Fired EDD workers, inmate, parolee charged in California’s COVID unemployment fraud scandal
Federal prosecutors have charged four women in California’s ongoing unemployment fraud scheme, including a former Employment Development Department worker who allegedly filed 100 claims — one of them in the name of a sitting U.S. senator.
The charges name fired EDD worker Andrea M. Gervais, as well as an inmate at the Central California Women’s Facility in Chowchilla and a parolee who allegedly filed false claims seeking government payments under the guise of being hairdressers forced out of work by the COVID-19 pandemic.
Officials say the government was bilked out of $400,000 in assistance payments for fraudulent claims seeking more than $2 million, and that some of the funds went to plastic surgery for the parolee.
In a separate but related scheme unveiled by federal prosecutors in San Diego, a former EDD contract employee was charged with conspiring with her boyfriend, who is serving a 94-year sentence at California State Prison, Sacramento, to submit fraudulent claims on behalf of multiple prisoners and out-of-state residents whose identities had been stolen.
The cases stem from an ongoing fraud investigation into a largely prison-based scheme that officials say involved inmates filing for COVID-19 relief funds using phony identities.
The probe was first revealed Thanksgiving week by Sacramento County District Attorney Anne Marie Schubert, U.S. Attorney McGregor Scott and a team of D.A.s from throughout California. Officials say it may involve the loss of up to $2 billion.
“We will work with every major law enforcement agency to investigate and prosecute the fraud arising out of the pandemic,” Scott said in a statement Thursday announcing the charges. “This theft of taxpayer dollars intended to assist our citizens in a very difficult economic time simply will not be tolerated.”
Gervais, 43, of Roseville, is charged with mail fraud in a criminal complaint filed in federal court in Sacramento and is currently out of custody. She did not respond to a message left on her cellphone Thursday seeking comment.
According to the complaint, that investigation began Dec. 1 when Bank of America notified authorities “that they discovered that a California unemployment profile was opened in the name of a United States Senator.”
The senator is not identified by name in the complaint, but two sources told The Sacramento Bee that the card was issued in the name of U.S. Sen. Dianne Feinstein, D-California.
Officials said a debit card was issued in the name of a senator with $21,000 on it and that Gervais was recorded on BofA ATM cameras using that card and others to withdraw cash.
Gervais allegedly was involved in submitting about 100 claims, and at least 12 of them were processed for payment, prosecutors say.
“EDD has paid out at least twelve of those claims in the amount of approximately $216,876 — including the claim that was filed under the name and SSN of a sitting U.S. Senator — with an attempted dollar loss of approximately $2.1 million,” the criminal complaint says. “Of the 100 claims that were not paid by the EDD, the claimant either did not respond to an ID Alert, or the identity documents provided were not sufficient to proceed with adjudicating the UI claim.”
The complaint says that Gervais, who also goes by the name Andrea Dangerfield, worked as an office assistant in EDD’s tax branch in 2018, when investigators began looking into allegations of theft from an EDD mailroom.
“The investigation found that a money order, originally made payable to the EDD, had been altered such that it was made payable to Andrea Dangerfield prior to being cashed in March 2018,” the complaint says. “EDD investigators reviewed Dangerfield’s EDD personnel file and observed that Dangerfield’s signature appeared to be nearly identical to the signature on the negotiated money order.
“On October 12, 2018, EDD terminated Gervais based on at least the result of its investigation into this money order fraud.”
The second case stems from a federal grand jury indictment in Fresno involving a scheme that originated inside the Chowchilla prison, officials say.
Inmate Sholanda Thomas, 36, and parolee Christina Smith, 37, were indicted on charges of conspiracy to commit mail fraud and aggravated identity theft.
Prosecutors say Thomas gathered up — or “bundled” — the names, Social Security numbers and birth dates of other inmates and provided them to Smith to file fraudulent claims.
“The underlying applications for the claims falsely stated that the inmates had worked within the prescribed period as hairstylists, barbers, and other occupations, and that they were available to work, which was not true because they were incarcerated,” Scott’s office said in a statement Thursday. “The claims would have been denied if accurate answers had been given.
“EDD and the United States have suffered a loss of over $200,000 as a result of the fraud. Thomas and Smith used the proceeds for their own benefit, which included Smith keeping Thomas’ share in a shoebox pending Thomas’ release from prison, and Smith getting plastic surgery.”
In the San Diego case, authorities charged former EDD employee Nyika Gomez with fraud and identity theft. Gomez, a San Diego resident, made an initial appearance in U.S. District Court in San Diego on Thursday.
Officials said Gomez, 40, teamed up with her boyfriend — an inmate identified in court papers only as “B.T.” — to submit claims totaling more than $170,000. Court records show some of the claims were rejected but nearly $80,000 worth of claims went through.
Officials said the total dollar amount that was stolen remains unclear.
“Frankly, we’re still counting,” said Stephen Wong, an assistant U.S. attorney.
Officials said Gomez was a contract employee at an EDD call center, helping unemployed workers process their claims. The post gave her access to confidential information about EDD’s benefits program, enabling her to work with her boyfriend to submit fraudulent claims for several prisoners. Her boyfriend also helped her purchase stolen identities from out-of-state residents.
The fraudulent benefits were mailed to her and an unidentified accomplice in the form of prepaid debit cards. Gomez sent some of the proceeds to the inmates by transferring funds to their prison accounts, prosecutors said.
This story was originally published December 17, 2020 at 3:09 PM with the headline "Fired EDD workers, inmate, parolee charged in California’s COVID unemployment fraud scandal."