Woman led unemployment fraud ring from prison, US prosecutors say

NEW YORK (NYTIMES) - A California woman serving a life prison sentence for murder led a scheme to collect at least US$2 million (S$2.78 million) in unemployment benefits using stolen identities, including those of other incarcerated people, federal prosecutors said.

The woman, Natalie Le DeMola, 37, was one of 13 people charged with conspiracy to commit wire fraud and bank fraud by collecting unemployment benefits using the personal information of people who were ineligible for the aid, the US attorney's office in the Central District of California announced on Tuesday (May 17).

An unnamed prison official provided some of this personal information, such as birth dates and social security numbers, by collecting it from California Department of Corrections and Rehabilitation databases, prosecutors said.

According to a 39-count indictment, members of the ring filed hundreds of unemployment applications online between June 2020 and April 2021 using the personal information of people, including themselves, who were not eligible for benefits because they were incarcerated, retired or working. Prosecutors said the applications were mostly for pandemic unemployment benefits expanded to help people who had lost work because of the coronavirus pandemic.

During this period, the California Employment Development Department awarded successful applicants with a debit account and debit cards sent to their mailing addresses.

Prosecutors allege the people named in the indictment used debit cards tied to stolen identities to take out money from ATMs in cities across Southern California, including Los Angeles, Riverside and Ventura.

The defendants are charged with 31 counts of bank fraud, which each carry a maximum sentence of 30 years in prison, and seven counts of aggravated identify theft, which carry a mandatory two-year consecutive sentence.

Federal authorities arrested five of the defendants on Tuesday. One other defendant was in custody in a Los Angeles County jail, prosecutors said.

DeMola is imprisoned for the murder of her mother, Kim DeMola, who was "savagely beaten" at their home in Corona, California, in April 2001. She was 16 at the time and dating Terry Lee Bell, then 17.

Kim DeMola died a week after the beating, according to a report filed by a federal magistrate judge in 2015.

In April 2005, a Riverside County Superior Court jury convicted DeMola and Bell of first-degree murder. They were sentenced to life without the possibility of parole in July 2005, the judge's report said. DeMola could not be reached for comment.

The other defendants in the unemployment fraud scheme are still being sought, authorities said. It is not clear if the prison official will also face charges.

The investigation into the unemployment scheme was conducted by several federal, state and local agencies, including the Los Angeles El Camino Real Financial Crimes Task Force, which is led by Homeland Security Investigations and investigates financial crimes in southern California.

Investigators searched the prison official's records after receiving a tip and found that the worker had accessed information belonging to hundreds of incarcerated women, 42 incarcerated men and their approved visitors, according to an affidavit. More than 250 of those names were used to apply for unemployment benefits, the court papers said.

In September 2020, two of the defendants - Khanshanda King, 31, and Cleshay Johnson II, 28 - were arrested during a traffic stop in Inglewood, California, with evidence related to the scheme, including ATM receipts tied to unemployment benefits accounts, according to an affidavit. The police also found a ledger in their car listing 98 profiles of people whose personal information was used to apply for unemployment benefits.

One of the people named in the ledger was an 83-year-old man who had never lived in California and told investigators that he did not know the people who had used his identity to claim benefits, the court papers said. Another man, who had been in prison for 15 years, told investigators that he was not familiar with unemployment benefits and did not know the people who had opened a benefits card in his name.

There have been several instances of people stealing personal information to fraudulently collect unemployment benefits expanded in response to the coronavirus pandemic. The inspector general for the US Department of Labour, Larry Turner, estimated that US$163 billion in pandemic unemployment benefits could have been "paid improperly, with a significant portion attributable to fraud", in testimony at a congressional hearing in March.

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