California authorities discovered that employees and employers alike in Orange County and other parts of the state get involved in defrauding the Employment Development Department. As a result, the state prohibits the filing of false unemployment claims and failing to pay employee deductions to the EDD program.
The crime of unemployment insurance fraud attracts different forms of punishment, depending on the amount of money you receive fraudulently and past criminal history. That means UI fraud is a wobbler offense, and the court can decide whether to charge you with a felony or a misdemeanor.
There are severe consequences if found guilty of defrauding the EDD under California Penal Code 550 and Unemployment Insurance Code 2101. You could pay thousands of dollars in fines or even spend many years in state prison or county jail.
To avoid compromising your profession and private life, you need to contact Orange County Criminal Defense Attorney Law Firm. Speak to our criminal fraud defense lawyers today to understand what defense options you could use to contest your charges.
What’s the Meaning of "Unemployment Insurance Fraud" Per California Law?
Fraud crime occurs when you do wrongful acts to deceive someone else. Usually, you, your loved one, or your organization willfully and deliberately deceives a victim or organization for monetary and personal benefits.
Like other crimes, fraud entails elements, which prosecutors must prove that the defendants performed before the judge can pass their ruling. These are:
- Deliberate misrepresentation of a vital fact
- With full knowledge that the fact is untrue
- To an unknowing victim who justifiably relies on the trickery
- As a result, the victim suffers momentary or property loss
Since fraud is a broad topic, here, unemployment insurance fraud in California is covered at length.
The Unemployment Insurance Program History
In the year 1935, the US government introduced a state-federal insurance program dubbed unemployment insurance (UI), that the Employment Development Department (EDD) manages.
The primary role of the UI is aiding employees after they lose jobs, provided that they didn't perform any wrongful act to get laid off from work. Using the funds from the unemployment insurance, the people can sustain themselves or their families for like a year as they seek new opportunities. The employer tax-funded program pays out between $40 and $450 weekly to beneficiaries.
As a beneficiary of the unemployment insurance funds, you must meet specific requirements, namely:
- You should not have a job. You can only file a claim if you lose your job. The law cannot allow you to file a claim on the last day at work. The law also allows you to file a claim if your regular full-time working hours are involuntarily reduced
- You are actively seeking other employment opportunities. The law allows you to file a claim if laid off from your current position and looking for another job position
- You should be willing and available to begin work immediately Due to fraudulent acts within the UI the law requires that if an opportunity emerges, you should report immediately
- Your working history must cover 18 months. For you to qualify for the program, the law needs you to have worked in any position for not less than 18 months, before losing the position
The law stipulates that beneficiaries must lose their working positions to qualify for unemployment benefits. However, under particular circumstances, the program also accommodates workers who choose to quit or fired through their fault. The California EDD handles exceptional cases where beneficiaries are those fired or resign on a case-by-case basis.
Like in several public insurance programs, many people seek the slightest of opportunities to benefit unlawfully. Taking unfair advantage in UI increases the costs for employers and builds up a massive backlog in the EDD system. As a result, legitimate beneficiaries wait much longer than usual to receive their claims.
People commit fraud crime in many ways, and the law defines specific types of fraud, insurance fraud being one of them. Insurance fraud occurs when you or an entity is insured and makes a deceptive insurance claim, looking to receive compensation for losses, which you never incurred.
Unemployment Insurance Fraud
An intensifying form of insurance fraud in California, unemployment insurance fraud happens when you make a deliberate false representation to reduce, obtain, or increase benefits under federal or state programs. Persons found guilty of UI fraud under the California Unemployment Insurance Code, risk serving jail time in state prison.
The Investigation Processes
The Employment Development Department handles all unemployment insurance fraud cases in California. The Department finds different suits and allegations through their website and fake UI applications people submit.
If your claim appears suspicious to the EDD, they launch a fraud investigation to gather pieces of evidence before presenting them to the prosecution. The prosecutor takes the evidence and files charges against you. If the prosecuting agency finds that the evidence is not enough, they keep your file until they can collect compelling proof.
