When you lose your job because of circumstances out of your control, unemployment benefits keep you going by paying your bills as you actively search for another job. Without these benefits, many families would be left homeless or endure untold suffering. Despite the advantages eligible unemployed individuals enjoy from the program, some target it for fraud, to obtain benefits they could not have otherwise qualified for. Eligible candidates end up not benefiting from the program, which is why authorities are aggressively pursuing the perpetrators of the fraud and severely punishing those found guilty.
Unfortunately, it is easy to face unemployment insurance fraud charges even when you did not intend to defraud. At CCLG: Los Angeles Criminal Attorney, we have the skills and a team of experienced crime fraud attorneys to protect your rights and prevent a wrongful conviction.
Unemployment Insurance (UI) History
The UI program is a federal-state government insurance program operated by the California Employment Development Department (EDD), set up in 1935 by contributions from employers’ tax deductions.
If you lose your job for reasons other than your own, UI benefits help you stay afloat for twelve or more months when you promise to search for another job actively. The benefits range from $40 to $450 per week, and EDD determines eligibility.
The conditions you must satisfy to qualify for these benefits are:
- You are unemployed, or your involuntary hours have been cut to half of full-time
- You are actively looking for a new job
- You are emotionally and physically ready to take up a new position immediately
- You must have been working for the last one and a half years
You cannot seek the benefits because you anticipate losing your position. You must lose the job first to qualify. Also, the job loss must not be your fault. Despite the program being intended for employees who lose jobs for reasons that are not part of their devising, exemptions exist under the law where employees who quit, resign, or are dismissed can qualify for UI benefits. In these situations, the EDD determines the qualification for the benefits based on the unique circumstances of each case.
UI, like other government coverage programs, faces multiple challenges. Unqualified people tend to take undue advantage to obtain UI benefits, which causes serious obstacles to the UI fund, because those who are intended to benefit do not benefit. Besides, the cost of business for employers contributing to the program increases. Additionally, fraudulent claims lead to more scrutiny and slow approval of claims, creating a backlog. Those entitled to the UI benefits end up waiting longer before receiving their payments, causing serious financial problems to beneficiaries.
Unemployment Insurance (UI) Fraud Overview
Cases of UI fraud have been on the rise in Los Angeles. Claimants and employers can be charged with this offense. A claimant will face charges for UI fraud when they furnish EDD with false or incomplete details to acquire undue unemployment benefits. On the other hand, an employer commits fraud when they present false information for an eligible applicant to be denied UI benefits to which they are entitled.
California Unemployment Insurance Code (UIC) 2101 outlines the acts that constitute insurance fraud. These include:
- Willfully making a fraudulent or false representation
- Knowingly concealing information
- Use of false identification
- More people are trying to manipulate the fund for their own benefit
When you engage in any of these acts with the intent to reduce, increase, defeat, or acquire undue UI benefits, you risk charges and a possible conviction for UI fraud. Laws are in place that punish these offenses with several years of confinement and monetary court fines.
UI Fraud Investigation Process
If you are suspected of engaging in activities aimed at defrauding the UI fund, the EDD is the agency that will investigate the accusations against you. Most of the time, the agency commences investigations after receiving tips from individuals who detect fraudulent activities. The tips come from:
- Members of the public who call the official hotline 800-229-6297 or report through the department’s “report fraud” site
- From the department’s field officers on the ground collecting UI benefits applications. When these officers identify inconsistencies in the applications that raise suspicions about fraud, they report them to the EDD, which commences investigations.
When EDD is tipped off to suspicious unemployment benefits applications, they deploy their fraud investigations officers to gather more information and determine if a crime has been committed. Not all fraudulent activities are flagged in the application phase. Some are detected after the applicant has received the funding. Whether funding has been released or not, the EDD investigators gather evidence and present the file to the local prosecutor, who decides on whether to lodge formal charges based on the evidence submitted. The prosecutor will return the file to the agency for further investigations if the evidence submitted is insufficient to lodge charges. However, when the proof is compelling, the prosecutor will file formal charges, and a judge will issue an arrest warrant.
