Introduction
Applying for or receiving unemployment compensation to which individuals do not have a legal right by providing false or insufficient information is known as unemployment insurance (UI) fraud, or EDD fraud. Employer-driven EDD fraud happens when a business provides misleading information to deny benefits to former or current employees.
The California UIC (Unemployment Insurance Code) prohibits making false statements, failing to reveal material facts, or using any kind of false identity to change any payment or benefit, whether it is for its manufacturer or for someone else.
A monetary penalty of as much as $20,000 and three years of imprisonment in the state-run jail are the consequences of breaking Section 2101. In actuality, though, the statute allows for charges under either federal or state law. In certain situations, both.
Things prohibited under Penal Code (PC) 2101
To commit UI fraud:
- You have to misrepresent something or omit something important; OR
- You have to use a fictitious name, Social Security number (SSN), or alternative form of identification; AND,
- You have to attempt to modify a payment or benefit; AND,
- You have to violate the Insurance Code (California); OR,
- You have to break a pertinent federal statute.
The answer to whether you can go to jail for collecting unemployment while working depends on the circumstances & applicable state laws.
A. Unemployment insurance scheme’s history
The EDD (Employment Development Department) in California oversees the unified state-federal program known as unemployment insurance, or UI. The program was created in 1935 and is financed by employer tax payments.
When someone loses their job, unemployment insurance helps them make ends meet for a minimum of one year during the time they actively look for other work. Payments to recipients vary from forty dollars to 450 dollars per week.
To be eligible for unemployment compensation, you have to:
- Be jobless (you are unable to submit a claim in advance of the final day of employment; you must hold off till you are truly unemployed), or have experienced having your hours unjustly cut to a lower level than a full-time
- Actively seek employment,
- Be prepared and physically capable of working right away, and
- Have been employed for the past eighteen months.
Although statutory unemployment insurance was designed for those who ended up losing their jobs due to no misconduct, some legal rules may permit someone who resigned or was terminated (as rather than let go) to still be eligible for payments. Questions about these kinds of situations should be sent to the Employment Development Department (EDD), as admissibility under these conditions is solely decided by EDD on an individual basis.
The issue is that individuals often misuse their insurance coverage, as remains the situation with many government-run insurance programs. Additionally, in terms of unemployment insurance, it can raise expenses for businesses and cause a pile-up in the entire system, which lengthens wait periods for people who are legally eligible for UI benefits.
B. Insurance fraud
Anytime someone commits “willful deception, knowing hiding, or fraudulent identity to gain, raise, diminish, or prevent any kind of benefit according to the federal or state programs,” they are committing UI fraud, a growing kind of insurance deceit in California. Both the Penal Code and the Unemployment Insurance Code (California) explicitly regulate this kind of fraud.
When someone is detected defrauding the system, they are punished and usually given harsh punishments, such as time in a state jail.
C. The process of investigation
The entity in charge of investigating claims of alleged UI fraud is the EDD. The majority of EDD’s tips come from:
- The general public through its “report fraud” site and telephone, and
- The field locations of EDD that gather the UI requests (for instance, when an employee of EDD discovers something suspicious on the program, like a falsified department stamp or the EDD director’s signature).
EDD’s fraud probe division takes control and investigates any suspicions of fraud. They send their findings to the local investigating body if they find sufficient evidence to support the filing of criminal accusations. They simply save their records in the event that they find themselves able to gather additional proof against the accused if they think the claim is going to be denied.
What are a few typical cases of fraud?
California’s laws against UI fraud can be broken in a number of ways. Examples of a few of the more prevalent kinds of these infractions are included below.
1. Examples of infractions by employees/claimants
- Working while receiving unemployment benefits and failing to apprise the EDD, which is in charge of the state’s unemployment insurance system. State regulations may determine whether you can go to jail for collecting unemployment while working.
- Collecting other forms of payment without disclosing, such as pensions, workers’ compensation benefits (this may also violate California’s workers’ claim fraud statutes).
- Using a fake Social Security number, name, or job details while receiving unemployment benefits while still working (which, contingent upon the situation, could also be considered a type of identity fraud).
