By Velena Jones

SACRAMENTO (CBS13) — A Sacramento couple arrested this week is accused of cashing in on more than $550,000 in fraudulent unemployment funds, police announced Friday.

While executing a search warrant last month at a Greenhaven-area apartment, the Sacramento Police Department gang unit contacted 25-year-old James Smith and his girlfriend, 21-year-old Chyna Hill. Investigators say they found illegally-possessed weapons and $1,100 in cash at the apartment as well as 15 Employment Development Department (EDD) debit cards with various names on them.

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Officers also reportedly found a notebook containing a list of 55 profiles with names, dates of birth, social security numbers, usernames, and passwords associated with EDD accounts.

Smith and Hill were arrested Friday and are facing multiple charges including unemployment insurance fraud, possession of stolen property and possession of assault weapons. Smith, a validated gang member with one prior strike conviction, was also charged with possessing firearms and ammunition as a felon.

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District Attorney Anne Marie Schubert said EDD fraud cases are frequently associated with violent criminal activity.

“We have got those EDD cards all flowing around our community and they have value, and unfortunately that triggers violence,” Schubert said.

She says unemployment fraud is financing violent crime fueled by the purchase of guns.

Mervin Brookins, the CEO of the community outreach program Brother to Brother, is seeing the direct impact EDD fraud is making with two of the people in his program using fraudulent cards to purchase weapons.

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“We don’t want people who genuinely deserve that help to stop receiving it, and then two, we want to stop the violence that it’s creating through the access of funds,” Brookins said.

To stop the violence, he believes you have to tackle the problem from all sides.

“They were purchasing illegal firearms before EDD money became available, once that fraud started happening they just able to purchase more,” he said. “Let’s deal with the source, as well as the EDD fraud.”

Schubert says it will be impossible to catch everyone involved in these fraud cases because there are just too many. With this increase in violence, she is focusing on prosecuting those who present the greatest risk.

“The more we aggressively prosecute it, the more we get the spigot shut down so those people who are genuinely in need of this can get the money they are so desperately in need of,” Schubert said. “Are we going to get them all? No. That’s just the reality of life, the volume is too big but the folks I think are critical are the largest dollar amount like we are seeing today and people that present a risk to our community.”

A state audit released late last month claimed the EDD did nothing for four months to stop bogus jobless claims. The audit blames Gov. Gavin Newsom’s administration for “significant missteps and inaction” costing taxpayers $10.4 billion and counting.

The EDD said it is working with law enforcement partners to identify and prosecute fraudsters.

“EDD continues to partner with federal, state, and local authorities in fighting the work of scammers sitting on a treasure trove of stolen identity information from the dark web and assaulting unemployment insurance programs across the country,” the agency said in a statement.

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A spokesperson said the federal Pandemic Unemployment Assistance (PUA) program provided opportunities for criminals to “defraud the system” because it does not require standard cross-checks or proof of employment. EDD estimates that 95% of fraud during the pandemic is linked to the PUA program.

Velena Jones