Unemployment Insurance Fraud

Fraud is a serious offense as far as California laws are concerned. It is the kind of crime that can leave you spending several years behind bars and paying hefty penalties, among other consequences. Unemployment insurance scam is among the most prevalent fraud crimes in the state. It is because, through such fraudulent activities, a lot of eligible workers have been denied a chance to enjoy some benefits during their time of need.

If you are facing charges for UI fraud in California, you are right to be worried. You could face severe penalties if you get a conviction. That is why you need the help of an experienced criminal defense attorney. At The Los Angeles Criminal Defense Attorney, we understand the criminal laws better to help you with the legal process and defense. If you are in Los Angeles, CA, make contact with us today for the protection of your rights.

Overview of Unemployment Insurance in California

Unemployment benefits/insurance refers to the state and federal insurance plan that is meant to help employees whose jobs are lost through a fault that isn’t their own. In California, the program, which was established in 1935, is managed by the state's Employment Development Department. The money disbursed through the program is the total amount of the tax contributions made by employers for every employee they hire. The money is meant to caution employees who have lost their employment for the time they will be out of employment. Once the employee finds another job, they stop receiving the benefits until that time again when they will need it.

When a person loses a job, so many things are affected in their life. The person will, for instance, be unable to keep up with the payment of bills, as well as catering for him/herself and their family. California state and the federal governments feel that such a person should be helped financially, at least until they can secure another employment. The financial aid is supposed to run for a one-year maximum, within which the person should be actively seeking other employment. The sum of money a person can get through these benefits ranges from $40 to $450 per week.

Unemployment benefits are meant to benefit only the extreme needy cases. For that reason, a criterion has been formulated to help determine those that are qualified for the benefits. Some of the factors that will be considered before a person is included in the program include:

  • That they are unemployed at the time of the application. A person that is anticipating losing their job is not allowed to claim the benefits until they are actually out of a job. if your employer has given you notice, you can’t present a claim on the last day of your employment
  • The reason for the job loss should not be the employee’s fault. If you were laid down from your job because of a mistake you made, you are not eligible for unemployment benefits in California. similarly, a person who applies for a voluntary reduction of working hours cannot claim unemployment benefits
  • That he/she is actively looking for employment. The unemployment benefits are meant to help you manage your bills for a short period until you can find another job. It means that the person must be aggressively seeking another post. if not, he/she will be ineligible for the benefits
  • The employee must be prepared and willing to start working immediately. The state and the federal governments need to be sure that you will be up for employment as soon as an opportunity comes up.
  • The employee needs to have been actively working in the last eighteen months. It goes to show that the person was already taking care of their bills and other personal financial needs before they lost their job. It is assumed that a person who has not been in employment for a long time may have alternative means of survival.

Understanding California Unemployment Insurance Fraud

A lot of people have significantly benefited from the UI program. However, some will still find a way to profit even if they are not eligible. Other people provide false information so that they can get more money out of the program than they truly deserve. When such things are done, the people who truly deserve to enjoy these benefits do not get them. Others do not get to receive the benefits on time, and it affects their lives significantly. It explains why unemployment benefits fraud is an offense that is severely punished in the state.

In a nutshell, unemployment insurance is meant to help people who have genuinely lost their employment and are actively looking for another post. In this case, people who have been fired or those that have quit their jobs may not be eligible for the benefits. However, there are provisions of the law which may allow such persons to receive the benefits. If the Employment Development Department has not approved your application under exceptional circumstances, you are not allowed to use false information to qualify. If that happens, you may be charged with unemployment benefits insurance fraud, an offense that comes with severe penalties, as will be discussed later in this text.

From that understanding, unemployment benefits insurance fraud can be said to occur when a person takes unjust advantage of state/federal insurance benefits. When people are allowed to get away with such fraud, it will drive up the cost for employers, who contribute to the insurance program. The scam will also create a backlog in the EDD's system, which could see more unemployed employees waiting for longer times than usual to receive the benefits.  A person who has just lost his/her job may not have the means to cater to his/her family's needs unless an immediate solution is sought. If such a person is made to wait for an extended period to get financial aid, his/her family will suffer much.

Note that both employees and employers can commit Unemployment Insurance fraud.

What Qualifies as Unemployment Insurance (UI) Fraud?