Incidents that Amount to UI Fraud
There are several ways employers and claimants violate California UIC 2101. As a claimant, you risk fraud charges when you engage in the following acts:
- Obtaining unemployment benefits while still employed. You should receive UI coverage only when you are unemployed. If you get a job, you should report it to EDD to halt your benefits so that the funds can go to another beneficiary in need of help paying bills and continuing to receive benefits disadvantages another eligible party and the companies contributing to the fund.
- Receiving other benefits, like pension and workers’ comp, without reporting them to EDD. Continuing to receive these benefits without the knowledge of the agency is a contravention of the law.
- Relying on a fraudulent name, employment details, and a social security number (SSN) to obtain undue unemployment funds while you are employed. Under these circumstances, you could face additional charges and a possible guilty verdict for identity theft.
- Attempting to fraudulently obtain unemployment benefits from another state while residing in California.
- Establishing a fictitious company and listing yourself as one of the workers to qualify for funding from the UI fund.
- Cashing another party’s UI benefits’ check without their approval
- Pretending to be diligently looking for work or faking your efforts to find a job to continue receiving benefits.
- Fabricating unemployment reasons to qualify for unemployment benefits
Claimants or workers are not the only people who defraud or attempt to defraud the EDD. Employers also violate the insurance laws in many ways, including:
- Supplying false details on the reasons for terminating an employee or their salary to avoid contributing to the UI fund.
- Deliberately withhold deductions from workers and decline to channel them to the UI fund or program.
UI Fraud Legal Penalties
When the police arrest you for insurance, you will be presented in court, where your charges will be read and you will enter a plea. If you plead guilty, you will be convicted, and a date for sentencing will be set. However, when you contest the charges by pleading not guilty, the case will undergo several court hearings and the trial, where the prosecutor will present facts and prove all the case’s elements beyond a reasonable doubt. If the prosecutor is successful, the court will find you guilty and sentence you.
The penalties you will receive during sentencing hinge on the specific charges filed against you and the special circumstances of your case. Fraud cases in California are mostly filed as wobblers. The prosecutor has the discretion to lodge misdemeanor or felony charges contingent on your case’s unique facts and criminal past.
Most UI fraud charges are filed under the UIC 2101, which prohibits unemployment insurance fraud, and Penal Code 550, which criminalizes insurance fraud in general. Therefore, the punishment you will face when the court convicts you hinges on the law you are accused of violating.
Penalties for UIC 2101 Violation
A violation of UIC 2101 is a misdemeanor. When the prosecutor proves the facts of the case beyond a reasonable doubt and the court finds you guilty, you will face at most twelve months of jail incarceration and no more than $20,000 in monetary court fines. If the preferred charge is a felony and the court issues a guilty verdict against you, you will attract the following penalties during sentencing:
- 16, 24, or 36 months of prison confinement
- A court-imposed fine of no more than $20,000
PEN 550 Violation Penalties
PEN 550 is the general insurance fraud statute in California. Even under this law, UI fraud is a wobbler. The charge the prosecutor will file hinges on the amount involved in the fraud. When the amount of fraud is at most $950, you will face a direct misdemeanor charge. Upon conviction, the court will impose a jail sentence of no more than half a year and a monetary fine of at most $1,000.
If the fraud value is at least $950, the offense becomes a wobbler. A misdemeanor charge stemming from a wobbler offense attracts severe penalties during sentencing than a direct misdemeanor. When the fraud amount exceeds $950 and you are convicted of a misdemeanor, your penalties are as follows:
- At most twelve months of jail incarceration
- Monetary court-imposed fines of at most $10,000
‘The prosecutor will file felony charges when UI fraud involves over $950 or is at least $950 and has been accumulated over a duration of twelve consecutive months. When found guilty of the felony PEN 550 violation, you will face 24, 36, or 60 months of imprisonment, a monetary court fine of no more than $50,000, or twice the insurance fraud amount, whichever is greater.
