In California, when you lose a job, you are entitled to unemployment benefits for a minimum of 12 months as you continue looking for another post. When an applicant for the benefits provides false or incomplete information, they may face fraud charges. At the California Criminal Lawyer Group, we understand these cases of fraud are on the rise, especially during this time of COVID-19 pandemic when many people are losing jobs. For this reason, our attorneys have highlighted details of unemployment insurance fraud in this article.

Explanation of Unemployment Insurance

In 1935, the federal and California state government formed an insurance program called unemployment insurance. The program is run in California by the Employment Development Department (EDD), and it is designed to help employees who lose their jobs through no fault of their own to have financial security for at least one year as they search for a new job. Take note that if you are fired because of something you did wrong or quit a job, you will not receive unemployment benefits unless under exceptional circumstances.

The least amount you can receive from the program is $4o per week, and the maximum amount is $450 per week. Not everyone is eligible for the benefits. Some of the requirements for eligibility include:

  • You must be unemployed or had your hours involuntarily reduced to less than full-time

  • You are actively seeking employment

  • You are ready, willing and physically able to work immediately

  • You must have worked in the last one and a half years

As mentioned earlier, unemployment benefits are for those that lose their jobs because of something that is not their responsibility. Under exceptional circumstances, however, persons who quit jobs or get fired because of their fault can receive unemployment benefits. Whether you qualify for the benefits under these circumstances is up to the Employment Development Department. EDD evaluates each case at a time to give a verdict. Besides, if you have any questions about the type of exceptional circumstances that will help you become eligible for the benefits, you should direct them to the EDD.

Although the program has a lot of benefits, people take advantage of it to receive insurance benefits that they don’t deserve. And concerning the insurance program, if people take unjustified advantage to receive the funds, employers will be forced to contribute more to the program. Additionally, there will be a backlog of cases in the system, making those legally entitled to the benefits experience delays.

Understanding Unemployment Insurance Fraud

In accordance with UI Code Section 2101, insurance fraud occurs in this program when you receive unemployment insurance benefits based on:

  • Willfully providing false information to the EDD

  • Intentionally hiding material facts or

  • Present false identification to the EDD to obtain or increase your unemployment benefits or to deny benefits to an otherwise eligible employee.

It’s worth noting that apart from charging you as per UI Section 2101 when you engage in the above conduct, the prosecutor might also charge you in accordance with PC 550 which focuses on general insurance fraud.

The Investigation Process

How does the EDD know who to investigate for this form of insurance fraud? They receive tips through their hotline (800) 229-6297. Other people use the EDD’s report fraud site to report these incidences of fraud. But in most cases, EDD begins investigation if their field officers notice red flags when collecting unemployment insurance applications. The common red flags include a forged seal or signature.

Once they suspect fraud, the investigation team takes over to probe the accusations. If they come across substantial evidence enough to convince a prosecutor to file criminal charges against you, the report of their investigation goes to the EDD. However, where there is no solid evidence, and they believe that the claim will be rejected, they keep the report as they look for more evidence. You should be careful about an investigation because people who found cheating the system are usually subject to hefty fines and custody in jail.

Examples of Unemployment Insurance Fraud

UI fraud can be committed by both the employee and the employer in many ways. Below are examples of the common ways in which people commission this form of fraud.

  1. Examples of Employee Fraud

There are many ways in which workers or claimants violate the Unemployment Insurance Code section 2101 and PC 550. As an employee, you will be committing Unemployment Insurance fraud if you do the following:

  • Work full time or part-time while receiving unemployment insurance benefits without reporting the work to the EDD, which is the authority in charge of the California Unemployment Insurance program.

  • Collect pension from a retirement plan or worker’s compensation benefits and fail to advise the EDD about it.

  • You live in California and obtain or attempt to obtain Unemployment Insurance benefits from another state

  • Use a false identity to work and simultaneously to receive unemployment benefits

  • Cash another person’s unemployment insurance benefit check without authority

  • Fabricate work-search efforts to show you are actively searching for a job when you are not looking for one.

  • Establish a made-up employer and list yourself as one of the workers that qualify for the program.

  • Submit a false reason why you are not working like a lay-off, whereas in the real sense, you were fired because of poor performance to obtain unemployment benefits.

  1. Examples of Employer Fraud

It’s not only workers that commit this form of fraud. Employers, in many cases, have been accused of taking specific steps to deny former employees who qualify for compensation unemployment benefits. The aim of doing so is to defraud EDD. Below are the things employers engage in that are deemed as Unemployment Insurance fraud:

  • Failing to submit payments or intentionally holding payments deducted from employees to the EDD for unemployment insurance as provided by the law.

  • Deliberately giving false information to the agency on the reason for terminating the employee. Presenting false information on the salary an employee was receiving before being fired also amounts to Unemployment Insurance fraud.

If the investigation team from the EDD finds strong evidence against an employer or employee, they present the file to the local agency.

