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California Unemployment Insurance Code § (Section) 2101 – Unemployment Insurance Fraud

California Unemployment Insurance Code § (Section) 2101 – Unemployment Insurance Fraud

California Unemployment Insurance Code (UIC) §2101Unemployment Insurance Fraud – Section 2101 of the UIC makes it illegal to make a false statement, fail to disclose a material fact, or to use any sort of false identification to alter any benefit or payment, whether it's for the maker or for any other person.

Violating Section 2101 can result in three years in a state prison and a fine of up to $20,000. However, the statute actually permits punishment under either state and federal law - or, in some cases, both state and federal law.

What Does California Penal Code §2101 (Unemployment Insurance Fraud) Prohibit?

In sum, to be guilty of Unemployment Insurance Fraud under Unemployment Insurance Code §2101:

  • You must make a false statement or fail to disclose a material fact; OR,
  • You must use a false name, false social security number, or other false ID; AND,
  • You must try to alter a benefit or payment; AND,
  • You must break a law under the California Insurance Code; OR,
  • You must break a relevant federal law.

Defining “Unemployment Insurance Fraud” Under Unemployment Insurance Code §2101

To convict you under UIC §2101, the prosecutor must prove the following beyond a reasonable doubt:

  • MADE A FALSE STATEMENT…/FAILED TO DISCLOSE: You willfully made a false statement or representation, or knowingly failed to disclose a material fact; OR,
  • USED A FALSE NAME…: You used a false name, false social security number, or other false identification; AND,
  • TO OBTAIN, INCREASE, REDUCE…: You submitted the claim to obtain, increase, reduce, or defeat any benefit or payment, whether for yourself or another person; AND,
  • VIOLATED THE UIC: The falsehood violated any provision of the California Unemployment Insurance Code; OR,
  • VIOLATED FEDERAL LAW: The falsehood violated any unemployment insurance law of the federal government or any training allowance law of the federal government or any trade readjustment allowance law of the federal government or any other allowance law of the federal government.

Unemployment Insurance In California: Brief Background

California's Unemployment Insurance program was established in 1935. Commonly referred to as “UI,” state Unemployment Insurance is actually a hybrid of a federal and state insurance program run by the Employment Development Department (EDD).

Since UI is designed to assist people who've lost their jobs without fault on their part, the program is employer-funded. While no specific amount of assistance can be expected, UI recipients can receive payments of up to $450 per week.

Who Qualifies For UI Assistance?

Only persons who meet all of the following criteria are eligible to receive state UI aid:

  1. People who've worked in the previous eighteen months before receiving aid; AND
  2. b) People who are actively seeking work; AND,
  3. c) People who are actually unemployed or who've had their hours reduced below full time; AND,
  4. People who're ready and physically able to work.[1]

“Are The Eligibility Rules The Same If I Quit?”

Most of the time, quitting your job disqualifies you from receiving unemployment insurance. There are, however, provisions of law permitting a person who quit to receive benefits. Whether you are eligible for benefits under any legal exception after quitting your job will be determined by the state EDD.

Common Examples of Fraud Under UIC §2101

As stated previously, UIC §2101 involves presenting a false statement, knowingly failing to disclose a material fact, or using a false name, false social security number, or false ID to change a benefit or benefit payment. The law applies irrespective of whether the false statement is made to benefit its maker or another person.

Section 2101 of the UIC can be violated by both employees and employers. In the case of employers, common fraud examples include: Intentionally providing false information in explaining an employee's termination; misstating an employee's wages or earnings to lessen the employer's UI program contribution obligation; and/or withholding deductions from employees, which are then unpaid to the EDD as well.

Employees, on the other hand, often violate Section 2101 by:  Using false names, false social security numbers, or falsified employment information to receive unemployment benefits; working while collecting UI and not reporting the work to the EDD; falsely reporting their efforts to search for work; cashing other people's unemployment checks without being asked to do so; providing false reasons for their unemployment; and/or collecting other types of compensation without reporting it to the EDD and taking UI benefits.