- Attempting to receive false benefits in a different state while residing in a state.
- Making up a fake employer and identifying oneself as a staff member qualified for UI payments.
- Cashing another person’s unemployment benefits without permission.
- Falsifying your job search efforts (i.e., claiming to be actively seeking employment while, in reality, you aren’t).
- Misrepresenting the explanation for why you are not currently employed (for instance, claiming that cutbacks caused your layoff while, in reality, poor job performance led to your termination).
2. Examples of infractions by employers
There are other people who can commit UI fraud besides employees. This kind of fraud is committed by employers when they:
- Purposefully give false information regarding an employee’s compensation or the reason for their termination to avoid paying into the program, or
- Deliberately neglect to pay employee deductions to the Employment Development Department (EDD) and withhold them from workers.
Must Read: Reasons for Unemployment Denial in California
What is the role of a defense attorney?
Fortunately, an accomplished criminal fraud attorney in California can offer you a number of different legal defenses. The circumstances around your claim can influence whether you can go to jail for collecting unemployment while working. Here are a few samples of particularly prevalent ones.
1. You didn’t intend to commit fraud
The prosecutor must first establish that you possessed fraudulent intent before they are able to demonstrate that you violated certain California fraud laws. The court will order members of the jury panel to declare you innocent of the accusations if they are unable to demonstrate that you operated with the particular purpose to defraud.
You ought not to be held accountable for breaking unemployment benefits law if you think you filed a valid claim, unintentionally gave false information (such as writing a wrong SSN), or were unaware that you had to submit freelance earnings to the Employment Development Department (EDD).
2. Not enough proof
Unemployment insurance filings (as well as fraud) are increasing in California. In response, the state has increased the number of fraud-related cases it investigates and prosecutes. Investigators frequently make snap decisions or leap to judgments when investigating a case because they are under an obligation to make indictments and file prosecutions.
As a consequence, the number of cases where there is merely insufficient proof that the accused person committed fraud is rising.
For instance, you are accused of intentionally failing to make payments for employee deductions to the Employment Development Department (EDD) and keeping them from workers. You might not have realized that the person in charge of the “accounts” or payroll matters has actually concealed the deductions (the entirety of which might constitute a breach of California’s embezzlement legislation).
You ought to be exonerated of the accusation based on inadequate proof when the prosecution lacks sufficient proof to link you to the act.
3. False allegations or misidentification
The best defense is to prove your innocence. Innocent persons become suspects of this offense for a variety of reasons. It’s possible that somebody in your workplace submitted a false claim and attempted to avoid responsibility by blaming you when confronted. Since you weren’t the one who filed the fake claim, it’s possible that you were the target of identity fraud & mistaken identity.
A competent defense lawyer and defense detective can frequently find the necessary details to clear a person who has been wrongfully accused.
4. Plea bargaining
Your California defense lawyer will try to secure a plea deal when everything else fails & the proof presented is simply too clear to ignore. Plea agreements are helpful when you are unable to avoid criminal responsibility and when proof provided by the state is poor, there are some mitigating circumstances, or there are many cases pending in the legal system.
You can enter nolo contendere or a plea of guilty to a lesser charge or a lesser sentence. This is in return for the more significant UI fraud accusation being dropped. This works under a plea deal that enables law enforcement to secure a verdict against you.
Individuals who are apprehended and brought to justice
The particular crime against which you have been found guilty determines the precise sentence you will get. Since many fraud violations are what people refer to as wobblers, penalties vary greatly. The prosecution may decide to charge “wobblers” as a felony or a misdemeanor, contingent on:
- The case’s facts, and
- Your past criminal activity.
Examples of common misdemeanor & felony penalties related to unemployment benefits cheating are shown below. These refer to the sanctions that are applied in relation to:
- California’s most prevalent law regarding unemployment insurance deception is UI Code 2101.
- Penal Code (PC) 550, which governs standard cases of California insurance deception and is a particularly serious offense.
