Unemployment insurance benefits are an essential part of California's economy. Workers statewide depend on these benefits to keep them going when they lose their jobs. Whereas unemployment benefits are supposed to be pursued by people who genuinely need them to stay afloat after losing their jobs, some ineligible people take advantage of the system, which constitutes unemployment insurance benefits fraud.

The California government treats unemployment insurance fraud cases harshly, as they cost the state and taxpayers an enormous amount in lost revenue. If you have been charged, you need to hire an attorney immediately. Being convicted of this crime could subject you to incarceration, hefty fines, and the loss of your professional license and significant rights.

At California Criminal Lawyer Group, our fraud crime attorneys have handled hundreds of insurance fraud cases, including unemployment insurance-related fraud. Depending on the facts of your case, we can mitigate the charges while negotiating a favorable plea deal or develop a solid defense strategy if the case goes to trial. Whichever way we handle your case, we always aim to achieve the best possible outcome. Call us for a consultation and to share your case details.

About Unemployment Insurance

California’s Unemployment Insurance (UI) program is a joint state-federal program. The program is overseen by the California EDD (Employment Development Department) and is particularly in place to help those who lost employment without it being their fault. The program aims to give these kinds of people some financial assistance while they search for another employment position. It pays at least forty dollars and, at most, four hundred and fifty dollars weekly for not more than 12 months.

EDD determines eligibility for UI benefits under the UI program on a case-by-case basis. Nevertheless, to be entitled to the benefits, there are particular conditions, including the following: 

  • You are currently unemployed (you should only pursue unemployment benefits once you are no longer employed; you cannot bring a claim anticipating that you will be out of work soon), or your employer has involuntarily reduced your working hours to below the required full-time.
  • You are presently seeking a new job.
  • You have been employed for the past eighteen months.
  • You are presently ready and physically capable of working immediately.

Even though unemployment insurance benefits are meant for people who have remained jobless without it being their fault, certain provisions under the relevant law may permit individuals who were either fired (not laid off) or resigned to recover benefits all the same. In this case, the EDD decides on eligibility exclusively based on the individual situation. And if you have any questions concerning these unique circumstances, you should direct them to the EDD.

The issue with the UI program is that many people usually take unwarranted advantage of the benefits it distributes. When this happens, it inflates costs for the employers and results in a pile-up of cases, leading to longer wait periods for those legally eligible for UI services.

When Does UI Fraud Occur?

Essentially, UI fraud, sometimes called EDD fraud, happens when a party makes a deliberate representation, a false ID, or a conscious concealment to recover, increase, defeat, or reduce unemployment benefits they are not eligible for or helps someone else do so. This crime is described under two different laws: the Penal Code (PC) Section 550 and the Unemployment Insurance Code (UIC) Section 2101.

A prevalent example of UI fraud is when an individual finds a new job, although at a lower pay rate, and still pursues unemployment benefits when receiving payment from their current employment. This is called double-dipping and is considered fraud under UIC 2102 and 2101.

For the prosecution to have the judge convict you of UI fraud, they must prove that you:

  • Made deliberate concealment, false representation, or submitted false identification.
  • When you did so, you intended to receive unemployment compensation under the federal and state unemployment insurance programs.

Note that as much as workers are the most common group of people to perpetrate UI fraud, employers too can engage in this kind of fraud, triggering criminal charges. Also, many instances constitute UI fraud by a worker. As a worker, you commit UI fraud by:

  • Working a new job while recovering unemployment benefits and neglecting to tell the EDD about that employment.
  • Recovering other kinds of compensation benefits, like workers’ compensation or pension, without notifying the EDD.
  • Utilizing fake ID details (name, details regarding your employment, or social security number) to collect UI benefits.
  • Living in California yet trying to recover compensation from another state.
  • Cashing another individual’s unemployment check when they have not authorized you to do so.
  • Creating a non-existent employer and including yourself as qualified for unemployment benefits.
  • Not seeking work yet claiming to be to recover unemployment benefits.
  • Presenting untruthful information about why you were rendered jobless.

As the employer, you violate PC 550 or UIC 2101 by:

  • Intentionally providing untruthful information regarding why you terminated a worker or the wages they earn to evade contributing to the UI program.
  • Knowingly concealing deductions from workers and willfully neglecting to pay those deductions to the Employment Development Department.

Investigating UI Fraud

The EDD is generally in charge of investigating UI fraud accusations. Most tips they receive are from their local offices that process initial applications and from citizens. Once the EDD suspects fraud, its investigation division takes charge of the case and investigates the claims.

It may be an instance where you supposedly used false employer information. If so, the investigation unit will call the employer you mentioned to validate your submitted details.

Or, it may be an accusation that you provided incorrect information regarding actively looking for a job. Here, the investigator will contact the anticipated employers you included on your form to verify that you applied for an employment position.

If the accusation involves you using someone else’s ID details, the EDD can generally disclose the truth relatively quickly.

For some investigations involving unemployment benefits fraud, the EDD’s investigation unit will even go to the extent of utilizing surveillance videos. And if it reasonably believes that any form of UI fraud has transpired, it will scrutinize the evidence and the accusation.

