Unemployment Insurance (UI) fraud challenges California's efforts to provide financial support to those who have lost their employment through no fault of their own. Governed by California Unemployment Insurance Code 2101 and Penal Code 550, UI fraud encompasses actions that manipulate or exploit the system for unlawful gains. These actions include claimants who illegally receive benefits and employers who provide false information to avoid contributions.

California's Employment Development Department (EDD) administers the UI program, a safety net during economic hardships such as the COVID-19 pandemic. The consequences of such widespread fraud are far-reaching. Not only does it undermine the integrity of the UI program, but it also diverts critical resources away from those genuinely in need.

Given the severity of UI fraud, you will face severe consequences if you face a charge for such an offense in Fresno. So, you want to seek a competent lawyer to fight the allegations against you. At California Criminal Lawyer Group, we provide solid defense strategies tailored to specific factors surrounding your case.

The Meaning of Unemployment Insurance (UI/EDD) Fraud Under California Law

The Unemployment Insurance (UI) program in California, established in 1935, is a state and federal insurance program that the Employment Development Department (EDD) manages. The program aims to provide financial support to those who are dismissed from work through no fault of their own. To qualify, you should:

  • Be unemployed.
  • Actively seeking work.
  • Physically fit enough to work.
  • Have worked within the last 18 months.

The UI program helps beneficiaries with payments ranging from $40 to $450 weekly​​.

EDD fraud in California involves willfully making a false representation, concealment, or identification to unlawfully obtain, defeat, reduce, or increase benefits under federal or state programs. The California Penal Code and the California Unemployment Insurance Code govern this type of fraud. Offenders often serve serious sentences, for example, many years in prison​​.

The EDD is responsible for investigating reported UI fraud cases. It receives reports from the EDD field offices and the public. The offices identify potential red flags in applications. Upon suspicion of fraud, the EDD's fraud investigation department thoroughly investigates the allegations. The case is forwarded to local prosecuting agencies for criminal charges if the arresting officer finds enough evidence. The EDD also retains files for additional evidence collection in cases where claims are expected to be rejected​​.

Below are employee acts that the law considers EDD/UI fraud:

  1. You commit fraud by working and refusing to report your employment status to the EDD.
  2. Fraudulently collecting unemployment benefits while receiving other compensations like pensions or workers' compensation without reporting them to the EDD.
  3. Obtaining UI benefits in another state while residing in California.
  4. Using false information like names or social security numbers to receive benefits while employed.
  5. Creating a fake employer to list oneself as a worker eligible for UI benefits.
  6. Cashing another person’s unemployment checks without authorization.
  7. Falsely claiming to be actively searching for work.
  8. Misrepresenting reasons for unemployment, for example, falsely stating being laid off when fired due to poor performance​​.

Conversely, acts of employer EDD violations are:

  1. Providing false reasons for employee termination or incorrect wage information to avoid sending contributions to the UI program.
  2. Knowingly failing to pay withheld deductions to the EDD​​.

How to Fight Your Charges

If you face EDD fraud charges in California, a criminal attorney can help you maneuver the California justice system. An experienced attorney can help by challenging the prosecution's case and arguing for your innocence or reduced culpability. The lawyer's expertise is essential in interpreting UI laws, protecting your rights, and striving for the most favorable outcome given the circumstances of the case.

You Lacked Fraudulent Intention

In EDD fraud cases, a key defense aspect is demonstrating the absence of fraudulent intent. The law requires the prosecution to demonstrate that you intended to defraud. Your defense lawyer can argue for a not-guilty verdict if the prosecutor cannot provide evidence beyond a reasonable doubt. This approach involves showing that misrepresentations were accidental or due to misunderstandings, rather than deliberate attempts to deceive.

Examples include:

  • Believing that the claim submitted was legitimate.
  • Accidentally providing incorrect information, such as an erroneous social security number.
  • Being unaware of the requirement to report certain types of income, like freelance earnings.

If your defense attorney successfully argues the lack of fraudulent intent, the judge should not hold you liable for EDD fraud.