It is good to know what the act qualifies as a fraud to understand the law against unemployment insurance fraud better. It will help an accused person determine whether or not they committed the said offense. From the legal definition provided under the unemployment insurance law, a person who commits this offense is one who does one or more of the following:

  • A person who provides false information intending to benefit from unemployment benefits illegally.
  • A person who deliberately conceals essential information that could disqualify him/her from qualifying for unemployment benefits
  • A person who provides false identification intending to obtain or increase benefits, or even to disqualify an eligible person from getting unemployment benefits

Here are ways through which employees/claimants can commit unemployment benefits fraud in California:

  • When an employee who is already working continues to collect unemployment benefits the law requires workers who are already receiving the benefits to report any changes in their employment status to EDD as soon as they happen. Therefore, if you have been receiving the benefits, and you get a job soon enough, you need to report it to the department immediately, and then stop collecting the funds from the insurance program.
  • An unemployed worker that is already receiving unemployment benefits is also getting other types of benefits, such as employees’ compensation benefits, devoid of reporting the same to EDD. The department needs to know any other kind of income the unemployed worker is getting to determine if they need financial help and how much of that help they need.
  • An employee that uses a false social security number, name, or employment data while they carry on with their work so that they can get some benefits. This, too, will be charged as identity theft in California.
  • An unemployed worker who lives in California and gets unemployment benefits but is also trying to get some benefits from another state
  • A person that creates a fabricated employer and list themselves as a former employee that is qualified to receive unemployment benefits
  • A person who cashes another person’s unemployment insurance checks without first obtaining their authorization
  • A person who pretends to be aggressively looking for employment while getting employment benefits, when in the real sense they are not
  • A person that provides false information on why they are not working anymore - A person that was fired from their previous job could state that he/she was laid back so that they can qualify to receive the benefits.

As mentioned above, employers, too, could violate unemployment insurance laws in more ways than one. Here are some examples of unemployment insurance frauds committed by employers:

  • An employer who intentionally provides falsified information regarding the reason why the employee was dismissed, or their earnings, so that they can avoid funding the unemployment benefits program.
  • An employer who willingly withholds deductions from his/her employees and fails to pay those deductions to the Employment Development Department (EDD)

Investigations Conducted on Those Suspected of Committing Unemployment Insurance Fraud

If an employee or employer is under suspicion of committing unemployment insurance fraud, they will first be investigated. The state's EDD is the body in charge of conducting such investigations. Since most fraudulent activities are done in secret, it is impossible to catch a person in the act. For that reason, the department relies on tips from various sources, and then it investigates those tips to determine whether or not they should charge the alleged offender with fraud. Most of these tips come from such sources as:

The Members of the Public

The department has a 'report fraud' section on its website, which members of the public can use to report any suspected fraudulent cases. Alternatively, members of the public are given a hotline number to call in case they have information to share with the department.

EDD Field Officers

The department has its field officers whose primary responsibility is to be on the lookout and report any issues workers might have concerning unemployment benefits. These officers collect and process applications, and so, they would be the first to notice any red flags on these applications that could result in fraud. Some of the things they check from these applications include forged signatures, forged department seal, or falsified information.

If the officers are suspicious of a particular application, they will report the matter right away to the department’s fraud unit for investigation. The fraud unit is well-trained in uncovering evidence that could be used against the alleged fraudster. If there is enough proof to show that the person has defrauded or was trying to cheat the department, the fraud unit will proceed to file a case in a criminal court.

Penalties for Those Convicted of California Unemployment Insurance Fraud

As mentioned earlier, unemployment insurance fraud is a severe offense in California, punishable by lengthy prison terms and hefty fines. The nature of penalties an offender receives is contingent on the exact type of fraud, for which they have been convicted, the facts of their case, and their criminal history. There are mainly two laws that the prosecutor can use to charge an offender that is suspected of having committed unemployment insurance fraud. They are:

  • Section 2101 of California Unemployment Insurance Law - It is the general law concerning unemployment insurance fraud in California
  • Section 50 of California Unemployment Insurance Law- This is a more severe version of the two offenses. It includes all the general cases involving insurance fraud in California State.

If an offender is charged under Section 2101, they might face a misdemeanor charge in a criminal court. The penalties for this will be a maximum of one year behind bars and/or a fine of not exceeding $20,000.

A person can also face a felony charge under Section 2101. If that happens, the consequences will be as follows:

  • Sixteen months, 2 or 3 years of incarceration
  • A maximum fine of $20,000 fine

If, on the other hand, a person is facing charges under Section 550 of the state laws, he/she is likely to meet the following penalties:

Misdemeanor Penalties

A person is likely to face a misdemeanor charge if the facts of their case are not severe or aggravating. The determination of how serious a fraud case is will be determined by the sum of money that is tangled in the fraud. In a case involving unemployment insurance fraud, a person is likely to face a misdemeanor charge if the sum of money involved is at or less than $950. For that, you will get a full jail sentence of 6 months and not exceeding $1,000 in fines.

