Former EDD employee gets 63 months in prison for $4.3 million fraud scheme
A former Employment Development Department employee was sentenced to 63 months in federal prison Friday for her involvement in a $4.3 million fraudulent unemployment benefit scheme.
U.S. District Court Judge John Holcomb sentenced Gabriela Llerenas, also known as Maria G. Sandoval, 44, of Perris, and ordered her to repay the money.
EDD has been riddled with fraudulent claims, and estimates are that as much as $20 billion could be lost in federal funds used to pay unemployment benefits.
EDD manages the state’s unemployment program. The U.S. attorney’s office for the Central District of California said Friday that Llerenas “took advantage of the expanded eligibility for unemployment insurance benefits” made possible by the 2020 CARES Act.
The federal law, a massive emergency relief package aimed at getting help quickly to people who suddenly were unemployed because of the COVID-19 pandemic, created the Pandemic Unemployment Assistance program.
The federally funded program provided benefits to about 2.9 million Californians who traditionally would not have qualified for regular unemployment insurance, such as independent contractors and small business owners. It ended in September.
But the program became a target for scams. It lacked the same sort of checks and balances in the regular state programs provided by employer-reported wage data, and officials were determined to get the money out quickly in a rapidly deteriorating economy.
Unemployment fraud scheme
From April to October 2020, Llerenas “filed and caused the filing with EDD of fraudulent unemployment insurance benefits that falsely asserted the named claimants were self-employed independent contractors — often identifying them as cake decorators or event attendants — who were negatively affected by the COVID-19 pandemic,” the U.S. attorney’s office said.
It described how Llerenas got some of the names, Social Security numbers and other identifying information she used to submit the fraudulent claims through her previous work preparing taxes.
Llerenas also falsely stated on some of the applications that the claimants were residents of California who could get unemployment insurance benefits administered by EDD when they lived elsewhere, the U.S. attorney’s office said.
It said that on some applications, she “inflated the amounts of income she reported for the claimant to maximize the benefit amount. She also filed a dozen or more fraudulent EDD claims in a day.”
Because of her activity, EDD authorized Bank of America to mail debit cards in the names of the claimants to addresses she provided. Cards were mailed to her residence, her husband’s business location, her mother’s apartment and the addresses of friends and other family members, the U.S. attorney’s office said.
It found that Llerenas charged the named claimants a fee for filling the applications, often paid from the fraudulently obtained benefits.
“In at least one case, she told the named claimant that she was still employed at EDD and could control the distribution of the unemployment insurance benefits, and then demanded an additional payment for ‘releasing’ the benefits,” the U.S. attorney’s office said..
It reported that as part of the investigation, $621,124 in cash was seized from Llerenas and has been forfeited.
Llerenas had worked at EDD as a disability insurance program representative. She resigned in March 2002 after admitting to fraudulently authorizing and paying disability benefits administered by EDD. She was sentenced to 37 months in federal prison in connection with that scheme.
Allegations of widespread fraud are under investigation by several government agencies. The Department of Labor-Office of Inspector General, EDD-Investigations Division, Homeland Security Investigations, United States Postal Inspection Service, FBI and Social Security Administration-Office of Inspector General investigated this case. Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, was the prosecutor..
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.
This story was originally published February 5, 2022 at 8:58 AM.
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