Additional Penalties
A guilty verdict for defrauding the unemployment insurance program goes beyond the legal penalties. A criminal record for the offense results in several collateral consequences, including:
- Professional discipline. UI fraud is a moral turpitude offense, meaning it will adversely affect your professional license. Your license application could be denied, and if you already have a permit, it could be suspended or your renewal application rejected.
- The conviction could render you unqualified to obtain any benefits from a state or federal government program.
- You may be forced to repay the funds you have fraudulently received, plus a 30% penalty
Victim Restitution in Lieu of Criminal Charges
When you face unemployment benefits fraud charges, you should have private legal representation. Having an attorney on your side from the start of the case can help you a lot. An experienced criminal attorney will negotiate with the investigative agency, the EDD, depending on the evidence they have against you, to drop the case in exchange for victim restitution or reimbursement of the funds lost through fraud. If the agency agrees, they will not submit the file with the evidence of fraud to the prosecutor, meaning you will avoid formal criminal charges and a possible criminal record.
If the fraud amount is colossal, your attorney must negotiate a flexible repayment plan to avoid defaulting on your payment. Delayed payments to the victim could reintroduce the formal criminal charges. Therefore, ensure that once your attorney negotiates a victim reimbursement deal instead of criminal charges, you honor all the payments until the full amount agreed upon is repaid to avoid criminal proceedings. An unfavorable decision in the criminal case could lead to severe and life-changing repercussions.
UI Fraud Legal Defenses
UI fraud is aggressively prosecuted in California. Many times, the EDD and prosecutor will not be willing to abandon the criminal charges for restitution, meaning they will take the case all the way to trial, aiming to secure a guilty verdict. With the severe legal and collateral consequences on the line upon conviction, you must take the charges seriously and prepare adequately for trial. The guidance from a competent criminal attorney is pivotal in securing a favorable outcome. Additionally, the attorney can use various defense strategies to obtain a fair verdict. The defenses include, but are not limited to:
- You Did Not Intend to Defraud
The prosecutor should show that you acted with fraudulent intent for you to be guilty of UI fraud. However, proving this element can be difficult because they must paint a picture of the state of your mind when you acted, and show that the fraud was intentional. This requires the use of circumstantial evidence, which might not be sufficient to attain the needed evidentiary standard in these cases. If the prosecutor’s evidence on your intent is not convincing, you can cast further doubt in the minds of the jury by arguing that:
- You submitted the benefits application or claim knowing it was legitimate
- You accidentally entered the wrong information in the application forms, such as a wrong SSN
- You mistakenly believed you were not required to report freelancing income to the EDD
Making these assertions will show the jury or bench that you did not intend to commit fraud, and this will make them doubt the prosecutor’s evidence. If the prosecutor cannot prove beyond a reasonable doubt that you intended to defraud EDD, the court will dismiss the case.
- Insufficient Proof or Evidence
With the rapidly growing number of UI fraud cases in California, authorities are rushing investigations to make arrests and prove their commitment to the fight against fraud crimes. Unfortunately, rushed investigations cause the investigators to miss out on crucial facts of the case, submitting files with incomplete evidence. If the evidence gathered against you does not prove the case to the evidentiary standard set by the court, you are innocent of your charges.
Similarly, the court will drop your fraud charges because of insufficient evidence if you demonstrate that the EDD’s investigative unit obtained most of the evidence unlawfully or engaged in misconduct. Any illegal evidence is inadmissible in court. If most of the evidence is dropped, the prosecutor will not have enough evidence to prove the allegations are factual.
For instance, you, an employer, have been accused of deducting contributions from the workers’ pay but not remitting them to the EDD. It turns out that one of your employees managing the payroll has been embezzling the deductions without your knowledge. Under the circumstances, even though you are the employer, there is no sufficient showing that you personally withheld the deductions, meaning you are innocent.
