Billion Dollar Bungle

PERSPECTIVE-Governor Newsom enjoyed an expensive dinner at the French Laundry. 

California got taken to the cleaners. 

In by nine, out by a billion. 

By now, most of us know about the massive unemployment fraud committed during the Pandemic, which may amount to a billion dollars-worth of bogus claims. Many of the payments were issued to prisoners at various facilities throughout the state or were issued under their names by others. 

In July, the Governor created a strike team to deal with chronic deficiencies at EDD. This team made recommendations to our governor, but none addressed cross-referencing the names of those incarcerated with those filing claims. The team was led by Government Operations Agency Secretary Yolanda Richardson and Jennifer Pahlka, the founder of open-government group Code for America.

One has to wonder what criteria Richardson and Pahlka used to select team members. 

Interesting note about Pahlka in Wikipedia:  “In 2018, in partnership with George Gascón, District Attorney for San Francisco, Code for America’s Clear My Record software was applied to automate searching for cannabis-related criminal records eligible to be expunged after California voters passed Proposition 64.” 

She was obviously familiar with prison databases. Shouldn’t a light have gone on in her head? 

Any decently managed operation, in any industry, tests incoming data and information that affects operations for completeness, accuracy and validity. I’ve audited internal controls for the better part of the last seven years, so I have seen it firsthand. 

Some 35 states cross-reference the names of inmates with unemployment filers. 

I would not rule out some involvement by EDD employees. The perpetrators may have sought insiders to assist them. 

Newsom announced he will form a task force to deal with this latest embarrassment. Allow me to digress, but what is the difference between a task force and a strike team? 

Quite frankly, residents of California should express no confidence in any team appointed by Newsom to deal with anything involving the EDD. . .or dining out in the pandemic. 

I wouldn’t trust the competence of anyone at the state level, other than the State Auditor, Elaine Howell, who is a CPA, to lead an internal review of the EDD. She was appointed in 2000 and is independent of Newsom and the legislature. 

President-Elect Joe Biden should steer clear of Newsom when it comes to consideration for a federal appointment. He should also think twice about how much financial aid to send to California, or at least have some strings – perhaps chains – attached to it.


(Paul Hatfield is a CPA and former President of the Valley Village Homeowners Association. He blogs at Village to Village, Billion Dollar Bungle | (wordpress.com) and contributes to CityWatch. The views presented are those of Mr. Hatfield and his alone and do not represent the opinions of Valley Village Homeowners Association or CityWatch. He can be reached at: phinnoho@aol.com.) Photo: Jim Wilson/The New York Times. Prepped for CityWatch by Linda Abrams.