EDD scam: How investigators caught inmates running EDD scam ring out of jail

SACRAMENTO, Calif. (KGO) -- ABC7 has learned more about how the San Mateo County District Attorney's office broke open an EDD fraud case that led to the arrests of 21 people.

An alert investigator is getting the credit for uncovering the scheme.

EXCLUSIVE: Insiders say California EDD unemployment benefit scam was get-rich-quick scheme

That investigator was in the midst of working on an unrelated case when he stumbled upon some stunning information.

Eight inmates inside the Maguire Correctional Facility in Redwood City face charges of taking part in a scheme to defraud the state out of $250,000 dollars in unemployment benefits.

Some were awaiting trial. Some were serving time on other charges.

They are some of the 21 defendants, which also include three inmates from three other jails and prisons.

"So one of our inspector who works in our office was working on another case, unrelated case, and was listening to some jail calls," said Sean Gallagher of the San Mateo County District Attorney's office.

VIDEO: DA explains how inmates at San Mateo County jail got $250K in EDD benefits
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While a million workers still can't get unemployment benefits, EDD paid out a quarter million dollars to jail inmates running a scheme behind bars.



That investigator, Jordan Boyd, had been monitoring calls made from the jail as part of a completely different investigation.

Gallagher says inmates are warned that their phone conversations are routinely recorded.

The inmates discussed Social Security numbers and other personal identifiable information being passed to the outside to individuals who applied for unemployment benefits on their behalf.

"In order to perpetuate the fraud, there has to be a lot of personal identifying information out there -- names, addresses, Social Security," Gallagher explained.

A search warrant obtained by 7 On Your Side said investigators "reviewed over 200 recorded jail calls, tablet messages and video visits."

The investigator began monitoring "inmate Luis Mariscal's recorded jail calls to inmate Lionel Jericho Mccoy, Jr."

RELATED: Jail inmates, including convicted murders, collect EDD benefits while unemployed Californians can't get them

East Palo Alto and San Jose Police arrested McCoy in a raid in San Jose in 2016 for the murder of Christopher Puckett, in what police described as an ongoing dispute.

Investigators say McCoy shot Puckett on this street in East Palo Alto in June of that year. McCoy is serving a sentence of 50 years to life for that murder at Corcoran State Prison.

In the search warrant, Boyd states that working with the Sheriff's office, he "obtained photographs of a homemade telephone book Mariscal kept under his cell mattress... I quickly discovered approximately 200 calls between Mariscal and McCoy that spanned March 14, 2020 to June 11, 2020."

McCoy is accused of receiving those calls on three cell phones smuggled into his prison cell.

But he wasn't the only one to get calls.

"They were phone calls between inmates and some people on the outside, who were the ones who were making the applications online," Gallagher said.

Gallagher says the investigation revealed numerous lapses at EDD, including not verifying employment history in the rush to get benefits out. The good news: authorities say they've recovered $150,000 of the $250,000 believed bilked from the EDD by the 21 suspects. More charges are expected.

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

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