And we wonder why we're broke
21 people charged in unemployment fraud scheme
By _Annalyn Kurtz_ (https://twitter.com/AnnalynKurtz) _@CNNMoney_
(https://twitter.com/intent/user?screen_name=cnnmoney) January 16, 2013: 11:52 AM
States mistakenly paid out $1.4 billion in fraudulent unemployment claims
in fiscal 2011.
NEW YORK (CNNMoney)
Three people were arrested in California Tuesday for collecting fraudulent
unemployment and disability benefits. To date, a total of 21 people have
been charged in the $5 million scheme.
According to federal prosecutors, the conspiracy centered around a family
claiming to operate several farm labor companies in Northern California.
They sold fake pay stubs to other people in the community and used their
companies to report false wages to the government.
Then the fake employees claimed they were laid off and used the phony pay
stubs to collect unemployment benefits, disability insurance, or both.
It's what's known as a _fictitious employer_
The family of alleged ringleaders, including Mohammad Nawaz Khan, 56,
Mohammad Adnan Khan, 31, Iqila Begum Khan, 31, and Mohammad Shahbaz Khan 56, was
arrested in May. Since then, 17 more people have been charged in relation
to the scheme, including the three who were arrested Tuesday.
Over the course of the conspiracy, the defendants allegedly reported wages
for more than 400 separate individuals that resulted in more than 2,000
fraudulent claims for unemployment and disability benefits.
_Related: 8 common unemployment scams_
When investigators interviewed some of the individuals, many would not know
the names or locations of the farms where they had supposedly worked. In
some cases, their earnings would greatly exceed normal pay for agricultural
The rate for picking peaches for example, was sometimes stated as high as
$15 per hour.
Another red flag included a 76-year-old man who allegedly performed
physically demanding work like grading and packing prunes, and said he was paid
at a rate of $110 per bin.
At this point the charges are merely allegations, and the defendants are
considered innocent until proven guilty.
_Related: Overpaid unemployment benefits top $14 billion _
Balkar Singh, 50, Harvinder Kaur, 37, and Harjinder Kaur Thandi, 34 of Yuba
City were all arrested and arraigned Tuesday, and six other defendants
will appear in court at a later date. This is the third indictment in an
ongoing investigation by the FBI, the United States Department of Labor and
California's Employment Development Department.
"Fraud against the employer-funded Unemployment Insurance program or the
employee-funded Disability Insurance program costs all of us and will not be
tolerated," Pam Harris, director of the EDD, _said in a statement_
The federal government and states overpaid an _estimated $14 billion in
unemployment benefits _
(http://money.cnn.com/2012/07/09/news/economy/overpaid-unemployment-benefits/index.htm?iid=EL) in fiscal 2011, or roughly 11% of
all the jobless benefits paid out, according to reports from the U.S. Labor
Department. Most of those overpayments are considered mistakes.
About $1.4 billion in overpaid state benefits _were attributed to fraud_
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