California Unemployment Insurance Fraud Laws

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Overview of Unemployment Insurance Fraud

Unemployment insurance is a program designed to help persons who become unemployed through no fault of their own to have some financial security while they seek other work. There are some exceptions when a person voluntarily quits or is fired under certain circumstances. The maximum amount anyone can recover is $450 per week and the program can last for more than one year. Unemployment insurance is a joint state and federal program administered by the California Employment Development Department or EDD.

Unemployment insurance fraud occurs when an individual provides false information, deliberately conceals material facts or provides false identification designed to obtain or to increase benefits, or to deny any benefit to an otherwise eligible employee.

Eligibility for Unemployment

You may qualify for unemployment compensation under the following conditions:

  • You have worked for the past 18 months
  • You are presently unemployed
  • You are actively seeking employment
  • You are ready, willing and able to work immediately

Fraud can be committed by both workers and employers.

Examples Of Employee Fraud

There are various examples of workers who are obtaining unemployment benefits illegally. You may be committing fraud if you do the following:

  1. Work full or even part-time while continuing to collect unemployment compensation
  2. Fail to advise EDD that you are collecting workers’ compensation or funds from a retirement plan
  3. Fail to report wages during a week when it was collected
  4. Use a false identity to collect unemployment while continuing to work under another name or identity
  5. Cash and appropriate the funds from the unemployment check of another person without authority
  6. You are not actively seeking employment but indicating that you are and falsifying information about employers you have allegedly contacted
  7. Use a fictitious employer and naming yourself as an employee eligible to receive benefits
  8. Receive or attempting to collect unemployment compensation from another state where you do not live
  9. Present a false justification or reason for qualifying for unemployment

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Examples Of Employer Fraud

There are various examples of workers who are obtaining unemployment benefits illegally. You may be committing fraud if you do the following:

  1. Work full or even part-time while continuing to collect unemployment compensation
  2. Fail to advise EDD that you are collecting workers’ compensation or funds from a retirement plan
  3. Fail to report wages during a week when it was collected
  4. Use a false identity to collect unemployment while continuing to work under another name or identity
  5. Cash and appropriate the funds from the unemployment check of another person without authority
  6. You are not actively seeking employment but indicating that you are and falsifying information about employers you have allegedly contacted
  7. Use a fictitious employer and naming yourself as an employee eligible to receive benefits
  8. Receive or attempting to collect unemployment compensation from another state where you do not live
  9. Present a false justification or reason for qualifying for unemployment

How Does The Prosecutor Prove Fraud

Depending on the type of fraud suspected, the EDD will investigate suspicious cases. It may note a false seal or employer identity for example and simply contact the alleged employer to see if it exists or to determine if you were employed by them for the period you specified.

If you falsely reported that you were actively seeking work, an EDD employee can contact any of the potential employers you allegedly applied to for work and see if you did or not.

Should you be suspected of using someone else’s identity, an EDD investigator can easily trace the identity to someone else. Other methods to catch fraud include checking wage records submitted to the state’s tax division, use of surveillance videos or operations and encouraging people to call anonymously on a hotline. Prosecutors can use these records to bring charges and inquire further if an anonymous caller reports someone who is involved in fraud.

Penalty For Unemployment Insurance Fraud

Most fraud cases that are prosecuted in California are wobbler offenses and may be charged as either a misdemeanor or felony, depending on the amount of the fraud, nature of the offense and if the offender has prior convictions for the same or similar offense.

You can be charged and convicted of unemployment fraud under more than one section of the California code.

Under Unemployment Insurance Code Section 2101, it is unlawful to willfully make a false statement, to knowingly conceal a material fact or to use a false identity such as a phony Social Security Number, to obtain, increase or to deny or defeat a benefit or payment. This is a wobbler so that if convicted as a misdemeanor, you face:

  • Informal probation
  • Up to one year in county jail
  • A fine not to exceed $20,000

If convicted of a felony under this section, the penalties are:

  • Formal probation
  • 16 months, 2 or 3 years in state prison
  • Fine up to $20,000

Should the prosecutor elect to charge you under PC 550, the general fraud statute, you also are subject to conviction as a misdemeanor or felony if the amount of the fraud exceeds $950. Otherwise, it is a misdemeanor. The amount of the fraud includes all funds that are the subject of the fraud during a 12-month period.

If the fraud amount is $950 or less, you are subject to 6 months in county jail and a fine of up to $1000. If you are convicted of a misdemeanor as a wobbler, you face up to one year in county jail and a fine up to $10,000.

Should you be convicted of a felony under PC 550, your sentence is:

  • Formal probation
  • 2, 3 or 5 years in jail
  • A fine up to $50,000
  • Or double the amount of the fraud, whichever is greater

Regarding a conviction for unemployment insurance fraud, you are subject to paying EDD back for the benefits you received illegally along with a 30% penalty on the amount and your eligibility to receive future benefits is revoked.

In some cases, your attorney can make arrangements with the EDD for you to reimburse it for the payments you received in exchange for not filing criminal charges.

What Our Clients Say

Legal Defenses

There are a number of defenses you can use:

Lack of Fraudulent Intent

Mistake or lack of understanding of the law on unemployment, while not technically a defense by itself, is nonetheless relevant in demonstrating lack of fraudulent intent. This would include your reasons for quitting your job or why you were terminated. You could have indicated the wrong Social Security Number or believed that you could work part-time and still be eligible for benefits.

Insufficient Evidence

You must be found guilty by proof that is beyond a reasonable doubt. This includes proof of intent as well as evidence that you were aware that a crime was being committed. For instance, if you were not involved in payroll for your employees and someone was deducting funds ostensibly to pay EDD but embezzled them, then there may be insufficient proof to charge or convict you.

Expungement For Unemployement Insurance

Convictions under Unemployment Code Section 2101 or under California Penal Code 550 are generally eligible for expungement since they call for county jail time instead of state prison. Consult a Los Angeles criminal defense attorney about the expungement process.

  • Find Out if You Are Eligible To Have Your Record Expunged
  • Stop Worrying About Employer Background Checks
  • Start Worrying About Landlord Background Checks

Related Offenses

Grand Theft – PC 487
Grand theft depends on the amount of the funds wrongfully obtained. If it is over $950, then you face grand theft charges, which is a wobbler.

If charged as a felony, you face:

  • 16 months, 2 or 3 years in jail
  • A fine up to $10,000

Perjury – PC 118
Anytime you present or give a false statement regarding a material matter or fact while under oath, you are committing perjury. It is a felony with county jail time of u to 4 years and a fine up to $10,000.

Forgery – PC 470
If you create or alter a document or instrument, or sign someone else’s name to it, for the purpose of defrauding EDD, then you have committed forgery. It is a wobbler offense. If convicted as a felony, you face 16 months, 2 or 3 years in jail.

Conspiracy – PC 182
Conspiracy entails the participation of another person in a plan or scheme to fraudulently obtain or increase unemployment benefits or to deny them to someone who is eligible to receive them. It is a straight felony with up to 3 years in county jail.

Next Steps If You Need Help

If you have been arrested and would like to learn more about how attorneys charge.

If you want to understand why its important to have an attorney represent you.

If you would like to discuss a pending case with an attorney contact the Aizman Law Firm at 818-351-9555 for a free confidential consultation.

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