Insufficient Evidence

The rise in EDD fraud allegations has led to increased investigations and prosecutions in California. However, this urgency can sometimes result in courts pursuing cases with insufficient evidence against the accused. In such situations, a strong defense strategy is to challenge the adequacy of the evidence presented by the prosecution.

For example, being charged with knowingly and willingly withholding deductions from your employees and failing to submit them to the EDD may not directly involve managing the company's financial records. In such cases, the defense can argue for acquittal based on insufficient evidence if the prosecution cannot provide concrete evidence linking you directly to the fraudulent activity.

The key in this defense is demonstrating that the connection between you and the alleged fraudulent actions is not strong enough to warrant a conviction. This approach relies on a detailed examination of the evidence and often requires expert testimony or an in-depth investigation to establish the gaps in the prosecution's case​​.

You Were Falsely Accused

In EDD fraud cases, false accusations or cases of mistaken identity can lead to wrongful charges. Common scenarios include being falsely implicated in fraudulent activities by coworkers or being an identity theft victim. In these cases, the accused individual is not the actual perpetrator of the fraud.

Your defense attorney plays a crucial role in such situations by investigating the facts and presenting evidence to demonstrate your innocence. They may use various investigative techniques to uncover the truth and prove that you were wrongly identified or falsely accused​​.

Plea Bargaining

Plea bargaining in California unemployment insurance (EDD) fraud cases is a complex process where you negotiate with the prosecution, often leading to pleading guilty or no contest in exchange for certain benefits. This process has various pros and cons that you must carefully consider.

The benefits of plea bargaining include:

  1. Reduced Charges and Sentencing. More often than not, accepting a plea deal results in lower charges and lighter sentences compared to what might result from a trial verdict​​.
  2. Saving Time and Money. Trials can be lengthy, stressful, and expensive, involving substantial attorney fees and expert witness costs. A plea bargain helps avoid these expenditures and the accompanying anxiety​​.

The demerits of plea bargaining are as follows:

  1. Proceeding on Insufficient Evidence. Prosecutors may offer plea bargains even in cases with inadequate evidence, lack of witnesses, or when a reduction or dismissal of charges won’t result in severe sentencing. This aspect of plea bargaining can allow cases with weak evidence to advance through the judicial system​​.
  2. Legal and Life-Changing Consequences. Accepting a plea bargain involves pleading guilty, leading to serious consequences like parole, post-release community supervision, limited work-time credit, and the forfeiture of one's driver's license and vehicle. Furthermore, it can adversely affect employment opportunities, especially if the crime is related to the professional field of the defendant​​.

What Happens After Your Arrest and Prosecution?

If arrested and charged with unemployment insurance (EDD) fraud, you face varying consequences based on the particular nature of the offense. These outcomes can range from misdemeanor to felony charges, with penalties including the following:

  • Jail time.
  • Hefty fines.
  • Professional discipline.
  • Ineligibility for benefits.
  • The requirement to pay back fraudulently obtained benefits.

Sometimes, your lawyer and the plaintiff could make arrangements for restitution to avoid criminal charges, contingent on timely payments. Since each case is unique, different factors could influence yours. For example, consider the amount of fraud, your prior convictions, and the specific details of the offense.

Unemployment Insurance Code 2101

Under this statute, California law addresses the violation of willfully making a false statement or representation, knowingly failing to disclose a material fact, or using false identification to influence any benefit or payment under various federal and state unemployment insurance laws.

The penalties under this code depend on whether the prosecutor charges you with a misdemeanor or a felony. If charged with a misdemeanor, you face not more than one year in jail and a fine not exceeding $20,000. For felony charges, the penalties include a 16-month-, two- or three-year prison sentence and a fine not exceeding $20,000.

California PC 550 General Insurance Fraud

  1. Misdemeanor Penalties

Under California's Penal Code 550, when the alleged fraud amount is $950 or lower, it is typically charged as a misdemeanor. The penalties for such an offense include imprisonment in jail for not more than six months and a fine of not more than $1,000. However, if the aggregate amount of the claims exceeds $950 within any 12-consecutive-month period, these claims may be escalated to higher penalties as stipulated for larger fraud amounts​​.

