CA auditor blasts EDD for bungling unemployment crisis

SACRAMENTO, Calif. -- The California State Auditor issued a scathing report Tuesday on the EDD's disastrous response to a surge in unemployment claims during the pandemic. The report says the mistakes by the EDD opened the door to rampant fraud, forcing millions of workers to struggle for benefits. Not only that, millions may have to pay back benefits they got by mistake.

The report says EDD knew for 10 years it wasn't ready for a disaster - and when the pandemic hit, sure enough, the system buckled.

RELATED: Expert answers your EDD, unemployment questions

Michele Evermore, an expert with the National Employment Law Project, answers questions from Eyewitness News viewers about getting unemployment benefits through California's EDD.

Millions of unemployed workers' plights are now crystallized in the state auditor's scathing report on the disaster at EDD when efficiency was needed most.

"The EDD has known for over a decade that they have these problems and they did not fix their operations," said State Assemblyman Jim Patterson (R - Fresno).

The auditor's report found EDD could not automatically process half the claims. Many required a manual review of items like ID verification.

It left hundreds of thousands of workers struggling for benefits - unable to reach anyone at the call center. It happened to Ima Holcomb in Calistoga.

"We are currently experiencing more calls than we can answer, and are unable to assist you at this time," she recalls hearing over the phone.

RELATED: Bank of America addresses freezing accounts, fraud in state assembly hearing

Representatives from EDD and Bank of America addressed a State Assembly hearing to shed light on the scope of fraud within California's unemployment program.

The report said less than one percent of workers reached an agent during the surge in claims.

The audit said EDD started waiving eligibility checks to speed up the claims. That opened the door for rampant fraud. EDD admitted it has paid at least $11 billion dollars to fraudsters - but it's possible another $20 billion also was paid to scammers.

In total, that would mean more than a quarter of all claims were fraudulent.

Not only that, EDD may have paid legitimate workers too much money by not checking eligibility. Now, up to 2.4 million workers may have to pay money back to the government -- a hit many still don't know is coming.

"So the guilty got the money and the innocent are gonna have to pay. It's just a terrible outcome here," as Assemblyman Patterson put it.

RELATED: California paid out $11 billion in fake jobless claims last year, official says

The Orange County D.A. outlined three separate unrelated plots, involving 10 people altogether that he said exploited loopholes in the state's unemployment system to steal nearly $500,000 that should have gone to taxpayers in need during the COVID-19 pandemic.

The EDD responded, saying in part: "The EDD appreciates the auditor's review and acknowledgment of the immensity of challenges EDD has faced in the pandemic. We recognize the work that lies ahead."

The auditor will be releasing a second report on Thursday, focusing on how the EDD spent $40 billion dollars in federal unemployment funds - and how much of it went to fraudsters.

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WATCH | Expert answers your questions on unemployment benefits, EDD (Pt. 1)

Michele Evermore, an expert with the National Employment Law Project, answers questions from the public about getting unemployment benefits through California's EDD.