Exclusive: EDD claims fueling California street violence — what Sacramento sweeps found
Late last month, as Sacramento was digging out from the violent rain and windstorm that whipped through the region, law enforcement officers in rain gear paid a visit to Deonte Humphrey’s second-floor apartment on Fulton Avenue near Arden Way.
Humphrey, 26, has been an Oak Park gang member, authorities say, and was on probation for being a felon in possession of a firearm.
He was wearing a court-ordered ankle monitoring device when Sacramento County probation officers showed up at his door. They found him there with his girlfriend, Joyce Taylor, who they say tried to run out of the apartment with a 9 mm handgun with no serial numbers or other identifying markings known as a ghost gun.
The two were arrested, and a subsequent search of the apartment turned up ammunition, a high-capacity magazine for the handgun, two California Employment Development Department applications for unemployment insurance payments, more than 100 Xanax tablets with no prescription, fake ID cards and nearly $2,000 in cash.
Officers also found a notebook with the handwritten title “Fraud Bible/Methods,” a lists of online Dark Web accounts and what appeared to be a note about a magnetic credit card reader that could be purchased from Amazon for $109.
“I’ve never seen something like this,” said Marc Marquez, chief deputy for Sacramento’s probation department, as he studied the “Fraud Bible” set out on the suspects’ bed along with other items. “But if you look at it, that’s your credit card security (information), ATM skimmer, Dark Web stuff.”
A month before that arrest, part of a regionwide sweep that resulted in seven arrests and several suspected EDD fraud cases, a probation search at a home on South Watt Avenue turned up another 9 mm ghost gun, more than $58,000 in cash and 38 EDD cards.
Other agencies in the area have reported similar finds, multiple fraudulent EDD cards along with firearms in the hands of convicted felons, results that law enforcement officials say leads them to one conclusion: criminals are using funds from the growing EDD fraud scandal to buy weapons.
“They’re using the money to buy guns,” Sacramento County District Attorney Anne Marie Schubert said. “I can only tell you that there’s a lot more violence on the streets right now.
“We have the highest level of homicides that we’ve had in well over a decade. We’ve already had six murders this year, and there’s a real concern that the money that’s been fraudulently stolen is being used for other criminal activity.”
The EDD fraud scandal, in which inmates and associates outside of jails and prisons were found to be submitting thousands of phony unemployment claims under their own names or names of others, originally scandal first broke into the open Thanksgiving week, when prosecutors estimated losses at $1 billion.
Authorities say fraudsters took advantage of the wave of funds the federal government was providing to keep the economy afloat after the COVID-19 pandemic hit the United States in earnest in March.
‘It’s like going to the AM-PM.’
The result has been what one community leader in Del Paso Heights calls a rapid proliferation of guns among young people throughout the community.
“The EDD, that whole world I do believe was very well-intentioned and for the most part it provided help to families that needed resources,” said Mervin Brookins, chief executive officer of Brother to Brother, which provides alternative programs to incarceration in Sacramento. “But at the same time there was fraud going on, and within that fraud I think you had a certain segment of the population that utilized that to buy guns, unfortunately.
“There’s a proliferation of guns on the streets and it coincided with that EDD fraud, and as someone who’s out working with some of these young men, yeah, it’s an unfortunate and sad fact. But it is a fact.”
Brookins said his program already has been working with two men who were caught up in EDD fraud and used the funds to purchase weapons, and he stressed that it is not limited to former felons but “damn near every youth now.”
And even with law enforcement focusing on the issue, Brookins said, there is no shortage of weapons available for purchase.
“It’s a continual flow,” he said. “I know they’ve taken guns off the streets, but there doesn’t seem to be a shortage.
“As soon as they take one off the street they are replaced. It’s like going to AM-PM. It’s really that bad.”
EDD fraud nearly $11 billion so far
A state audit released Jan. 28 — the same day probation officers were raiding Humphrey’s Fulton Avenue apartment — estimated the amount of fraudulent claims filed between March and December might be more than $10.4 billion.
Schubert said she expects the final figures to be much higher — as much as $30 billion — despite efforts by the state to put new safeguards in place.
Local and federal prosecutors say there are few limits to what stolen EDD funds are being spent on, ranging from plastic surgery to purchases of debit cards.
One defendant allegedly used the name of U.S. Sen. Dianne Feinstein, D-California, to obtain a card, and inmates in prisons across the country are believed to have cashed in on the fraud by submitting unemployment insurance claims in various names.
Even Nigerian fraudsters are believed to have ended up with some of the funds, prosecutors say.
But the easy access to cash and guns is what worries many officials.
“This has become the new funding stream for criminal activities,” said Placer County District Attorney Morgan Gire. “They can purchase more firearms, more equipment.
“It got sophisticated in a relatively short period of time.”
Gire’s office is prosecuting one case involving a felon in possession of a firearm and narcotics in which up to $4 million in EDD fraud is suspected, he said.
Sacramento County Probation Chief Lee Seale says firearms seizures in 2020 spiked toward the end of the year in the county just before the EDD scandal broke into the open.
A typical month might see four or five weapons seized, he said.
Then, in October, authorities seized 27, with another 12 confiscated in November. Seizures dropped to four in December, then back up to 10 in January. Seale said Friday that probation is already averaging one firearm recovery daily in February.
“Something is going on,” Seale said, noting that some of the weapons officers are finding are the untraceable ghost guns that typically are manufactured from kits.
“What we’re seeing are certainly some gun cases where this cash, we fear, is being used to fund illegal gun purchases and criminal behavior,” Seale said.
‘Oh, my God, they’re buying guns.’
And the concerns are shared by authorities statewide.
“The gun violence we’re seeing is not just in Sacramento,” Schubert said. “It’s happening across the state of California. There’s been a major uptick in gun violence and shootings.
“And when we realized how much money was being given out to individuals who aren’t entitled to it, that was one of our biggest concerns: ‘Oh, my God, they’re buying guns. And drugs, and whatever else they want to buy. Liposuction, cars, Maseratis, all that kind of stuff.”
The potential EDD fraud cases that officers are discovering don’t always immediately lead to gun seizures, officials added.
Last month, when officers searched Humphrey’s apartment as part of a sweep that led them to two dozen homes, authorities say they found three other potential instances of EDD fraud, including one where $11,000 had just been withdrawn from an EDD account.
A check of the cards at Humphrey’s apartment found one had a zero balance, the other still held just 76 cents in its balance, Marquez said.
“Whatever they had on it was already spent,” Marquez said.
This story was originally published February 8, 2021 at 5:00 AM with the headline "Exclusive: EDD claims fueling California street violence — what Sacramento sweeps found."