  1. Felony Penalties

In cases where the fraud amount is over $950 or the aggregate amount exceeds this figure within 12 months, you face a felony charge. The penalties for a felony conviction under Penal Code 550 include imprisonment for two, three, or five years and a fine of up to $50,000 or double the fraud amount, whichever is higher.

In some instances, the sentence can include both imprisonment and a fine. Additionally, if the amount is significant but still under $950, the offense may be considered for felony charges based on the aggregate amount over a year​​.

Additional Penalties

Beyond the direct penalties of fines and imprisonment, you may face further consequences if convicted under Penal Code 550. These can include professional discipline (especially for crimes classified as those of moral turpitude, which many fraud offenses are), ineligibility to obtain or retain paid benefits, the obligation to repay the fraudulently obtained benefits, and a 30% penalty. Such additional penalties highlight the far-reaching impact of a conviction beyond the immediate legal repercussions​​.

Restitution In the Place of Criminal Charges

In certain situations, individuals accused of fraud under PC 550 could compensate the California EDD. This arrangement can lead to the EDD not pressing charges, contingent upon the accused making timely restitution payments. However, failure to adhere to the agreed payment schedule can result in the institution of criminal proceedings​​.

Related Offenses

In California, several offenses entail similar elements to unemployment insurance (EDD) fraud, each governed by specific penal codes. They include the following:

California PC 487, Grand Theft Law

Grand theft involves stealing personal property, real estate, money, or labor valued at over $950. It also includes theft of property from someone else's motor vehicles or firearms, irrespective of their value. Key elements of grand theft vary based on the type of theft, such as grand theft by larceny, false pretense, trick, or embezzlement. These elements generally include taking possession of someone else’s property without permission, having the intent to deprive the owner permanently or temporarily, and keeping the property for any duration​​.

Grand theft is a "wobbler" offense. So, the prosecutor could charge it as either a misdemeanor or a felony. Misdemeanor grand theft can lead to up to one year in county jail. Felony convictions may result in a 16-month, two-year, or three-year jail term, and for grand theft of a firearm, always treated as a felony, the same imprisonment terms apply. Additionally, there are penalty enhancements for high-value property theft, including additional prison time depending on the value of the stolen property​​.

Legal defenses against grand theft charges include lack of intent to steal, a claim of right where you believe the property rightfully belonged to you, consent from the property owner, and false accusations. Demonstrating a lack of criminal intent, rightful ownership, or consent can be pivotal in defending against these charges, as can proving the accusations are baseless or motivated by ulterior motives​​​​​​.

California PC 470, Forgery Law

In California, forgery involves falsifying a signature, seal, or counterfeiting documents with fraudulent intent. This includes signing another person's name, counterfeiting seals or handwriting, altering legal documents, and forging specific documents such as checks, bonds, and money orders​​.

A crucial element of forgery is the intent to deceive or lie to deprive someone of money, property, or legal rights. The court could rule that you had this intent even if no fraud or financial loss occurred​​.

Forgery is a wobbler; therefore, the prosecutor could charge you with either a misdemeanor or a felony. As a misdemeanor, it carries a maximum of one year in county jail or a fine of up to $1,000. Felony forgery can result in a jail term not exceeding three years and a fine of no more than $10,000​​.

When fighting the allegations against you, demonstrating a lack of intent to deceive is a key defense. For example, if the action was a prank without fraudulent intent, it could negate the charges​​.

In complex business or legal scenarios, you might be wrongly accused of forgery to cover someone else's guilt. Demonstrating false accusations is a valid defense​​. Also, if police coerced a confession to forgery, it could be excluded from evidence, potentially leading to case dismissal​​.

California PC 118, Perjury Laws

The California PC defines perjury as deliberately giving false testimony while under oath. The law classifies it as a felony under California law​​. For the court to find you guilty of perjury, the prosecutor must prove several elements:

  • You took an oath to testify truthfully.
  • You willfully stated information they knew was false.
  • The false information was "material," meaning it had the potential to influence the proceedings.
  • You knew you were making the statement under oath.
  • You intended to testify falsely when making the statement​​.