- False Allegations or Misidentification
The ultimate defense strategy against fraud charges is proving you are innocent. Many people falsely accused of UI fraud end up with wrongful convictions because they lack experienced legal representatives to tell their side of the story. A competent criminal attorney will conduct an independent investigation into the allegations to establish the actual event leading to the charges. If a colleague filed a false claim and, when it was discovered, tried to cover their tracks by accusing you, an independent investigation will reveal these facts.
Additionally, an independent investigation will show that someone stole your identity and committed the fraud, causing you to be mistakenly identified as the victim. When you successfully show that the accusation is false or you have been mistaken for the actual perpetrator, the court will drop the charges. The best person to uncover the case’s facts is a competent defense attorney.
- Entering a Plea Deal
When the allegations against you are factual, using legal defenses might not prevent a guilty verdict. If a conviction is inevitable, your attorney should consider plea bargaining. A plea deal is possible when:
- Criminal liability is inevitable
- The prosecutor’s case has weaknesses
- Mitigating circumstances exist in the case
- The prosecutor is handling multiple cases and needs to secure a win fast
If these circumstances are present in your case, your defense attorney should negotiate a favorable plea deal. In these bargains, the prosecutor secures the guilty verdict they were seeking and allows you to enter a guilty or no contest plea to a lesser charge or sentence. In return, the court dismisses your UI fraud charges. Even though you will still end up with a conviction, it will be for less severe charges or will result in a reduced sentence, which is a win.
Offenses Related to UI Fraud
Unemployment benefits fraud entails acts like forgery, theft, and perjury so, the prosecutor can file these charges alongside the fraud crime.
Grand Theft
Per California PEN 487, grand theft occurs when you illegally take an individual’s or an entity’s property valued at at least $950. For purposes of this statute, property means land, personal items, money, or labor.
The prosecutor can charge you with grand theft alongside or in place of UI fraud when you defraud the EDD of money exceeding $950 through a fraudulent claim. A PEN 487 violation is a wobbler. A felony guilty verdict for a felony attracts a sentence of no more than 36 months in jail and at most $10,000 in court fines.
California Forgery
PEN 470 criminalizes the deliberate alteration, use, or creation of written documents with the intent to defraud. The offense relates to UI fraud if you claim unemployment benefits using another party’s name or signature, or fabricate a supervisor’s or employer’s signature on the section of your application where these individuals are required to corroborate the claim. Your UI fraud charges could therefore attract an additional charge of forgery.
A PEN 470 violation can be filed as a misdemeanor or felony, with the maximum punishment upon conviction being no more than 36 months of confinement and $10,000 in monetary fines.
California Perjury
Per PEN 118, perjury occurs when you intentionally furnish authorities with false details, having taken an oath to tell the truth. Prosecutors file the violation as a felony, with a guilty verdict attracting at most 48 months of county jail confinement and at most $10,000 in financial court fines.
You will face perjury charges alongside UI fraud when you present a fabricated name, SSN, or willfully falsify information in your unemployment benefits claim.
Conspiring to Engage in a Crime
Conspiring to perpetrate a criminal offense is a felony under PEN 182. This means that when you conspire with another party to obtain undue unemployment benefits fraudulently or to defeat a claimant who is eligible for the benefits, you could face PEN 182 violation charges alongside UI fraud.
Find a Competent Fraud Crimes Defense Attorney Near Me
A guilty verdict for unemployment insurance fraud can be life-altering. The worst part is that without proper representation, an honest mistake when filling out your claim can be interpreted as fraud, leading to criminal charges and a wrongful conviction. You need an attorney to tell your side of the story to prevent a conviction. At CCLG: Los Angeles Criminal Attorney, we will aggressively defend you for a charge dismissal. If you cannot escape criminal liability, we will negotiate a favorable plea deal. Contact us at 323-922-3418 to begin preparing your defense.