Fraud In Paycheck Protection Program (PPP) Loans & The Coronavirus Aid, Relief And Economic Security (CARES) Act

The Paycheck Protection Program (PPP) was established in April 2020 as part of the Coronavirus Aid, Relief & Economic Security (CARES) Act. Small businesses that qualify for support under the PPP can obtain up to $10 million in loans for costs like mortgages, utilities, rent and even payroll for eight weeks, with a promise of government forgiveness for their debts if money is used for these types of concerns, also known as “qualified expenses.” Note, however, that PPP support was made available solely to businesses affected by COVID-19. Furthermore, any business receiving PPP support must have fewer than 500 full-time employees.

With the creation of the PPP, the possibility of fraud was also created. Thus, when any person or business intentionally obtains, or attempts to obtain, funds or loan forgiveness through the PPP by doing any of the following, PPP/CARES Act fraud is committed: Making any false claim that coronavirus hurt a business economically; misrepresenting the number of people that a company employs; claiming falsely that loan money is going towards qualified expenses; not disclosing if employees leave to get more of the loan forgiven; and/or inflating payroll costs to get more loan money. Since PPP loan fraud is a federal crime, a conviction can produce years in state prison and/or a large fine, depending on the offense involved, not to mention the obligation to repay the loan and expenses in recouping the money.

If you commit any of the forms of PPP/CARES Act fraud, you should consult a qualified criminal defense attorney as soon as possible. The attorneys at the Kann California Law Group are prepared to help you present the best possible defense to any allegation.  Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County for more information. Your call will go directly to a lawyer – and that is guaranteed.

Penalties For Unemployment Insurance Fraud Under UIC §2101

Unemployment Insurance Fraud can be charged as a felony or a misdemeanor, depending on whether the claim was worth more than $950. This makes Unemployment Insurance Fraud a “wobbler”[2] under California law. If you are convicted of the felony form, the penalty may be:

  • A term of up to three (3) years in a state prison; OR,
  • A fine of up to $20,000 (twenty-thousand dollars); OR,
  • Both a fine and imprisonment.[3]

However, the misdemeanor form of Unemployment Insurance Fraud permits a form of “wobbler” charge as well. If the fraud is worth less than $950, the penalty may be:

  • A term of up to six (6) months in a county jail; OR,
  • A fine of up to $1,000 (one-thousand dollars); OR,
  • Both a fine and imprisonment.[4]

If, however, the fraud is worth more than $950, the penalty for a misdemeanor may be:

  • A term of up to one (1) year in a county jail; OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[5]

As stated previously, if you're convicted of felony Unemployment Insurance Fraud, the penalty may be up to three (3) years in a state prison, a fine of up to $20,000 (twenty-thousand dollars),[6] or both a fine and imprisonment. Conviction of the misdemeanor form can result in six (6) months in a county jail, a fine of not more than $1,000 (one-thousand dollars), or both a fine and imprisonment.[7]  However, if you're convicted of the enhanced form of misdemeanor violation, you face up to one (1) year in a state prison, a fine of up to $10,000 (ten-thousand dollars), or both a fine and imprisonment.[8]  

Defenses Against Unemployment Insurance Code §2101 – Unemployment Insurance Fraud

Four common defenses against a charge of Unemployment Insurance Fraud under UIC §2101 are:

The Accusation Is False

Example: Defendant Dale lost his job because of downsizing and receives UIC benefits. He's also in the midst of a divorce from Estranged Wife. Seeking to take advantage of Dale during the proceeding, Estranged Wife reports that Dale was actually fired from his job because of poor performance. Now Dale is being investigated for possible violation of UIC §2101(a). Should Dale be prosecuted for the offense?

Conclusion: Dale, as the facts make clear, receives unemployment benefits because he was let go from his job through no fault of his own; Estranged Wife simply believes she can hurt him in the divorce proceeding. Since there's no truth to her claim, Dale shouldn't be prosecuted. The accusation is false.

The Evidence Against You Is Insufficient

Example: Defendant Dominic, fired from a job recently because of redundancy in his position, applies for state UIC benefits. State investigators become suspicious of Dominic's application because it is his third in as many years. They believe that he has lied to them about why he was let go as a result. Dominic insists he's telling the truth and that the EDD has no reason to charge him under §2101(a). Is he correct?