It is important to emphasize that because there are numerous rules pertaining to UI fraud, your sentence could vary based on your specific conviction. Several factors can affect whether you can go to jail for collecting unemployment while working.
1. Code 2101 for Unemployment Insurance
You might spend up to a year in the county jail & pay a maximum penalty of $20k if found guilty of this misdemeanor. If found guilty of this crime (felony), you could spend sixteen months, 2 years, or 3 years in the state jail and pay a penalty of up to $20k.
2. PC 550: Fraud involving general insurance
A. Misdemeanor penalties
The fraud’s severity will determine your punishment. This is when the prosecution finds you guilty of this crime. Unemployment fraud could be a misdemeanor. The claimed scam has to be 950 dollars or less. A conviction carries as much as $1000 fine. A maximum of 6 months in the county jail is also possible.
The offense will become a wobbler when the sum surpasses $950. You might face a maximum of a one-year prison sentence & a possible $10k fine if the total sum surpasses $950 and you are found guilty solely of a misdemeanor.
B. Felony penalties
When the purported fraud’s amount surpasses 950 dollars, or surpasses 950 dollars in any given successive 12-month period, prosecutors have the option to indict you for this offense. A judgment entails:
- As much as 5 years in prison, & either
- A penalty of up to $50k, OR
- Twice the fraudulent amount, whichever is higher.
3. Extra penalties
Furthermore, being convicted of fraudulently obtaining unemployment benefits exposes one to:
- Professional disciplinary procedures (because criminal convictions may have an impact on professional licensure, particularly when the violation is categorized as an offense involving moral turpitude. It is usually the situation with cheating offenses),
- Incapacity to get (or perhaps keep) any compensated benefits, and
- Return of benefits and a penalty of thirty percent.
4. Repayment in exchange for prosecution
A knowledgeable criminal defense lawyer might make arrangements to reimburse the EDD in return for the Department deciding not to press charges, contingent upon the specifics of your conduct.
You won’t be charged with a crime if the agency approves and you repay on time. However, the EDD has the right to start criminal actions at any given time if you fail to make any of the payments.
Associated offenses
Prosecutors may pursue the following counts along with or instead of UI deception since UI fraud sometimes involves accusations of theft, perjury, and forgery.
1. Grand theft statute (California)
Grand theft legislation, 487 PC, forbids stealing property worth more than $950 from another individual or organization. Money, personal belongings, labor, and land are all considered forms of “property.”
This implies that prosecutors may hit you with a corresponding wobbler, which carries a potential $10k fine & a maximum 3-year jail sentence, if you falsely get unemployment benefits totaling in excess of $950.
2. Forgery law in California
Forgery law, PC 470, forbids deliberately making, modifying, or utilizing written material with the intent to engage in fraud. This implies that if you file for unemployment compensation.
- Prosecutors may also choose to press forgery charges if you sign another person’s name for the candidate, or
- If you sign as the representative of your supervisor or any “supervising” individual who must verify your request.
If found guilty of forged documents, you will once more be subject to a wobbler. It carries a potential $10,000 penalty & 3 years in prison.
3. Perjury laws in California
Perjury is considered a felony in California. It carries a maximum penalty of $10k. There could also be a four-year sentence in prison. You are breaking this rule when you willfully provide false details while under oath to tell the truth.
This implies that prosecutors may even prosecute you for fraud if, for instance, you file an application for unemployment insurance under a fictitious name, using a phony Social Security number (SSN), or purposefully fabricating any other data.
4. Conspiracy law in California
Conspiracy to engage in any criminal act is forbidden by California’s 182 PC. If you plot with somebody else, that is, decide to carry out an illegal act to:
- Receive fake benefits from unemployment insurance, or
- Decline valid benefits from unemployment insurance
If found guilty of UI fraud, you will be punished with the same consequences as for a felony.
5. California’s PC 472 prohibits the possession, forging, and counterfeiting of public seals
A wobbler under California’s PC 472 prohibits forging, imitating, or having a fake public seal. It carries up to a $10,000 fine & 3 years in a county jail.
Prosecutors might also indict you for this offense if you fake an official seal, such as on a fake UI application.
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