EDD pays phony jobless claim, takes $4,000 from identity theft victim

AMERICAN CANYON, Calif. (KGO) -- It's happened again. The EDD seized more than $4,000 from a North Bay couple's tax refund... without saying why.

Turns out a scammer had used the husband's identity to file a phony unemployment claim during the pandemic. Three years later, the EDD tried to claw back that money -- but took it from the ID theft victim. It's not the first time EDD seized money from a blameless citizen.

It's surprising this is still going on. You may recall the EDD was so swamped with unemployment claims during the pandemic, it loosened the rules -- and wound up paying an estimated $20 billion dollars to fraudsters. Many were using stolen identities to file phony claims. Now identity victims say EDD is making them pay back money it gave to the crooks.

"It feels like it was stolen from us. The state literally stole money from us," said Issac Biera.

MORE: EDD drops Bank of America as unemployment payment contractor

Issac and Ellen Biera of American Canyon were totally bewildered. Out of nowhere, they found out the state Employment Development Department had seized their tax refunds -- more than $4,000.

"It was very hard to really understand... what did we do wrong? And, we had no idea," Ellen said. "It's so difficult because we're up against the state. We just feel so powerless."

An IRS notice said EDD took their funds due to "unemployment fraud"... but neither of them had claimed unemployment, not even during the pandemic.

"It's scary because... we're like, who do we trust? Because it's the state that's doing this to us," Ellen said. "So we try to contact EDD, with no one to contact, there's nobody. It goes around and around and around..."

Later, Issac recalled that the EDD sent his boss a notice more than three years ago, saying Issac had applied for unemployment benefits -- when he did not.

MORE: Recipients of California unemployment benefits experience issues logging in to new EDD website

His employer quickly replied, saying Issac was working and did not apply for benefits, and any claim was fraudulent.

Issac assumed that shut the case.

It did not.

"We did all the right things. My HR team did all the right things. I thought the process was, you know, taken care of," Issac said.

Turns out the EDD kept paying the fraudster even after that alert. And now, EDD was coming after Issac for payback.

"You're the one who gave my money away, and now you're gonna take my money again," Issac said.

MORE: Missing EDD money? Here's why you should transfer funds to your own bank account

Issac filed a new fraud report with EDD, but heard nothing back. He tried calling, but no help.

"The person that I talked to, it didn't even sound official, right? Like at this point everything was fake to me," he said. "And they wouldn't give me any answers. They just said somebody will call you in a couple of weeks. I never got a call from anybody."

The couple had planned to use the refund for a family vacation, but EDD took all the money they had coming.

"I ended up having to get, like, a little moonlighting job on the side... so we could take that vacation," he said.

EDD has intercepted tax refunds from other ID theft victims too. More than a dozen came to 7 On Your Side for help over the past three years. EDD did not say how many citizens claim the agency unfairly seized their money.

MORE: EDD takes tax refund, garnishes wages of man who reported unemployment fraud in his name

ABC7 told EDD it had just taken $4,000 from an identity theft victim.

The agency quickly looked into Issac's case, but had no record of his fraud alerts, so we provided his contact information.

That's when EDD realized it had been sending benefits to the scammer's address, not Issac's. And not just $4,000 - EDD told Issac it sent $30,000 to the scammer... and EDD might have tried to get that back from Issac, too.

EDD said it didn't know it was sending money to a fraudster's address -- and not Issac's -- because: "people do move all the time and unfortunately there is no government database that maintains up-to-the-minute updates on people's addresses for any cross-matching purposes. The real culprit here is identity theft."

MORE: EDD fails to act as SF man reports ID theft in his name, gets benefits card anyway

EDD did not say why it kept sending money even after Issac's boss reported the fraud three years ago, but tells 7 On Your Side:

"We have continued to clean up eligibility issues on some claims from the pandemic that were difficult to complete with demands of the time... we continue to work hand in hand with investigators... to bring offenders to justice."

EDD finally did give Issac his money back.

"We're so thankful to ABC 7 On Your Side because you guys really saved us. You guys are like heroes to us. You saved us. You saved our money," Ellen said.

A state audit released last summer said EDD is still at a high risk of continuing fraud, but EDD has implemented a new ID verification process for every new unemployment claim. The agency says it should stop fraudulent claims before they get started.

According to a legislative analysis, people with commercial health insurance stand to save approximately $44.5 million dollars in direct charges for ambulance rides.

Take a look at more stories and videos by 7 On Your Side.

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