If the department discovers irrefutable evidence of fraud during its investigation to persuade a district attorney to press criminal charges, it will take its findings to the local prosecuting agency. And if it thinks the district attorney will not act on the report, it will simply hold on to it just in case it obtains more evidence against the suspected person.

Criminal Penalties

The possible criminal punishment for UI fraud varies depending on the type of violation. Penalties range a little, as most state fraud-related violations are wobblers. That means the prosecuting attorney could charge the case as a felony or misdemeanor violation. Their decision to file felony or misdemeanor charges depends on the factors surrounding the legal situation, the amount of money involved in the fraud, and the defendant's criminal history.

You can be found criminally liable for unemployment insurance compensation fraud under the two code sections of California law prohibiting this violation.

Punishment Under UIC 2101

Under UIC 2101, intentionally concealing material facts, making false statements, or using a fake identification, like a forged Social Security Number, to receive UI benefits is an offense. This form of insurance fraud is deemed a wobbler.

If found criminally liable for a misdemeanor violation, you may be subject to at most 12 months of custody, a fine not exceeding 20,000 dollars, and summary probation. And if found criminally liable for a felony violation, you may be subject to three years, two years, or sixteen months in prison, fine not exceeding 20,000 dollars, and felony probation.

Punishment Under PC 550

PC 550 is California's overall insurance fraud law. If the D.A. decides to prosecute you according to this statute, the precise amount involved in your fraud case will determine your penalties.

You will face misdemeanor charges if the fraud amount is nine hundred and fifty dollars or less. The consequences of a conviction will include half a year of custody and up to a thousand-dollar fine.

You will face wobbler charges if the fraud amount is nine hundred and fifty dollars or more. If the value is more than nine hundred and fifty dollars and you have been found liable for committing a misdemeanor violation, your jail sentence will increase to a year, and your fine will increase to at most ten thousand dollars.

And if the value of the supposed fraud exceeds nine hundred and fifty dollars or exceeds nine hundred and fifty dollars in any one-year consecutive period, you may face felony charges. The legal consequences of a conviction will include five, three, or two years of custody, a fine of up to fifty thousand dollars, or twice the fraud amount, and felony probation.

Being convicted of UI fraud could also impact your professional license since it is categorized as a violation involving moral turpitude, which applies to all California fraud convictions. Also, if convicted of UI fraud, your eligibility to collect (or potentially keep) any paid unemployment insurance benefits will be revoked—the court will mandate you to refund the cash you obtained illegally to the EDD and impose a thirty percent penalty on the total amount you received.

And since UI fraud is a crime involving moral turpitude, it may negatively affect your immigration status. California immigration laws have provided that crimes involving moral turpitude can lead to an immigrant being deported or labeled inadmissible. Therefore, a conviction under PC 550 or UIC 2101 can have detrimental immigration consequences if you are an alien.

Restitution Instead of Prosecution

Based on the facts of your case, your lawyer could arrange with the EDD so you can pay restitution to the department, and in turn, the department would not pursue criminal prosecution. Should the department agree and you make the reimbursement payments promptly, you will avoid criminal charges. But should you neglect to pay, the EDD might initiate criminal charges at any time.

Expungement for UI Fraud Insurance

All criminal convictions under UIC 2101 or PC 550 generally qualify for expungement because they subject the defendant to a jail sentence instead of prison time. Per PC 1203.4, a person can apply for an expungement if they have served their probation or jail term, whichever applies. An expungement frees a person from most of the hardships associated with a criminal conviction, for example, difficulty securing employment or renting an apartment.

Crimes Related to UI Fraud

Since UI fraud often involves perjury, forgery, and theft accusations, prosecutors may press the following criminal charges instead of or alongside unemployment insurer fraud.

PC 470, Forgery

Under PC 470, using, altering, or creating written material aiming to defraud is illegal. Doing so constitutes a forgery offense. You commit forgery in connection with UI fraud if you pursue unemployment insurance benefits by, for example, signing another person's name as the actual applicant or signing for your employer or another administrative individual who must validate your application. 

The prosecution could press forgery charges alongside or instead of UI fraud. Forgery is considered a wobbler violation. If found criminally liable for a misdemeanor, your punishment may include informal probation, incarceration in jail for 12 months, and a fine of up to $1,000. If convicted of a felony, you may be subject to felony probation, incarceration in jail for at most three years, and a fine not exceeding $10,000.

PC 472, Possessing, Forging, or Counterfeiting a Fraudulent Public Seal

If you counterfeit or forge a public seal, for example, on a counterfeit or forged UI application, the D.A. could charge you with both unemployment insurance fraud and PC 472 violations. Violating PC 472 is a wobbler offense. If convicted of a misdemeanor, you will be subject to 12 months in jail and up to $1,000 in fines. And if convicted of a felony, you will face a prison sentence of at most three years and up to $10,000 in fines.

