Prosecutor: Unemployment fraud conspiracy in Northern California bilked state of $14 million

An unemployment scheme carried out in Northern California since the early 1990s has led to more than $14 million in fraudulent claims, federal authorities said Friday.

U.S. Attorney Benjamin Wager said two recent arrests mean 28 people have been charged in the Sutter County case since 2012, and more remain under investigation. Thirteen of the 28 have already pleaded guilty to various charges.

In the alleged conspiracy, Wager said, four Yuba City residents posed as farm labor contractors issuing fake paystubs to others who could then draw fraudulent unemployment claims and disability benefits.

Wager said at least one defendant wrote checks to supposed employees and instructed them to cash the check and return the money to give the appearance that he had paid them wages.

Over the course of the conspiracy, the defendants reported false wages for more than 1,000 people, resulting in over 2,000 fraudulent claims, Wager said. Some ensnared in the scheme are charged with committing perjury before a federal grand jury.

"Those responsible for this scheme are likely to end up in prison," Wagner said. "Those who purchased false wages from them should come clean rather than try to conceal the scheme."