Inmates at Monterey County Jail may be involved in statewide EDD scam

SALINAS, Calif. (KION) Thousands of inmates in California, including death row inmates, may have received up to a billion dollars from the state's unemployment benefits system in what prosecutors called "the largest ever taxpayer fraud to occur in this state's history."

The Monterey County District Attorney's Office now confirms that inmates at the Monterey County Jail may be involved in the fraud and that they are a few months into the investigation.

It began when officers with the Salinas Police Department overheard jail calls and heard the inmates talking about unemployment insurance.

Soon after, investigators say inmates were handling unusually large amounts of money within the facilities in instances where money was sent to people outside the facilities or thousands were spent on jail books.

They contacted Cathy Palozolo at the jail in hopes of figuring out what was happening. The DA's Office said they could not get EDD to give them information, so they contacted the Department of Labor, which was more receptive.

“When the COVID outbreak came, the federal government loaded a bunch of money for extra unemployment insurance, the plan was to get the money to the people as fast as they could because they didn’t want the economy to collapse," says Deputy District Attorney Steve Somers.

Investigators sent a list of inmates who had been in custody, and they found that many of them had claims for unemployment in their names.

They compared the social security numbers of the inmates to the applications and found that there are at least 72 inmates who have claims for unemployment in their names during times that they are incarcerated.

Now the challenge facing investigators is whether inmates were collaborators in the crime or if they were victims of identity theft.

The unemployment claims amount to about $5 or $6 thousand dollars per person, according to the DA's Office.

They also said it has become apparent throughout the state that the scam did not stay within the jails and prisons.

If an inmate is found guilty of participating in the fraud, they could face three years in prison with a two year enhancement if it is over a certain amount of money. Each time someone recertified they were still unemployed could also be a separate charge.

The DA's Office said many recertified many times.

The DA's Office tells KION that this may just be the tip of the iceberg, saying they took the obvious names and did not go after little things.

Investigators will begin to look into the prisons in southern Monterey County.