- Associated Press - Tuesday, November 24, 2020

SACRAMENTO, Calif. (AP) — California’s system for paying unemployment benefits is so dysfunctional that the state approved more than $140 million for at least 35,000 prisoners, prosecutors said Tuesday, detailing a scheme that resulted in payouts in the names of well-known convicted murderers like Scott Peterson and Cary Stayner.

From March to August, California has put $140 million on debit cards and mailed them to addresses associated with the inmates, according to Sacramento County District Attorney Anne Marie Schubert. At least 158 claims were approved for 133 death-row inmates, resulting in more than $420,000 in benefits.

The list includes Peterson, who was sentenced to death after being convicted of killing his pregnant wife following a trial that riveted the nation. Others are Stayner, convicted of killing four people in Yosemite National Park in 1999; Susan Eubanks, a San Diego woman convicted of shooting her four sons to death in 1997; Isauro Aguirre, who was sentenced to death for the 2013 murder of 8-year-old Gabriel Fernandez in Los Angeles; and Wesley Shermantine, part of the duo dubbed the “Speed Freak Killers” for their meth-induced killing rampage in the 1980s and ’90s.

Prosecutors said they learned of the scheme from listening in on recorded prison phone calls, where inmates would talk about how easy it was for everyone to get paid. They said the scheme always involved someone on the outside to facilitate the applications. In Kern County, home to five state prisons, one address was used to receive benefits for 16 inmates.

“In my nearly four decades as a prosecutor in this state, I have never seen fraud of this magnitude,” Kern County District Attorney Cynthia Zimmer said.



In some cases, inmates used their real names. In others, they used fake names and even fake Social Security numbers. In one instance, an inmate used the name: “poopy britches,” Schubert said.

“Quite frankly, the inmates are mocking us,” Schubert said.

Prosecutors declined to give more details about the claim associated with Peterson, citing an ongoing investigation. His attorney, Pat Harris, did not return an email or phone message from The Associated Press seeking comment. The California Supreme Court recently overturned Peterson’s death sentence and has ordered a lower court to review his murder conviction.

Prosecutors blamed the Employment Development Department, which has been overwhelmed by more than 16.4 million benefit claims since the pandemic began in March, resulting in a backlog that at one time totaled more than 1.6 million people.

But prosecutors said in its haste to approve benefits, the department did not check unemployment claims against a list of prisoners, as many other states do. San Mateo District Attorney Stephen Wagstaffe said that when he notified the department about 22 inmates fraudulently receiving benefits, they told him they could not cut off the payments until they were formally charged with a crime.

The problem was so bad that on Monday, nine county district attorneys sent a letter to Gov. Gavin Newsom asking for him to intervene.

In an email to the AP, Newsom called the fraud “absolutely unacceptable.” He said he first learned of the fraud earlier this year, which prompted him to order the department to “review its practices and take immediate actions to prevent fraud and to hold people accountable.”

Newsom said he has ordered the Office of Emergency Services to set up a task force to assist prosecutors with their investigation.

“While we have made improvements, we need to do more,” Newsom said.

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This story has been corrected to show that convicted killer Wesley Shermantine’s last name was misspelled.

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