Two Kern Valley State Prison inmates, one Los Angeles resident indicted for COVID-19 unemployment benefits fraud scheme
KERN COUNTY – The first indictments for fraud conspiracy against the California Employment Development Department (EDD) in the Central Valley have been handed out. A grand jury returned an indictment July 15 against three defendants for a scheme to submit over $1.4 million in fraudulent unemployment insurance claims in other inmates’ identities to EDD.
The indictment charges Daryol Richmond, 30; Telvin Breaux, 29; and Holly White, 30, with conspiracy to commit mail fraud and aggravated identity theft. Richmond and Breaux are inmates at the Kern Valley State Prison and California Correctional Institute, respectively. White resides in Los Angeles. The indictment was unsealed July 21 following White’s arrest.
According to court documents, the underlying applications for the claims falsely stated that the inmates worked within the prescribed period as clothing merchants, handymen, and other jobs, and were available to work. To avoid detection, the defendants created fictitious email accounts and used different physical addresses throughout Southern California for the fraudulent claims. In some cases, they paid family members and associates up to $1,000 to use their physical addresses. The actual loss to the EDD and United States is over $270,000.
This case is the product of an investigation by the FBI and EDD. Assistant U.S. Attorneys Joseph Barton and Melanie Alsworth are prosecuting the case.
If convicted of the conspiracy to commit mail fraud, the defendants each face a maximum statutory penalty of 20 years in prison and a fine of up to $250,000. If convicted of the aggravated identity theft, they each face a mandatory two-year consecutive sentence. Any sentence, however, would be determined at the discretion of the court after considering any applicable statutory factors and the Federal Sentencing Guidelines, which take into account several variables. The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Three Republican bills to combat EDD fraud are sitting in the state pipeline, one of which is Senator Shannon Grove’s (R-Bakersfield) SB-39, which would require EDD to cross check unemployment insurance claims with state prison rolls, a demographic thought to be—and now indicted—responsible for a significant portion of the billions paid out in fraudulent claims.
“The EDD’s tolerance of unemployment insurance fraud is a scandal of historic proportions. The department failed to check UI claims against current inmate roles which essentially gave criminals an easy outlet to steal billions of dollars from taxpayers,’ said Grove. “We need to put safeguards in place immediately, and my bill SB-39 will mandate that the EDD crossmatch all incoming claims against current inmate roles.”
In November 2020, nine county district attorneys signed a letter announcing UI fraud involving tens of thousands of inmates and hundreds of millions of dollars. In December, EDD and the California Department of Corrections and Rehabilitation (CDCR) signed a data sharing agreement for CDCR to share names and social security numbers of current inmates to EDD. Grove’s SB-39 would require the Director of Employment Development to crosscheck CDCR data to verify that a UI benefits applicant is not an inmate currently incarcerated in state prison before making any payments.
Governor Gavin Newsom has also pledged $305 million to clear EDD’s backlog, implement a direct deposit system and improve access for foreign language speakers in the May budget revise showing California’s $75.7 billion surplus, most of which has been awarded to taxpayers. Newsom has also indicated $35 million will be used to assist local governments in piloting basic income programs, popularized by former Stockton mayor and current Newsom adviser Michael Tubbs.
As of press time, the backlog of unemployment claims past 21 days pending EDD action is at 238,431, up from 215,601 at the beginning of July.