Cases of Unemployment Insurance Fraud in California
There are many ways you could commit UI fraud in California and face charges. These ways include:
Violations from Employees or Claimants
If you are an employee or claimant, you violate unemployment insurance fraud if:
- You receive unemployment insurance benefits while employed and fail to notify the California EDD
- You fail to notify the EDD that you accept other compensations like workers’ compensation benefits and pension while still collecting UI benefits
- You offer the EDD wrong identity like false names, employment details, and social security number intending to receive UI benefits while in employment. Here, the court could also find you guilty of identity theft
- Attempting to file fraudulent claims in another state but you live in California
- Creating a non-existent employer and registering yourself as a worker who is qualified to collect unemployment insurance benefits
- You cash an unemployment check belonging to another person without permission
- You lie that your employer laid you off from work because of cut-backs while the truth is that you got fired due to poor performance at the workplace
Violations from Employers
Like employees, employers can as well commit California UI fraud. Examples of employer fraud violations include:
- Deduct UI premiums from a worker’s salary as requires and deliberately refuse to make payments to the EDD
- Knowingly offer untrue reasons as to why they terminated an employee, about their income, with an intent to evade paying premiums to the UI program
Penalties and Sentencing
California doesn’t have one-size-fits-all sentencing for UI fraud crimes. The court decides on what penalties depending on the circumstances surrounding the crime. California law considers fraud offenses as wobblers; therefore, the prosecution agency could file charges against you as either a felony or a misdemeanor. There are particular factors the prosecutor looks at before presenting your felony or misdemeanor charge sheet in court, and they include:
- Specific facts surrounding your criminal case
- Your past criminal record
Punishment commonly imposed on suspects of felony and misdemeanor offenses linking to UI fraud include:
- California Penal Code Section 550 PC – general insurance fraud. Severe crime and involves California UI fraud lawsuits
- Unemployment Insurance Code 2101. A law famous and connects to UI fraud in California
Note that no UI fraud sentencing is the same as the other. The court sentences convict per case-by-case basis.
General Insurance Fraud – California PC 550
Like UI code 2101, PC 550 entails both felony and misdemeanor punishment.
You are charged with a felony crime if the amount you received fraudulently is more than $950 within a year.
Possible penalties for a felony conviction under PC 550 are:
- A fine that doesn’t exceed $50,000
- A fine that is twice the amount you received fraudulently
- Serving jail time for two years, three years, or five years in county jail
The amount of money involved in your fraud crime determines what punishment you get if prosecuted for a misdemeanor crime. In California, you are charged with a misdemeanor if the amount received fraudulently is $950 or lower. Possible penalties for this crime are paying a fine not exceeding $1,000 and serving jail time not exceeding six months.
Your crime is considered a wobbler if the money you gained through fraud is more than $950. If the money involved is more than $950, you risk spending up to one year in jail and heftier fines not exceeding $10,000.
California law imposes extra punishment for UI fraud convicts. They include:
- Professional discipline. You risk losing your professional licenses if convicted for UI fraud. Typically, fraud crimes are considered offenses of moral turpitude; hence, affecting professional licenses
- Disqualification from receiving or retaining UI benefits
- Repayment of the received benefits and a 30-percent penalty
Refunding in Place of Criminal Charges
If the circumstances surrounding your crime allows, your defense lawyer could push for a refund instead of pressing charges. If the California EDD agrees to your proposal, you could pay back the amount obtained through deceitful methods, and they will not take you to court. You could reach into an agreement with the Department to pay in installments and proceed with a court case should you default on payments at any given time.
Unemployment Insurance Code 2101
The court can convict you for a misdemeanor or a felony offense under Unemployment Insurance Code 2101. If sentenced for this crime as a felony, you serve jail time in state prison for 16 months, two years, or three years. The court could also order you to pay a fine not exceeding $20,000. If your sentencing is for a misdemeanor offense, the possible punishment is paying a fine, not more than $20,000 and jail time of not more than a year.
Legal Defenses to UI Fraud Charges
A reputable criminal defense attorney can help build defense and cast doubts in the shreds of evidence the prosecution presents in court against you. Common legal defenses for unemployment insurance fraud cases are:
1. You Had Not Intent to Defraud EDD
The intent is an imperative element in any California fraud crime. Here, the prosecution must offer proof beyond a reasonable doubt that you had the intent to deceive California EDD. You have no case to answer if the prosecutor cannot produce evidence that you had a fraudulent purpose.
There is the possibility that you could file a genuine claim but accidentally give incorrect information, for instance, a wrong social security number. In this scenario, you offered incorrect details unknowingly and had zero intent to defraud the EDD.
You can also use this legal defense when you are a freelance worker and did not report your income because you didn’t know that it’s required to do so.
2. Lack of Enough Evidence
The California EDD has received many genuine and fraudulent claims over time. Due to the fraud fact, the authorities have pumped up scrutiny in the claims and taking suspects in court on the slightest mistakes. The investigating officers have, in turn, made wrongful arrests, file lawsuits, and are quick to conclude before getting proof and facts right.
As a result, many fraud cases reach the court corridors with insufficient evidence against the suspects. For example, if you are an executive at a company, the odds are that there is a professional whose work is to manage payroll and accounts. If the professional withhold employees’ deductions and failed to forward them to the EDD knowingly, the investigating officers could assume that you, as the managing director, are liable for fraud.
The good news is, the judge cannot pass judgment if the prosecution hasn't provided compelling evidence against your charges. Therefore, your attorney could cast doubts in your charges taking advantage of insufficient evidence.
3. Mistaken Identity or False Accusations
The primary defense of any criminal charges is proving your innocence. Many innocent people get charged with a crime for many reasons. Maybe the liable person was questioned and denied liability and afterward saying you were responsible.
There is another incident where your identity was stolen and mistaken for a fraud crime. If charged in court, your lawyer could argue that yours is a mistaken identity case because you are not the person who filed a fraudulent claim. It is recommended that you find an attorney who has experience with unearthing crucial facts to acquit a fraud crime suspect if falsely accused.
