failed to deliver, and she hasnt learned the lesson.
As Thomas Buckley of the California Globe warns, Julie Su is proposing a permanent system eerily similar to the federal pandemic unemployment plans kicking in extra pay every time a recession is declared. As this plays out, the massive unemployment fraud from the pandemic has yet to be adjudicated, and its not just about California. As Widespread Fraud notes, a full $191 billion could have been improperly paid out nationally, but only $6.8 billion has been recovered.
When Julie Su became acting labor secretary, the report recalls, she moved to forgive herself for the debt she could have prevented but failed to do so. Julie Su has been avoiding accountability since before the pandemic and will continue to do so until she is forced to face consequences for her negligence. As taxpayers should know, such an accounting has yet to take place.
The incoming Congress should make it a priority, and also remove the power of GAO bureaucrats to keep officials like Julie Su in office without Senate confirmation. The people will be watching.