A Sutter County woman has pleaded guilty in federal court in Sacramento to her role in an unemployment benefit fraud scheme.
Iqila Begum Khan, 34, of Live Oak pleaded guilty Thursday to conspiring to commit mail fraud in a fictitious employer scheme, according to a U.S. Attorney’s Office news release.
Iqila Kahn is one of 28 defendants charged in a long-running Yuba City-based scheme involving several family members, authorities said. She is the daughter of defendant Mohammad Nawaz Khan, sister of Mohammad Adnan Khan, and niece of Mohammad Shahbaz Khan and Mohammad Riaz Khan. To date, 15 defendants have pleaded guilty to various charges. A jury trial for Mohammad Nawaz Khan and five others is scheduled for Jan. 12.
According to court documents, the defendants set up farm labor contracting businesses that purported to provide labor to harvest various crops in Sutter and Yuba counties. They registered the businesses with the California Employment Development Department and reported employees and their wages to EDD. The organizers of the scheme allegedly sold fraudulent pay stubs to other people and reported the wages to EDD. The purchasers of the fake wages could then file for unemployment or disability benefits with EDD based on their fictitious employment. Because the amount of the benefit that EDD pays is based on the claimant’s prior earnings, customers were charged more for documents reflecting higher wages, authorities said.
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According to her plea agreement, Iqila Khan sold fake wages on behalf of the companies at a rate of $250 for ever $1,000 of reported “wages.” She generally sold these fraudulent wages at an office on Palora Avenue in Yuba City. During the investigation, authorities said, Iqila Khan was secretly recorded making a sale, in which she explained to the undercover buyer how and when to file for unemployment benefits based on the fake wages and what to say if the buyer was contacted by the state.
Law enforcement agents later executed a search warrant at the Palora Avenue office and found a black ledger providing lists of names and amounts that were to be listed as fictitious wages with EDD as well as hundreds of fraudulent pay stubs, authorities said.
The defendants are alleged to have reported false wages for more than 1,000 separate individuals resulting in more than 2,000 fraudulent claims for unemployment benefits. The scheme is alleged to have defrauded EDD of more than $14 million.
Iqila Khan is to be sentenced Jan. 29 by Chief U.S. District Judge Morrison C. England Jr.
The case resulted from an investigation by the FBI, the Department of Labor, Office of Inspector General and the California Employment Development Department.
Call The Bee’s Cathy Locke, (916) 321-5287.