The loss of millions of dollars in unemployment benefits that allegedly went to jail inmates across the state, including in Santa Clara County, has prompted the District Attorney's Office to initiate a crackdown, the office announced Tuesday.

The significant rise in unemployment benefits fraud throughout the state became apparent because of the COVID-19 pandemic. The state has been bombarded by unemployment claims as people have sought relief after being unable to work, Supervising Deputy District Attorney Charlotte Chang said by phone on Jan. 5. "Some people also see an opportunity to receive more benefits than they are entitled to," Chang said. Anyone who is Incarcerated is not entitled to receive EDD payments.

The statewide fraud is estimated to cost California close to $1 billion, district attorneys from five counties said in November. Investigators suspect the hundreds of millions of dollars scammed were perpetrated by organized rings within jails and prisons with the assistance of people on the outside, including in the Santa Clara County jail system.

"The amount of money is staggering. … It's out of control," Chang said.

One case alone in the county involves defrauding the state Employment Development Department (EDD) out of approximately $12 million. The District Attorney's Office is still investigating whether there is a link to inmates in jail, Chang said.

Investigators allege that individuals inside the jails provided identification to accomplices on the outside. The accomplices then submitted an EDD application on the inmate's behalf. To avoid alerting the state agency that the applicant is in jail or prison, the accomplice receives and transfers benefit payments back to the inmate through inmate jail accounts.

"Within the last two months, tens of thousands of local, state, and federal inmates were involved in this fraud, including Cary Stayner, one of California’s most notorious murderers," the District Attorney's Office said.

It is suspected that the accomplices receive a kickback, Chang said. The inmates are also suspected of recruiting other convicts to provide their identities to perpetuate the scams. The accomplices might also be recruiting others on the outside, she added.

The District Attorney's Office is currently working with the San Mateo County District Attorney's Office and expects to file charges in the next couple of weeks, Chang said.

District Attorney Jeff Rosen said he has created a team to clamp down on the problem. The county has joined other elected district attorneys in a statewide EDD Fraud Task Force to work with law enforcement partners to combat the massive fraud. Rosen's office is part of the task force, which also includes the EDD and other district attorneys' offices in Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, Santa Cruz, San Francisco, San Mateo and Sonoma counties.

"To those who have abused the system during this pandemic: you will be caught and pay the price from stealing from the pockets of the needy. Fraudulent unemployment claims deny benefits to those who are legally entitled to receive them and who truly are in need," Rosen said in the statement.

A conviction of unemployment benefit fraud carries a maximum sentence of three years in state prison and a fine of up to $20,000.