If the sum of money involved goes beyond $950, the crime will be treated as a wobbler. If the sum of money is above $950, but you are charged with a misdemeanor, the jail sentence will be increased to a maximum of one year and the fine to $10,000.

Felony charges arise when the sum of money involved exceeds $950, or the total amount intricate in the fraud for 12 months exceeds $950. Again, the prosecutor may decide to charge the offender with a felony based on other factors. If that is the case, here are the possible punishments the offender is likely to get:

  • 2, 3 or five years in a jail sentence
  • Fines of not exceeding $50,000 or twice the sum of money tangled in the scam, the one that is more

On top of the criminal penalties listed, an offense such as this will attract additional penalties and other consequences that will affect various aspects of an offender's life. Some of the additional penalties an offender should expect if convicted include:

  • Professional discipline: Most criminal verdicts impact professional licenses, most notably those considered as crimes of moral turpitude. Fraud offenses are some of these. It means that a person may lose their professional license or find it hard to obtain one after their conviction
  • The person may be ineligible to receive or retain other paid financial benefits in California
  • The person may be expected to repay the benefits they have illegally obtained, plus a fine of about 30% the total amount

Defending Yourself Against Unemployment Insurance Fraud Allegations

If you are facing charges for an unemployment insurance scam in California and are afraid of the consequences of a conviction, it is advisable to get in touch with a competent criminal defense lawyer. The advantage is that there are many legal strategies that a skillful lawyer can utilize to help reduce your charges or have them dropped altogether. The most common of these strategies include:

No Fraudulent Intent

One of the facts of this offense is fraudulent intent, which the prosecutor needs to prove beyond a reasonable doubt for the offender to be found guilty. If it isn’t possible, then the court may not find sufficient reason to convict the offender. Your attorney can take advantage of that to argue that you didn’t have any fraudulent intent while doing whatever you did. If the court is unable to establish that you acted with a specific plan to defraud EDD, then your charges could be dropped or reduced. 

Your attorney could support your innocence by stating that you filed a legitimate claim. Also, it might be that you had accidentally provided a wrong piece of information. If you are facing charges for not disclosing your other sources of income, he/she may argue that you didn’t realize the need to provide that information to EDD. If the court accepts these claims, then it will be established that you didn’t have fraudulent intent and is, hence, not guilty of fraud.

Insufficient Evidence

As mentioned earlier, most people who commit fraud do not leave a trail of evidence behind. Therefore, it could be challenging for the prosecutor to collect sufficient evidence to support their case. The law demands that all the facts of a particular case must be proven beyond reasonable doubts for an offender to be determined culpable of the criminal charges they are facing. Your attorney could take advantage of the fact that the prosecutor does not have enough evidence against you to challenge their case. If successful, you cannot be found guilty of the charges you are facing.

Mistaken Identity/False Accusations

There are many people out there who have faced criminal charges for crimes they didn’t commit. For that reason, it will not be a surprise if someone accused you falsely for fraud. Again, it could be a case of mistaken identity, in which case you will be required to prove your integrity. Your attorney should work in finding proof of your integrity, as this may be the only way you will not be found guilty of the charges you are facing.

Some fraud cases involve other offenses such as identity theft. A person may have used your information to commit unemployment insurance fraud. It is crucial to find ways in which your attorney will prove that you are not the one that submitted the fraudulent claim for your charges to be dropped.

California Unemployment Insurance Fraud and Related Offenses

California has other offenses that are often charged together with or in place of unemployment insurance fraud charges. The most common of these include:

  • California grand theft, as provided under Penal Code Section 487 of California laws - It is the law against taking another person’s property values at more than $950
  • California forgery, as provided under Penal Code Section 470 of the state’s laws - It is the law against knowingly creating, using or altering another person’s document, intending to commit fraud
  • California perjury, as provided under Section 118 PC of the state’s laws - It is the law against giving false information, especially when under oath.

Find a Los Angeles Criminal Defense Attorney Near Me

If you are facing charges for unemployment insurance fraud in California today, you are better off hiring the best criminal defense attorney you can get. An experienced attorney will advise you and also come up with the best defense strategies against your charges. If you are in Los Angeles, CA, you could benefit significantly from the services of The Los Angeles Criminal Defense Attorney. Call us at 310-564-2605 today and talk to one of our top-notch attorneys.

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