How California's EDD got scammed out of $2 million by a prison inmate, a nurse and a car dealer employee
A man walks by the Employment Development Department’ San Francisco office in 2020. A prison inmate, a nurse and a car dealer employee used the dark web to bilk California’s troubled unemployment system of almost $2 million.
Gabrielle Lurie/The ChronicleA prison inmate, a nurse and a car dealer employee used the dark web to bilk California’s troubled unemployment system of almost $2 million, buying a $71,000 Audi Q7 and a new home with their ill-gotten gains.
It sounds like the plot of a hackneyed heist movie.
But it’s just the latest in a string of embarrassing revelations about fraud at the state Employment Development Department, which has lost billions of dollars to scammers during the pandemic. Officials say the EDD lost between $11 billion and $31 billion to perpetrators who include organized criminals from overseas, gangs of prison inmates and even some on Death Row who took advantage of a deluge of claims and lax standards for verifying information. EDD has received 22.7 million claims and paid out $164.8 billion since January 2020.
Prison inmate Ratha Yin, 34; his wife, Amanda Yin, 31, a nurse; and Steven Mavromatis, 26, of San Leandro, were charged this month with conspiracy to commit mail and wire fraud, according to the U.S. Attorney’s Office for the Northern District of California. If convicted, each could face up to 20 years in prison and a $250,000 fine.
The case unraveled in October 2020 when a prison guard at Centinela State Prison in Imperial County searched Ratha Yin’s cell and found contraband electronics, including two cell phones, one in Yin’s pocket and the other inside a book, and two SD cards concealed in a deodorant bottle, that contained “a trove of information about communications” between the three over filing fraudulent EDD claims. The complaint said that Yin’s cellmate, who was not named, may have been a co-conspirator or have participated in separate EDD frauds. Yin’s nephew, also not named, may be been another co-conspirator, the complaint said, noting his suspicious text exchanges with a contact stored as “Neff.”
The perpetrators went on the dark web, a hidden part of the Internet often used by criminals, to steal personal information about hundreds of people, then created email accounts for them, and filed unemployment claims in their names, the U.S. Attorney’s Office said. EDD issues benefits via Bank of America debit cards, which the trio had mailed to a post office box controlled by Mavromatis, the complaint said. The documents said the two men filed 91 fraudulent claims, reaping at least $1.9 million, while Ratha Yin and other unnamed co-conspirators filed other claims worth at least another $132,000.
But the stolen amounts may have been much higher. The complaint notes that Bank of America records for 285 claims associated with the trio show ATM cash withdrawals amounting to $5.569 million.
A text exchange between Ratha Yin and an unknown co-conspirator discusses the fraud.
U.S. District Court for the Northern District of CaliforniaAmanda Yin’s role was to launder the illegally obtained funds, the complaint said. It said she bought household items with cavities to hide valuables, such as a flower pot with a false bottom, a picture frame with space inside and books with false backs. She exchanged texts with her husband about a cryptocurrency wallet, a way to store funds and prevent them from being seized remotely, such as by law enforcmeent.
Some of the money allegedly went into accounts in Amanda Yin’s name and some into a joint account with her husband, the complaint said. In addition, it said, she used a “straw purchaser” to buy a $71,000 Audi sport utility vehicle for all cash. In May 2021, allegedly used the proceeds for a $160,000 down payment on a $391,000 home in Indio (Riverside County).
“We appreciate the strong work of law enforcement in investigating this criminal activity from last year and bringing the perpetrators to justice,” EDD said in a statement.
The agency said it implemented new fraud filters last year that have prevented at least $60 billion in potential fraud.
However, earlier in the pandemic EDD allegedly left the door wide open to fraudsters. Unlike other states, California did not cross-check jobless claims against a list of incarcerated people. EDD even paid $21,000 in benefits to a con artist using the name and Social Security number of Calif. Sen. Dianne Feinstein.
Ratha Yin's phone had photos from video calls showing large amounts of cash.
Criminal complaint, U.S. District Court for the Northern District of CaliforniaIn July EDD hired former federal prosector McGregor Scott as special counsel to probe the widespread fraud during the pandemic. Scott works with a task force at the state Office of Emergency Services.
The nationwide pandemic shutdown resulted in millions of layoffs. As part of a massive aid package, Congress created the Pandemic Unemployment Assistance program, which for the first time made jobless benefits available to self-employed people, gig workers and freelancers. But that also made it easier for fraudsters to file fake claims. At the same time, EDD, which was overwhelmed and struggling to pay legitimate claims, relaxed its systems for verifying applications.
The result was “what appears to be the most significant fraud on taxpayer funds in California history,” according to a letter that a task force of district attorneys sent to Gov. Gavin Newsom last year.
Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid
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