4. A Plea Bargain
If all efforts to cast doubts using legal defenses fail, especially where proof against you is beyond a reasonable doubt, your defense lawyer could negotiate a plea bargain.
Fraud crime suspects use plea bargains if they cannot evade liability to crime or if the criminal fraud defense lawyer discovers flaws in the evidence presented in court. Several other pending court cases in court and some mitigating factors could make your lawyers opt for a plea bargain.
Plea bargaining lets the court sentence you after pleading guilty/ nolo contendere, but with a promise of a lower penalty or lessened charge in the place of a UI fraud charge.
Related Offenses to Unemployment Insurance Fraud
The crime – UI fraud involves many acts like perjury, forgery, and theft. That means the prosecution can charge you with these crimes in place of or in addition to UI fraud.
1. Grand Theft Law -California PC 487
According to Penal Code 487, grand theft is the act of taking property that does not belong to you illegally, given that the property has a value of $950 and above.
Grand Theft by Larceny
You commit this type of grand theft (larceny) when you pick tangible property belonging to someone else without their permission. When taking another person’s property for a significant period, you deny them a share of enjoyment or value of it.
Grand Theft by False Pretense
Per California PC 532, this form of grand theft occurs when:
- You mislead someone by telling them something false with full knowledge. Here, you are said to make a fake pretense
- You make a pretense to lure the victim into allowing you to carry their property
- The victim falls for your trickery and allows you to carry their property
Trickery as a Grand Theft
You commit this type of grand theft when:
- You take another person’s property
- You take the property after deceiving the owner
- You take the property with the intent to keep it for a significant period to deprive the owner enjoyment of it
- You took the property for a considerable period
- The owner of the property never transferred their ownership to you
Grand theft attracts wobbler punishment in California. Here, the court could decide to charge you with a felony or a misdemeanor hanging on the circumstances of your case and past criminal record.
Possible punishment for misdemeanor grand theft is serving jail time for not more than a year. If the judge convicts you for felony grand theft, you are likely to spend time in a county jail for 16 months, two years, or three years.
2. California Forgery Law - PC 470
According to California PC 470, you commit forgery when you alter a signature with fraudulent intentions. Generally, forgery involves:
- Signing someone else’s name
- Faking someone else’s handwriting
- Falsifying documents the court provides or legal wills
- Forge particular documents like money orders, bonds, and checks
The jury has the jurisdiction to charge you with either a felony or a misdemeanor since forgery is a wobbler offense. If you are charged with a felony forgery, possible punishment is a fine not exceeding $10,000, going to jail for not more than three years, and formal probation. If charged with a misdemeanor forgery, you could pay a fine of up to $1,000, serve jail time for not more than a year, or summary probation.
You have the option to defend against forgery allegations in court using legal defenses like you never intended to deceive, the plaintiff accused you falsely, and forced confession.
3. California Perjury Laws - PC 118
You are said to commit perjury if you falsify details while you are under oath. Elements that the prosecution must prove before your conviction are:
- You took an oath to testify honestly
- You willfully and knowingly said that the information you offered were right when they were untrue
- You had full knowledge that you were under oath
- You intentionally made your false statement when testifying
- The information was a material matter
Legal defenses your attorney could use to contest PC 118 allegations include you were not under oath, you never had the intent to lie, and the information was not material.
You receive felony penalties if convicted for perjury. The court could decide to sentence you to not more than four years in prison or order you to pay a fine of not more than $10,000.
4. California Conspiracy Law - PC 182
California PC 182 defines conspiracy as agreeing with someone else to violate a statute, and one party commits the crime. While some conspiracy charges are considered a felony crime, others are wobbler offenses. Wobbler offenses are charged as either felonies or misdemeanors. The judge sentences the defendant on a case-by-case basis.
5. California Counterfeiting, Forging Or Possessing a Fake Public Seal Law - PC 472
It is a criminal offense to forge a public seal under California PC 472. Forging a public seal involves faking the logo on a state identification card or a driver's license. In California, forging a state seal is a wobbler crime. Here, the judge has the jurisdiction to choose whether to charge you with a felony or a misdemeanor.
A public seal-forgery felony attracts penalties such as a fine not exceeding $10,000 or a jail term of 16 months, two years, or three years in state prison. A misdemeanor conviction could land you in a county jail for not more than a year. Legal defenses for this crime could include pleading innocent, police misconduct, and lack of intent.
Contact an Orange County Criminal Defense Attorney Law Firm Near Me
Unemployment insurance fraud charges could affect both employers and employees. The crime of UI fraud involves deceiving the EDD for monetary gain. If found guilty, you could compromise your personal and professional reputation in addition to fines or jail time.
You must hire an experienced criminal fraud attorney when you or a family member is facing unemployment insurance charges in Orange County. At Orange County Criminal Defense Attorney Law Firm, we have lawyers skilled at defending the most complicated Unemployment Insurance fraud crimes. To have your case reviewed and offered the best advice today, dial 714-740-7848.