Mother and California inmate son charged in COVID unemployment insurance fraud case

A mother and her incarcerated son have been indicted by a federal grand jury in Sacramento on charges of defrauding California’s unemployment insurance agency by filing phony claims for payments to inmates during the COVID-19 pandemic.

Misty and Jaime Ornelas were charged by a federal grand jury with conspiracy to commit mail fraud in a scheme that allegedly involved phone calls between the mother and her son, who was an inmate at High Desert State Prison in Susanville, court records say.

The indictment says that from June 2020 to September 2020 the two conspired to defraud California’s Employment Development Department by filing unemployment claims for Jaime Ornelas and other inmates who claimed to have lost jobs as a home cleaner for the elderly, a car detailer or tattoo artist, the indictment says.

“As Misty and Jaime Ornelas were well aware these claims were false and fraudulent in that Jaime Ornelas and the other inmates were not so previously employed or newly employed, but were incarcerated and not employed at all relevant times,” the indictment says, adding that the two “routinely checked the status of the fraudulent California EDD UI claims to see which fraudulent claims had been approved.”

The two also gave false information to the other inmates about how much in payments had been approved “so that they could keep the majority of the proceeds for themselves,” the indictment says.

The alleged scheme led to more than $150,000 in fraudulent payments, the indictment says.

Misty Ornelas, 46, has pleaded not guilty and was ordered held in custody until a hearing Thursday at which U.S. Magistrate Judge Jeremy Peterson agreed to allow her release on an unsecured $25,000 bond.

Court records do not reflect a scheduled hearing for Jaime Ornelas.

This story was originally published December 7, 2023 at 11:39 AM with the headline "Mother and California inmate son charged in COVID unemployment insurance fraud case."