PC 487, Grand Theft

PC 487 prohibits the illegal taking of property belonging to someone or an entity when the property is worth more than nine hundred and fifty dollars. Property includes labor, money, land, or personal property. So, if you use fraudulent means to obtain unemployment insurance compensation worth more than nine hundred and fifty dollars, the D.A. could accuse you of grand theft and UI fraud.

Grand theft is a wobbler offense. If convicted of a misdemeanor grand theft, you will be subject to 12 months in custody and a fine of $1,000. If pronounced guilty of grand theft as a felony, your punishment may include formal probation with at most a year of jail or sixteen months, two or three years in custody, and a fine of up to $10,000.

PC 118, Perjury

You commit perjury when you intentionally give false details when you have sworn to speak honestly. So, for example, if you use the wrong name or false social security number or deliberately forge any other details when applying for unemployment insurance benefits, the D.A. could press perjury and unemployment insurance fraud charges simultaneously. Perjury is considered a felony offense. If convicted, you will face at most four years of custody and a fine of not more than $10,000.

PC 182, Conspiracy

PC 182 criminalizes conspiring to perpetrate any criminal offense. Should you plot with someone else, that is, agree to execute an illegal act to either deny lawful unemployment benefits or obtain fraudulent benefits, you will face felony charges. If convicted, you will face the same repercussions as you would for being found guilty of UI fraud.

Legal Defenses Against California UI Fraud

There are various legal defenses a skilled attorney can argue for you to help you beat all types of UI fraud charges. Note that every UI fraud case is unique, and the defenses your lawyer will present depend on the specific facts surrounding your case. However, some of the most prevalent defense strategies against these charges include the following:

Mistaken Identity or False Accusations

Proving your innocence is the best defense. Innocent people can be accused of unemployment insurance fraud for several reasons. Perhaps somebody in your workplace filed for fraudulent unemployment benefits and tried to escape their liability by pinning the fraudulent action on you when interrogated. Or, it could be that you are the victim of identity theft, and, in turn, you are also the victim of mistaken identity because you are not the person who presented the fraudulent claim. In both cases, your lawyer can successfully uncover the key facts to acquit you.

Coerced Confession

This legal defense would apply to your case if you were charged after you confessed to committing UI fraud. California law provides that law enforcement may not use overbearing tactics to obtain a confession. If your lawyer can prove the police forced you into confessing, the judge may exclude the confession from the prosecution's evidence or dismiss the case if you were pressured into admitting an offense you did not commit.

Insufficient Evidence

UI fraud cases are on the rise in California. The government's response to these increasing cases is intensifying investigations and prosecutions. Consequently, prosecutors have become overly aggressive in these cases and often jump to conclusions or rush to judgment in pursuing fraud accusations.

As a result, there is a rising number of prosecutions with insufficient evidence that the defendant intentionally committed fraud. If there is inadequate evidence in your case for the judge to find you guilty beyond a reasonable doubt, they will have no choice but to acquit you of all charges.

Consider this example: You have been accused of intentionally withholding insurance deductions from your workers and failing to remit them to the Employment Development Department. If you do not personally oversee payroll issues or the books, you may have been unable to notice that the person in charge withheld the deductions. If the D.A. does not have sufficient evidence to link you to the criminal offense, the judge should acquit you of the charges against you based on the inadequate evidence defense.

Lack of Fraudulent Intent

It is essential to note that the burden of proving beyond a reasonable doubt that you intentionally presented false identification or information aiming to receive benefits illegally lies with the prosecutor. In other words, you must have specifically intended to defraud the EDD. If the D.A. cannot demonstrate your specific intent to commit fraud, the court may acquit you of all charges.

Your lawyer may successfully argue that you reasonably believed you presented a valid unemployment insurance claim, you may have unintentionally given the EDD incorrect details, or you did not know you had to report freelance income to the EDD, meaning you committed an honest mistake. If your attorney can cast reasonable doubt regarding your intent, your odds of avoiding a UI fraud conviction will be high.

Plea Bargain Negotiation

Let us face the facts. Yours may be a case where you are guilty beyond a doubt. In other words, the evidence against you is overwhelming and obvious, and no legitimate defense strategy exists. In that case, your lawyer can try negotiating a favorable plea deal with the prosecution.

A plea deal effectively minimizes penalties when there are no weaknesses in the prosecutor's evidence. In exchange for your no-contest or guilty plea, the D.A. may agree to reduced criminal charges and a lenient sentence.

Contact a Knowledgeable Fraud Crimes Lawyer Near Me

If you face UI fraud charges, you should stay calm and call an experienced fraud crime lawyer for help. An attorney who understands how local prosecutors and judges work can apply that knowledge to represent you. While this might sound straightforward, the reality is complicated. The attorney will have to file the necessary motions, negotiate possible deals, and thoroughly review your case facts before developing a solid defense strategy.

At California Criminal Lawyer Group, our lawyers are highly experienced in handling unemployment insurance fraud and other forms of fraud cases for clients charged in Anaheim. To ensure you obtain the best outcome possible, call us at 714-766-0965 for a complimentary initial consultation.