Former SoCal EDD employee sentenced to more than 5 years in prison for $4.3 million fraud scheme

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Monday, February 7, 2022
More than $8B paid to criminals in EDD fraud
How did California handle its unemployment crisis compared to other states? The amount of unemployment funds stolen from California taxpayers in 2020 may total more than $8 billion -- four times higher than estimated just one month ago.

RIVERSIDE, Calif. -- A former employee for the California Employment Development Department living in Riverside County, was sentenced Friday to more than five years in federal prison for obtaining nearly $4.3 million dollars in fraudulent COVID-19 related unemployment relief claims.

A federal judge sentenced 44-year-old Gabriela Llerenas, of Perris, to 63 months in prison, and ordered her to pay $4,298,093 in restitution.

Llerenas took advantage of the additional COVID-19 unemployment assistance, through the CARES Act aimed at helping workers and businesses most impacted by the pandemic, to file fraudulent insurance benefits from April to October 2020, the U.S. Department of Justice said.

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The fraudulent claims would contain false employment information identifying the claimants as "self-employed independent contractors" negatively affected by the pandemic, according to officials.

"Llerenas obtained some of the names, Social Security numbers and other identifying information she used to submit the fraudulent claims through her prior work as a tax preparer," said DOJ. "Llerenas also falsely stated on some of the applications that the claimants were residents of California entitled to unemployment insurance benefits administered by EDD when in fact they lived elsewhere."

The DOJ also says that Llerenas inflated the amounts of income reported on some applications to maximize the benefit amount.

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"Llerenas charged the named claimants a fee for filling the applications, which was often paid out of the fraudulently obtained benefits. In at least one case," said DOJ. "She told the named claimant that she was still employed at EDD and could control the distribution of the unemployment insurance benefits, and then demanded an additional payment for 'releasing' the benefits."

As a result of the fraudulent applications, EDD authorized Bank of America to mail debit cards at the different addresses Llerenas provided, which included addresses to her own home, her husband's workplace, mother's apartment, friends, and other family members.

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RELATED: EDD estimates nearly $20 billion paid to fraudsters since start of pandemic

The California Employment Development Department (EDD) estimates nearly $20 billion have been paid to fraudsters since the start of the pandemic.

In total, 197 debit cards were fraudulently issued resulting in losses to the government totaling nearly $4.3 million. Over $600,000 in cash was seized from Llerenas as part of the investigation.

Llerenas, who had worked as a disability insurance program represented at EDD, resigned in March 2002 after she admitted to fraudulently authorizing and paying disability benefits administered by EDD. She was sentenced to 37 months in prison for that scheme.

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After just over a year in charge, EDD Director Rita Saenz is resigning and will be replaced by Chief Deputy Director of External Affairs Nancy Farias.

The Pandemic Unemployment Assistance benefits ended on Sept. 4, 2021.