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Special advocate engaged in California unemployment fraud investigation

Faced with widespread fraud in California’s unemployment benefit system, state officials said on Tuesday they hired former federal prosecutor McGregor Scott to serve as special counsel to help with investigations into false claims filed by international criminal organizations, detainees and others.

Scott was the U.S. attorney for the Eastern District of California until his resignation this year and was the head of a task force of California prosecutors that launched an investigation into unemployment fraud in November.

The investigation was launched by Scott and nine county prosecutors after finding evidence that thousands of fraudulent claims for unemployment benefits had been filed on behalf of California prison inmates, including those on death row.

Since then, the state’s employment development department has determined that more than $ 11 billion in benefits have been paid on fraudulent claims, with an additional $ 19 billion in suspicious claims pending. investigation.

Last year, the state began matching claimants’ personal information to the detainee list and hired a contractor to verify the identity of people claiming unemployment benefits.

“California took general action last year to identify and prevent prosecution of unemployed criminal fraud – and with the help of McGregor Scott, we’re taking another important step to empower prosecutors to crack down on those who engage in this criminal activity, ”said Rita Saenz, director of EDD.

As an American attorney, Scott oversaw federal prosecutions in a district comprising 34 counties from the Oregon border to Bakersfield. Appointed by President Trump in 2018, Scott resigned from his post when President Biden took office this year.

He previously held the same position from 2003 to 2009 under President George W. Bush, and was twice elected Shasta County District Attorney.

Scott, whose title will be Special Fraud Advisor, said on Tuesday he would work closely with a task force made up of state and local law enforcement agencies formed in November by Governor Gavin Newsom. This group is overseen by the State Emergency Services Office.

“Last year the state’s unemployment systems were attacked by sophisticated international and domestic organized fraud schemes,” Scott said in a statement. “We look forward to working with EDD, Cal OES, and local, state and federal prosecutors to identify, investigate, and prosecute those who have stolen benefits that rightly belong to Californians in need.”

Scott, who is a partner at King & Spalding law firm, will have his hands full. The group of prosecutors he was involved with estimated in November that fraudulent claims involving 21,000 detainees could total $ 400 million.

The governor’s task force said in April that there had been 68 arrests and opened 1,641 more investigations.

Additionally, federal officials who have made more than 500 arrests nationwide in unemployment fraud cases say much of the problem lies with international criminal organizations. Security experts say identity theft networks have filed fraudulent unemployment claims from Russia, China, Nigeria, Ghana, Turkey and Bulgaria, among other countries.

Closer to home, former EDD employees have been implicated in fraud schemes, including one in December in which a former state employee was able to defraud more than $ 200,000 by filing claims on behalf of victims. ignorant, including US Senator Dianne Feinstein (D-Calif.).

Scott’s role includes supporting state, federal and local efforts to prosecute suspected criminal activity and ensuring that criminal cases are referred to law enforcement agencies to hold criminals accountable. and recover benefits paid fraudulently.

Atty of California. Gen. Rob Bonta, who has made investigating unemployment fraud a priority since taking office in April, said Scott brings his expertise to the investigations.

“The California Department of Justice was instrumental in uncovering last year’s unemployment fraud program; and from the start, we worked in close partnership with then-US lawyer Scott to stop this illegal activity, ”Bonta said.

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