KCRA-TV is a television station in Sacramento,affiliated with NBC. It is owned by Hearst Television.
For months, KCRA 3 Investigates producer Dave Manoucheri and Photographer Victor Nieto traveled across California and interviewed people in other states as part of an unprecedented documentary project that revealed a wave of failures at California’s Employment Development Department, or EDD. With nearly 15 hours of interviews from 17 people – and dozens of hours of news footage – the documentary tells the story of what is being called the worst fraud in California history.
And the documentary seems to have triggered a federal investigation of the EDD. On Friday, James Comer, head of the Committee on Oversight and Accountability sent two letters, one to Nancy Farias, head of the EDD, and one to Martin Walsh, head of the U.S. Department of Labor.
The letters both cite KCRA and the documentary “Easy Money: Fraud Fortune and Failures” in the need for an investigation of fraud against the California unemployment system.
From 2020 onward, the department had seen massive numbers of fraudulent applications for unemployment and for the CARES Act era program “Pandemic Unemployment Assistance” (PUA). That program would allow freelancers and gig workers to apply for lost wages, something they had never been eligible for before.
During the pandemic, EDD had a massive number of both legitimate and illegitimate applications for money. In an effort to get money out the door, the leadership at EDD and in the administration lifted fraud controls and allowed people to back-date their claims, assuming that they could catch fraud on the back end. However, EDD had no back-end fraud prevention mechanisms.
The letter quotes the head of California Labor and Workforce at the time, Julie Su, as saying “there is no sugar coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” something she said during a press call highlighted by Easy Money.
Su would go on to become a deputy secretary of labor in the Biden administration.
Comer, a Republican Congressman from Kentucky, took over the Committee on Oversight and Accountability with the changeover in the House of Representatives, now controlled by a Republican majority.”Despite the unexpected and unprecedented nature of the coronavirus pandemic, California’s problems cannot be blamed on COVID alone,” Comer wrote in the letter to Nancy Farias
As part of their investigation, the committee is asking for:
“1. All processes and procedures related to the disbursement of unemployment insurance benefits during the pandemic, including policies and procedures intended to ensure payments are made to the proper individual, and to ensure that the individual is a qualified recipient of unemployment insurance;
2. All documents and communications between employees of the California EDD and employees of the U.S. Department of Labor regarding the state’s UI benefit program;
3. All documents and communications related to efforts to prevent payment of fraudulent UI claims;
4. All documents and communications related to efforts to recoup UI claims paid improperly; and
5. All documents and communications related to identifying the total number of improperly paid UI benefits and documents sufficient to show whether those funds remain in the United States or were transferred to entities outside the United States.”
They are asking for similar information from the U.S. Department of Labor. The documents are requested no later than Jan. 27. The committee is holding its hearing into the matter on Feb. 1.