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New charges were announced Monday against two convicted murderers in state prisons, four long-term inmates and four others on the outside who were allegedly part of a unemployment benefits scam involving a storefront business opened in Garden Grove.
Orange County Dist. Atty. Todd Spitzer and Assemblywoman Cottie Petrie-Norris, D-Laguna Beach, said the three cases are the latest in a massive set of frauds in California that, since March, could top an estimated $10 billion. On Monday, officials pegged the figure at more than $11 billion.
In one case, two business owners opened a Garden Grove storefront to file false unemployment claims with the California Employment Development Department and steal taxpayer dollars intended to help people made jobless by the COVID-19 pandemic, Spitzer said.
The prosecutor said the two men blatantly advertised their services in Vietnamese-language advertisements. At their homes and the business, nearly $500,000 in cash and bank accounts was recovered.
"There was so much cash. It was stuffed into suit pockets," Spitzer said, noting that investigators serving search warrants had recovered evidence of at least 1,000 fraudulent claims, including one for a 99-year-old woman who claimed she lost her job as a housekeeper decades after she stopped working. The two men got kickbacks of $200 to $700 per claim, the prosecutor alleged.
In the two other separate schemes, an Anaheim tax preparer and a convicted carjacker on parole arranged with groups of inmates to pretend they were workers made jobless to get of tens of thousands of dollars in unemployment benefits.
"I am really angry," Spitzer said, noting that the world is dealing with "a worldwide pandemic that has killed millions of people, forced unemployment rates to levels not seen since the Great Depression and left families across America struggling to feed their children." Meanwhile, he said, "opportunists and profiteers are taking advantage of California’s unemployment system.”
Legislators are concerned because efforts to fight fraud have harmed people with legitimate unemployment claims. Last month, the EDD suspended payment on 1.4 million claims while it investigates potential fraud.
Spitzer said his investigators working with the California Department of Corrections and Rehabilitation uncovered Sandra Pineda, 35, of Anaheim filing an unemployment claim for Leonel Hernandez, 30, who was sentenced to 50 years to life for murder in 2010. She claimed the Kern Valley State Prison inmate worked 40 hours a week in the last 18 months and had an income of $45,263 and was forced to stop working because of COVID-19.
Pineda, a tax preparer, is also charged with conspiring to file false unemployment applications with three other state prisoners: Greg Garcia, 29, who is incarcerated at the Substance Abuse Treatment Facility and State Prison, Corcoran; Ryan Vargas, 36, who is serving a 64-year sentence at Kern Valley State Prison for assault with a firearm; and Hector Jimenez, 31, who is serving a 23-year, four-month sentence in Solano State Prison for the first-degree burglary.
Spitzer and the assemblywoman said a lack of cross-checking with CDCR incarcerated persons allowed the men to get the money. Later last year, a group of California district attorneys revealed that hundreds of prisoners, including some on death row, had received large sums of money from EDD fraud, and even inmates in other states have benefited from the massive fraud as California paid out $113 billion in unemployment claims since March.
Petrie-Norris introduced a bill last month that would require EDD to access incarceration records for cross-checking benefit applications.
Spitzer said his and other prosecutors' offices don't have the prosecutors or investigators to pursue all the cases and recover the stolen billions. He and Petrie-Norris said a statewide plan needs to be made. "We've got to get this money back," Spitzer said.
A firm hired by the state to examine the level of fraud involving inmates found there were more than 20,000 claims deemed at high or moderate risk of having been paid to an incarcerated person, either in California or another state.
Pineda was arrested on Jan. 14, 2021. She has been charged with five felony counts of perjury, five felony counts of making a false statement, and one felony count of conspiracy to defraud, authorities said, and faces a maximum sentence of eight years and eight months.
Rosalva Bahena, 35, of Irvine is accused of conspiring with her brother, Bruno Galindo, who is serving 44 years to life in High Desert State Prison for attempted murder and gang charges, and Guillermo Rodriguez, also a state prisoner, is accused of defrauding the EDD of approximately $50,000, authorities said.
According to Spitzer, Rodriguez is serving 110 years to life sentence at High Desert State Prison for strangling his female neighbor to death in Fullerton. Bahena is currently on parole after serving time in state prison for carjacking.
Bahena is accused of using fraudulently obtained EDD debit cards to withdraw thousands of dollars a week as she operated out of Orange County motels, where she was arrested last week. She has been charged with three felony counts of perjury, three felony counts of filing a false statement, three felony counts of money laundering derived from criminal activity, and one felony count of conspiracy to commit theft by pretenses. She is being held in the Orange County jail after pleading not guilty.
Spitzer said prosecutors and the sole EDD investigator in Orange County uncovered Garden Grove-based Nguyen Social Services, LLC, after a tip.
Huy Duc Nguyen, 32 of Garden Grove and Mai Dacsom Nguyen, 40, of Garden Grove are accused of creating the business to process thousands of fraudulent applications. The pair were arrested on Dec. 21 and charged with a series of felonies related to the fraud scheme.
Mai Nguyen faces up to seven years, eight months behind bars if convicted, while Huy Nguyen faces a maximum sentence of four years, eight months in prison.
This story originally appeared in Los Angeles Times.