Tens of thousands of prison and jail inmates, including convicted serial killers and notorious inmates like Scott Peterson, have carried out what prosecutors described Tuesday as possibly the largest fraud scheme in California history.
The alleged crimes, which center on pandemic unemployment benefits, could total as much as $1 billion, Sacramento County District Attorney Anne Marie Schubert said.
“The fraud is honestly staggering,” she said.
Between March and August, Schubert said, inmates housed in every California prison and in jails across the state filed 35,000 claims totaling $140 million in benefits.
Sometimes those benefits were paid directly to inmates inside the facilities, she said. In other cases, the money was sent to relatives and friends outside the prisons and jails.
In Kern County, district attorney Cynthia Zimmer said investigators were alerted to the scheme in September after the arrival of numerous money orders destined for inmates.
Sometimes the benefits included fake Social Security numbers and names like John Doe, John Adams or, in one case, “poopy britches,” Schubert said.
“Quite frankly, the inmates are mocking us,” she said.
In other cases, claims were made with real names. Among them were 133 of the state’s 700 death row inmates, including convicted criminals like Cary Stayner, who murdered four people near Yosemite National Park in 1999; Susan Eubanks, who murdered her four sons in 1996; and Peterson, who killed his wife and unborn son in 2002.
Earlier this year, Peterson’s capital sentence was overturned after the state’s high court ruled that there had been “significant errors” during jury selection in his trial. Prosecutors have said they will again seek the death penalty in the case.
Asked how much fraud was associated with Peterson’s claim, another prosecutor with Schubert’s office said “we know the number” but declined to provide it citing an ongoing investigation.
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A lawyer for Peterson, Pat Harris, did not immediately respond to a request for comment Tuesday, but told the Associated Press that investigators will find “that he had not a thing to do with any kind of scheme to get fraudulent benefits.”
Schubert said that claims totaling $420,000 had been paid to death row inmates.
She said the fraud could be carried out because unlike 35 other states, California lacks a system that “cross matches” prison and jail data with unemployment claims.
In a statement, Loree Levy, deputy director of the state’s Economic Development Department, said it was “pursuing how to integrate such cross-matches moving forward as part of enhanced prevention efforts during this unprecedented time of pandemic-related unemployment fraud across the country.”
The department declined to comment on specific claims, citing confidentiality requirements.
In a statement to NBC Los Angeles, California Gov. Gavin Newsom called the fraud “absolutely unacceptable” and said he’d directed emergency services officials to assemble a task force to help tackle the problem.
Tim Stelloh
Tim Stelloh is a reporter for NBC News based in California.