How a Prosecutor Shows You Committed Unemployment Insurance Fraud

Based on the type of fraud you are suspected of committing, the EDD will use the report from the investigation agency to show you are guilty of the crime. Some of the things the agency uses to prove that you are guilty of the crime are:

Fabricating Work-Search Efforts

If you lied about looking for a job, an employee of the EDD could contact the business owners you claim to have visited to see if you went looking for a job or not. In case these employers say they never saw you or received any job application from you, then that will be enough to prove insurance fraud.

Using Another Person’s Identity

If you are suspected of falsifying another person’s identity, it will be easy for the investigation unit from the EDD to find the person whose identity you falsified. They can also check wage records forwarded to the California tax division, use CCTV footage, or encourage people to give anonymous tips by calling the EDD’s hotline. The prosecuting attorney uses these resources to show that you were involved in unemployment insurance fraud.

Penalties for Unemployment Insurance Fraud

Several penalties may be imposed on you upon conviction for unemployment insurance fraud. The punishment is imposed based on PC 550 and Unemployment Insurance Code 2101 regulations. And because several statutes regulate this form of fraud, it’s essential to understand that the sentence you get for this crime varies.

  1. Unemployment Insurance Code 2101 Penalties

If the prosecution proves that you made a false statement intentionally, hid a material fact, or used a false identity to obtain or increase unemployment benefits, you will face misdemeanor or felony consequences. Misdemeanor consequences include:

  • Informal probation

  • No more than twelve months in county jail

  • A fine not exceeding 20,000 dollars

A felony conviction under this Code will be subject to the following penalties:

  • Felony probation

  • One and a half years, two or three years of incarceration in a state prison

  • A maximum fine of twenty thousand dollars

  1. Penalties Under PC 550

Should the prosecutor prefer to charge you for unemployment insurance fraud under PC 550, the crime will be a wobbler. If the amount of insurance fraud within one year doesn’t exceed $950, you will be facing misdemeanor charges. The punishment upon sentencing includes:

  • A half a year in county jail

  • A fine no more than one thousand dollars

Take note that if you end up with a sentence for a misdemeanor as a wobbler, the punishment upon sentencing will be twelve months in jail or a fine of up to 10,000 dollars.

If the amount of insurance fraud is at least 950 dollars or exceeds 950 dollars within twelve consecutive months, the prosecutor might prefer felony charges against you. Upon conviction, the punishment will be as follows:

  • 24, 36, or 60 months in a county jail

  • A fine of up to 50,000 dollars

  • Twice the amount of insurance fraud whichever is greater

  1. Additional Penalties

On top of the above penalties, a conviction for this form of insurance fraud will subject you to the following penalties:

  • Paying back the EDD agency, the number of benefits you received illegally plus a 30% penalty on the amount.

  • Ineligibility to receive or retain any paid benefits

  • Professional discipline because upon sentencing, your license will be affected

Keep in mind that consulting with the California Criminal Lawyer Group can help you a lot when you are facing accusations of unemployment insurance fraud. With an attorney, instead of being subject to criminal charges, you can negotiate with the EDD to pay restitution. Whether your request for restitution instead of criminal charges will be accepted depends on the circumstances of your case.

If the agency agrees not to file criminal charges, you will reimburse them for the unemployment benefits received promptly. Failure to meet the terms of restitution may result in the agency instituting criminal proceedings regardless of the amount you had reimbursed.

You should reimburse all the amount as agreed, especially if you are a professional license holder, or your job requires a good reputation. Criminal charges alone without a conviction can affect your career. Therefore, get an attorney to negotiate for restitution in place of criminal charges immediately after being informed of the allegations of unemployment benefits fraud.

Legal Defenses for Unemployment Insurance Fraud

Although criminal sentencing for this form of insurance fraud can have significant consequences on your life, a criminal defense attorney can help you prevent these repercussions. Some of the legal defenses that you can use to fight these charges include:

Lack of Fraudulent Intent

As per California fraud laws, a prosecutor must prove you had fraudulent intent to be guilty. If the prosecution cannot demonstrate fraudulent intent in your case, the charge will be dismissed. The good thing with criminal charges is that the prosecution bears the burden of proof.

If they can prove you acted with fraudulent intent, your defense attorney can assert that the lack of knowledge or misunderstanding of unemployment insurance laws is what resulted in the allegations of fraud. This would include your reason for quitting the job or why you were fired.

Also, you can argue that you believed you were submitting a legitimate claim, or you accidentally provided the wrong social security number. If the charges are for receiving unemployment benefits while you are still working, you could argue that you didn’t think it’s necessary to report freelance wages to the agency. If you make these assertions, you will prove that you lacked fraudulent intent, and you shouldn’t be held accountable for breaching the law.

Insufficient Proof

With the current coronavirus pandemic, many employees have lost jobs, and cases of unemployment benefits fraud have increased significantly. The government has responded to the rise in fraud crimes by speeding up investigations and prosecution of insurance fraud cases. Due to the pressure from the government, EDD investigation units are rushing investigations that have led to weak evidence or wrong conclusions.

