Three Arrested in Scheme Involving Nearly $200,000 in Unemployment Insurance Benefits Paid to Unqualified Beneficiaries
SANTA ANA, California – Three Southern California residents have been arrested on federal bribery and embezzlement charges related to a scheme that allegedly caused a California state agency to issue at least $187,513 in unemployment insurance benefits checks to dozens of people who were not eligible for the benefits, with tens of thousands of dollars in cash kickbacks going to the organizers of the scheme.
A 31-count indictment returned by a federal grand jury yesterday charges the three defendants with conspiracy, bribery, embezzlement and obstruction of justice. The three defendants who have now been arrested by special agents of the U.S. Department of Labor are:
David Paul Holden, 30, of Corona, a former employee of the California Employment Development Department (EDD), who was arrested last night;
Patricia Cordova, 31, of Corona, who was arrested last night; and
Narciso “Tony” Rodriguez, 29, of Riverside, who was arrested this morning.
The three defendants are expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
According to the indictment, in 2010 and 2011, Holden worked at the EDD office in Anaheim, where he processed unemployment insurance claims and had access to EDD’s electronic database for approving claims and making payments of unemployment insurance benefits. Both personally and through a network of recruiters, which included Cordova and Rodriguez, Holden approached more than 50 individuals who were not qualified to receive state unemployment benefits because they were already employed, had voluntarily quit their prior jobs, or had been terminated for other reasons, including misconduct. Holden and his recruiters persuaded those people to provide their social security numbers and other information so that Holden could arrange for them to receive unemployment checks. Holden then manipulated EDD’s electronic database to make it appear that those people were entitled to benefits and caused EDD to issue unemployment benefits checks to those persons, the indictment alleges. After receiving the fraudulently issued checks, the recipients allegedly gave Cordova, Rodriguez and the other recruiters cash payments of up to $5,000, which were then funneled to Holden.
The indictment specifically alleges that the people who were not qualified to receive unemployment benefits from EDD illegally obtained $187,513, but investigators have determined that EDD paid more than $500,000 to unqualified beneficiaries. The indictment also specifically alleges that Holden and his co-defendants received $33,100 in kickbacks, but investigators have determined that the amount of kickbacks and unemployment benefits that went directly to the defendants is more than $85,000.
“Our tax dollars fund benefit programs that provide much needed payments to qualified Americans who have lost their jobs,” said United States Attorney André Birotte Jr. “Corrupt public officials and their accomplices who exploit these programs are ripping off taxpayers and compromising programs that are designed to help unemployed people in need.”
Abel Salinas, Special Agent in Charge of the Los Angeles Regional Office of the U.S. Department of Labor, Office of Inspector General, stated: “This case presents a clear message that combating unemployment insurance fraud remains a high priority for the Office of Inspector General. We will continue to work with our law enforcement partners to vigorously investigate these types of allegations in order to safeguard all Department of Labor programs.”
In addition to bribery and embezzlement, the indictment alleges that Holden and Cordova took various steps to conceal the scheme and discourage other participants from cooperating with investigators. For example, after learning that he was being investigated, Holden encouraged two people who were fraudulently receiving benefits to withdraw their illicitly obtained funds from their bank account, according to the indictment. Later, Holden allegedly called the same individuals – who were also acting as recruiters to bring new participants into the scheme – and instructed them to lie to investigators and to tell their own recruits to do the same. Cordova is also accused of approaching another recruiter and similarly encouraging him to mislead investigators.
“The state Employment Development Department is committed to safeguarding the money entrusted to us by California’s taxpayers, and we are dismayed by this alleged theft of public funds,” said EDD Director Pam Harris. “At the same time, we take pride in the vigilance of our Unemployment Insurance Branch managers who uncovered the theft and our Investigations Division criminal investigators, who worked with the U.S. Department of Labor OIG to build the case that has led to this indictment. We will not tolerate illegal activities by even a single employee, nor lose sight of the fact that the overwhelming majority of our employees are hardworking, dedicated and honest public servants.”
Holden, Cordova and Rodriguez are charged with conspiracy to commit bribery and embezzlement. Holden also is charged in 24 counts of accepting bribes and embezzling funds, as well as three counts of witness tampering. Cordova is charged alone in two bribery counts and charged along with Holden in one count of witness tampering. Additionally, Rodriguez is named in one bribery count.
If they are convicted of all counts in which they are charged, Holden would face a statutory maximum sentence of 305 years in federal prison, Cordova could be sentenced to as much as 45 years in prison, and Rodriguez would face a statutory maximum sentence of 15 years in prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The investigation in this case is being conducted by the U.S. Department of Labor's Office of Inspector General and EDD’s Investigations Division.
Release No. 12-022
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