Former California cybercriminal reveals how easy it is to fool the EDD

ByRandall Yip KGO logo
Friday, January 15, 2021
Former cybercriminal shows how easy it is to fool CA EDD
As over a million of unemployed workers in California are frozen out of their unemployment benefit accounts, a cybercriminal reveals just how easy it is to get the documents to fool the EDD.

PITTSBURGH, Calif. -- It's been a rough few weeks for a Contra Costa County woman trying to reclaim her EDD benefits. A former cybercriminal reveals what he thinks went wrong for EDD and hundreds of thousands of Californians.

Lupita Alvarez treated herself to a glass of milk.

Back in November, she withdrew money from her EDD benefits card at an ATM in Pittsburg.

An hour later, she says a fraudster drained what was left in her account from an ATM in North Hollywood.

She contacted 7 on Your Side. We contacted Bank of America and it promptly returned her money.

"That made me feel great. I was like, okay. That was very good. Thanks," said Alvarez.

RELATED: California unemployment fraud 4 times worse than first reported; $8 billion paid to criminals

How did California handle its unemployment crisis compared to other states? The amount of unemployment funds stolen from California taxpayers in 2020 may total more than $8 billion -- four times higher than estimated just one month ago.

Unfortunately her elation didn't last long.

On Christmas Eve, she received a letter from the state.

"The account was the subject of fraud or suspicious activity and they closed down my account," she said as she looked over the letter.

Brett Johnson is known by the Secret Service as the original "internet godfather."

"Now how did I get that title? In my case, 39 felonies, a place on the United States most wanted list, and escaped from prison and I built the first organized cybercrime community," he told us.

Johnson admits to filing tax returns for the dead in California and opening hundreds of phony bank accounts in their names.

RELATED: California Unemployment: EDD investigating 255 criminal claims, sharp increase from 2019

Today he consults for federal authorities on how criminals outfox the system.

"They ask you for a scan of your driver's license, easy enough to get, they asked you for some bank statements, easy enough to fake, fabricate," he said.

He showed us a number of phony driver's licenses including one from California. He says he can get a complete set of documents to assume an identity for under 50 bucks.

"Today, you've got 16-year-old kids that are stealing $60,000 to $70,000 a week on unemployment fraud. Typically an identity theft, one of the groups that you tend to look at are prisoners," said Johnson.

We've previously reported hundreds of inmates throughout California face charges of stealing money from EDD by filing false claims.

RELATED: 'People need help': As many as 1 in every 3 EDD claims is fraudulent, security firm says

He says a simple check of their identities would have revealed they're in prison and could not possibly qualify for unemployment.

"What it actually boils down to is if you're looking at the data, if you're looking at the data, you can tell that something is fraudulent," he said.

Hearing all this just frustrates Alvarez.

"Giving out unemployment to prisoners and to people that don't exist and to people that are dead, I don't know how a government agency can do something like that," Alvarez said.

EDD hired an outside security firm and has implemented a number of security measures since October, which they say will cut down on the fraud.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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