For a conviction to happen, the prosecuting attorney must prove beyond a reasonable doubt that you are guilty. So, if the evidence available is not enough to show that you had intent or knowledge of the crime, there will be an acquittal.

For instance, if you are an employer facing accusations of withholding employees deduction and failing to submit them to the EDD, you will not face charges or conviction for fraud if you are never involved in preparations of the payroll. The prosecution will not have any evidence to link you with the fraud.

False Accusations or Mistaken Identity

The best way to defend against any fraud charges is by showing the jury and the judge that you are innocent. You can do this by claiming that the allegations against you are false. Maybe someone jealous of you or seeking revenge might have reported you to the EDD. It might also be someone who filed a fraudulent claim, and after questioning, the person decided to blame you for it.

Similarly, you can claim that you are a victim of mistaken identity. Your attorney can assert that someone stole your identity and used your employment information to submit a fraudulent claim. Your attorney will, however, need proof to exonerate you from these false allegations.

Plea Deal

At times the evidence against you might be overwhelming such that no defense strategy can prevent a conviction. If that is the case, your attorney can negotiate with the prosecuting lawyer for a plea bargain. If there are too many cases in court or when the evidence against you by the state is weak, you can negotiate for a plea deal.

The plea bargain will allow you to get sentencing by pleading guilty or no contest to a lesser charge or sentence. In exchange, the prosecution will dismiss the more serious unemployment benefits fraud charge.

Expunction of Unemployment Insurance Fraud

Because a conviction for unemployment benefits fraud involves jail sentence under both PC 550 and Unemployment Code 2101, you may be eligible for expungement. Reach out to the California Criminal Lawyer Group to learn more about how you can delete or erase the conviction from your record. Expunging a criminal conviction has a lot of benefits, which is why you should consider it if you are eligible.

Related Crimes

Conspiracy, perjury, theft, and forgery are frequently linked to unemployment benefits fraud. For this reason, the prosecutor might charge these crimes alongside or on top of unemployment insurance fraud.

  1. Grand Theft

PC 487 is the statute that outlines grand theft. According to the statute, it is a crime to unlawfully take someone’s or an entity’s property whose value exceeds $950. In the definition, the property includes money, labor, or land.

PC 487 is relevant in unemployment insurance fraud because if you received benefits amounting to a minimum of $950, you would be facing grand theft charges too. The prosecuting attorney will charge you with a wobbler whose consequences include 36 months in jail or a fine and penalty assessment fee of no more than 10,000 dollars.

  1. Forgery

PC 470 is the statute that outlines forgery. Under the statute, it is unlawful to change, create, or use a written document with intent to defraud. The crime is related to Unemployment Insurance fraud if you make an application for these benefits by signing another person’s name as an applicant or you sign for your employer or supervisor where they were required to sign to confirm the application.

If this is the case, the prosecutor can choose to charge you with forgery on top of the unemployment insurance fraud charges. And because forgery is a wobbler, if the prosecution elects to charge you with a misdemeanor and you end up with a sentence, you will be facing the following penalties:

  • Summary probation

  • Incarceration in a county jail for no more than 12 months

  • Court fines no more than one thousand dollars

In case they elect to file felony charges, the punishment for the offense includes:

  • Formal probation

  • A maximum of three years custody in a state prison

  • No more than 10,000 dollars fine

If the number of unemployment benefits received fraudulently is at most $950, the prosecutor registers the offense as a misdemeanor.

  1. Perjury

California PC 118 prohibits individuals from lying or giving false information when under oath. The offense is related to unemployment benefits fraud because the crime is committed when a person lies or gives false information when making an application for unemployment benefits.

The prosecution files perjury in California as a felony. If you end up with a conviction, you will be subject to custody in a California prison for a maximum of 48 months. Additionally, you might be asked to pay a fine of up to ten thousand dollars. Sometimes, the judge may impose formal probation in place of prison incarceration.

Cases, where you can be charged with perjury and unemployment insurance fraud, include when you present an application with a false name or social security number.

  1. Conspiracy

PC 182 is the statute that prohibits individuals from conspiring to commit a crime. Conspiring, in this case, means an agreement between people to engage in an act that violates the law.

Cases of conspiracy in unemployment insurance fraud are widespread because they usually involve more than one person. The common incidents involve:

  • Individuals conspiring to acquire unemployment benefits fraudulently

  • Individuals conspiring to deny valid unemployment benefits

Conspiracy is a felony and will subject you to the following penalties:

  • At least one-year custody in a county jail

  • A fine of up to ten thousand dollars

  • Both fine and sentence

Unemployment insurance fraud also involves having a fraudulent public seal, counterfeiting, or forging a seal. For this reason, the offense might be charged alongside California PC 472.

Find a San Jose Fraud Crimes Attorney Near Me

If you are under investigation for unemployment insurance fraud, or you have a pending case, you should speak to the California Criminal Lawyer Group at 408-622-0204. We understand the local judicial system and know how prosecutors and judges operate. For this reason, we are in a position to provide the best defense that will keep you off jail and ensure that your career is not affected by the criminal charges.