text: Anita Chabria, Patrick McGreevy, Richard Winton
  November 24, 2020, 2:00 PM ·9 min read
  Scott Peterson, center, during his 2004 murder trial. (Al Golub / Associated Press)
  Pat Harris, Peterson's attorney, said he was "absolutely certain Scott was not involved, and any investigation will clear him."
  The district attorneys called the situation "the most significant fraud on taxpayer funds in California history," according to a letter obtained by The Times, describing crimes that involve identity theft of prisoners as well as alleged conspiracies by individual inmates and organized gangs to game the state system.
  "It is a manifest problem that cannot be ignored, and the governor needs to take steps to address it," said McGregor Scott, U.S. attorney for the Eastern District of California.
  The prosecutors contend that the fraud is preventable with systems such as those used by other states that check inmate data against unemployment claims. They asked Newsom to step in to "turn off the spigot" of payments to incarcerated people, contending that EDD's response to their investigations has been "slow to nonexistent," according to Sacramento County Dist. Atty. Anne Marie Schubert, who helped form and lead a task force on the issue.
  "EDD, it's just a dysfunctional mess," said El Dorado County Dist. Atty. Vern Pierson, a member of the task force and president of the California District Attorneys Assn.
  Newsom on Tuesday said the fraud was "absolutely unacceptable" and announced his own task force to aid district attorneys and coordinate California's anti-fraud efforts, adding that the state has already started comparing inmate rolls to pandemic benefit claims.
  "Earlier this year, I launched a strike team to expedite unemployment payments and to minimize abuse of the system," Newsom said in a statement. "While we have made improvements, we need to do more."
  EDD is attempting to weed out claims from incarcerated people who are ineligible and is "pursuing how to integrate such cross-matches moving forward," said Loree Levy, a spokeswoman for the agency.
  Though few dispute the need for unemployment aid during an unprecedented economic downturn — and the potential need for further stimulus money — the latest allegations highlight ongoing problems with EDD that have left many questioning the agency's ability to administer the massive number of new claims.
  So far, investigations have uncovered more than $400,000 in state benefits paid to death row inmates and more than $140 million to other incarcerated people in California's 35 prisons, according to Schubert.
  "The murderers and rapists and human traffickers should not be getting this money," said Schubert. "It needs to stop."
  "I've been a prosecutor for 36 years," she said. "I have never seen fraud of this magnitude."
  Because the cases are complex and may involve thousands of incarcerated individuals in multiple jurisdictions — some making claims are imprisoned in counties other than where their payments are sent — prosecutors said individual counties, especially small and rural ones where some prisons are located, couldn't handle the burden of investigations.
  "At the line level," he said, "they are trying to do their best, but they don't have adequate resources or support."
  Riverside Dist. Atty. Mike Hestrin said the scheme works typically by someone on the outside doing the paperwork. The payments usually go to an address outside of prison. Once the cash card is obtained, the person on the outside puts some of the funds into the inmate's prison account, where it can be used to buy services and goods such as food and stamps.
  "One guy on a telephone call bragged he just bought a $400 watch for his mother thanks to the state," Hestrin said.
  San Mateo County Dist. Atty. Stephen Wagstaffe, who is not a member of the task force but whose investigators uncovered such fraud months ago, said he believed the problem was "dramatically wide." Wagstaffe said charges had been filed against 22 people in his jurisdiction for applying for benefits while incarcerated or helping an inmate to do so — felonies that could result in three years in prison. He said four of those defendants had pleaded guilty so far. In one instance, the alleged fraudster was a convicted murderer awaiting transfer to state prison and, once transferred, continued the scam, Wagstaffe said.
  "It's such an easy scam to do," said Wagstaffe. "It spreads like wildfire among the inmates."
  CDCR spokeswoman Dana Simas said the agency "has worked with the Employment Development Department, the U.S. Department of Labor and the local district attorneys to stop these illegal activities inside state prisons. We will continue to partner with the local district attorneys to provide whatever resources and information are needed to investigate and prosecute this latest development."
  "The ineptitude at EDD knows no bounds," said Assemblywoman Cottie Petrie-Norris (D-Laguna Beach), chairwoman of the Assembly Accountability and Administrative Review Committee. "This latest report of widespread EDD fraud by inmates is particularly outrageous, because this is a very simple problem to solve."
  "Really, at this point stopping the bleed is the most important thing, because the fraud is continuing," said Fresno County Dist. Atty. Lisa Smittcamp, who has found about 860 questionable claims from inmates at Pleasant Valley State Prison, amounting to about $3.6 million. "These are just random cash cards they are sending out, and they are being completely irresponsible with taxpayer money."