Perjury is punishable by a prison sentence not exceeding four years and a fine not exceeding $10,000. Judges may also award felony probation instead of prison time​​.

When fighting your charges, a primary defense is that you did not intentionally lie. This can be applicable if the false statement resulted from a mistake or misunderstanding​​​​. Attempting to correct a false statement after you have made it can indicate a lack of intent to provide false information​​. If the only proof of the statement's falsity is the testimony of one other witness, it may be insufficient to prove perjury​​.

California PC 182, Conspiracy Law

Criminal conspiracy under this law occurs when you agree with one or more other people to commit a crime, and any party commits an act to further that agreement​​. The elements of a conspiracy under California criminal law include the following:

  • Agreement between you, someone else, and other people to commit an offense.
  • An overt act taken to further or advance the agreement.
  • You must have done an overt act within California​​.

Conspiracy is a wobbler offense. The prosecution can charge you with either a felony or a misdemeanor offense. The penalties often depend on the underlying offense's penalties. If it is a conspiracy to commit a felony, the penalty will be equivalent to that for the felony itself​​.

You will need an experienced lawyer to fight your charges. You would have a valid defense if you withdrew from the conspiracy before committing any overt. Withdrawal must be affirmative and communicated to the other members of the conspiracy​​.

The court cannot convict you of conspiracy if you did not know that the act you were conspiring to do was illegal​​. The false accusation defense applies if the plaintiff wrongly accuses you of conspiracy involvement. The prosecution must prove that the defendant agreed and intended to commit the crime​​.

If there was no agreement to commit the underlying crime or you did not commit an overt act toward the commission of the crime, the court cannot convict you of conspiracy​​.

California PC 472, Law Against Forging, Counterfeiting, Or Possessing A Fraudulent Public Seal

California Penal Code 472 prohibits counterfeiting, forging, or possessing a fraudulent public emblem or seal, typically to make a document appear to be officially endorsed by a government agency​​. The prosecution must prove that you forged or counterfeited a seal representing California or another state, government, or corporation and intended to defraud​​.

Before the court can convict you for possession, the prosecution must show that you had a counterfeit seal, knew it was counterfeit, willfully concealed this fact, and intended to defraud​​. Penal Code 472 violations are "wobbler" offenses, meaning they can be charged as either misdemeanors or felonies. Misdemeanor charges can result in up to one year in county jail, while felony charges carry a maximum three-year prison​​ sentence.

Legal defenses to a Penal Code 472 violation include the following:

  1. No Intent to Defraud. A key defense is showing a lack of intent to commit fraud. The charge may be dismissed if there is no evidence of fraudulent intent​​​​.
  2. Lack of Knowledge. You cannot be convicted if you did not know the seal was forged. For example, if a counterfeit seal was placed in your possession without their knowledge​​.
  3. Authorized Use. Using a legitimate public seal with permission, such as from a government employer, is not considered forgery​​.
  4. Parody. Satirical or parodic depictions of public seals protected under the First Amendment are not considered forgery​​.

Find A Criminal Defense Lawyer Near Me

Unemployment insurance fraud jeopardizes the vital safety net intended for those who genuinely need it. While the financial losses are significant, the deeper harm lies in eroding public trust and diverting resources from those struggling to regain their footing.

Effective detection and prosecution efforts by the Employment Development Department (EDD) have helped curb fraud. Public awareness campaigns educate potential claimants about their responsibilities and encourage the reporting of suspected fraud. Technological advancements continue to bolster these efforts, refining algorithms to identify suspicious claims and streamlining investigations.

If you face charges related to unemployment insurance fraud in Fresno, it is crucial to seek legal counsel. We have the expertise to assist in such cases at the California Criminal Lawyer Group. Our knowledge of UI fraud laws will provide the necessary legal guidance and representation. You can contact us at 559-712-8377 to explore your legal options and ensure your rights are adequately protected.