Conclusion: Dominic might be charged merely because people at the EDD think he has applied to them more often than he should. This doesn't, however, permit them to maintain a charge against Dominic. Suspicion may be enough to motivate an investigation, but mere suspicion does not convict anyone; only real evidence does that. Dominic, it follows, is correct. The evidence against him is insufficient.

You've Been The Victim Of Mistaken Identity

Example: Defendant Dmitri has his telephone hacked. Pictures of Dmitri are taken. Some time later, police arrest Dmitri. They insist his image was used to fraudulently apply for, and receive, UIC benefits in San Francisco. Dmitri lives in Reseda and has never been to Northern California. He has been the victim of identity theft, he says, and is being mistaken for the real thief. Should he be charged under §2101(a)?

Conclusion: Dmitri had his image stolen during a phone hack. The image was used by someone in the Bay Area to file a false UIC even though he has no connection to the region. His identity has been taken and now he's being confused with the actual criminal applicant. Dmitri, therefore, committed none of the elements of the offense. He shouldn't be charged. Dmitri has been the victim of mistaken identity.     

You Had No Intent To Defraud

Example: Defendant Debora submits a UIC believing she has been fired from her job. She does not know that she's supposed to wait until she's actually unemployed, nor does anyone tell her this when she is being let go. Soon she discovers why: she wasn't actually fired. However, when the EDD learns of this from her employer, they assume she violated §2101(a) with a fraudulent application. Is Debora guilty?

Conclusion: Debora wasn't informed of rules regarding waiting until one is actually unemployed before applying to the EDD at least in part because she wasn't being fired. But no one made this clear to her - or at least they didn't make it clear enough that she knew not to submit an unemployment insurance claim. The submission, thus, was innocent. Debora is innocent. She had no intent to defraud. 

Related Offenses

Note: The crimes below are described generally as “related” because they're frequently charged with UIC §2101 and/or have common elements the prosecutor must prove beyond a reasonable doubt.

The California Penal Code includes several offenses related to Unemployment Insurance Fraud, such as: Grand Theft (CPC §487), Forgery (CPC §470(a), Forging, Counterfeiting, or Possessing a Fraudulent Public Seal (CPC §472), Perjury (CPC §118(a)), and Conspiracy (CPC §182(a)).

Grand Theft

California's statute criminalizing Grand Theft (CPC §487) applies, broadly, whenever property is taken with value exceeding $950. The crime also applies to automobile theft and the theft or firearms. Grand Theft does not require the use of fear or force. You must, however, move the property and keep it for some period. The crime is related to Unemployment Insurance Fraud because UIC fraud can also involve amounts or items constituting a violation of Penal Code Section 487.

The facts surrounding your case will determine the severity of the charge. This makes Grand Theft a “wobbler”[9] crime in California. If you're convicted of a felony grand theft, the penalty may be:

  • A term of up to three (3) years in a state prison;[10] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both imprisonment and a fine.[11]

Note: Grand theft involving a firearm is considered a “serious felony,”[12] making it punishable under the state's “Three Strikes” system. If you amass three “strikes” on your record, you'll serve at least twenty-five years in a state prison.[13]

You can find more information in the California Grand Theft Attorneys section of the Kann California Law Group's website. Feel free to contact the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County. Your call will go directly to a lawyer – and that's always guaranteed.

California Criminal Jury Instructions – Grand Theft

To convict you under CPC §487, the prosecution must prove the following beyond a reasonable doubt:

You took someone else's automobile, firearm, or property which was worth more than $950. When you took it, you intended on taking it permanently or removing it for long enough that the owner would lose a major portion of its value or enjoyment of it. Finally, you moved and kept it for some amount of time.

Example: Defendant Dickie knows Victim Veronica has a T206 Honus Wagner baseball card worth millions.[14] He sees the opportunity to steal it. He picks it up and walks across the room where he finds it. But he feels guilty and returns it. When Veronica sees him put it down, she accuses him of stealing it. He insists he couldn't be guilty under CPC §487(a); he didn't even leave the room, after all. Is Dickie guilty?  

Conclusion: Dickie took Veronica's property with the intent of keeping it. He kept it for long enough to walk across the room where he found the card. Finally, the card was worth a great deal more than $950. These are the elements of the charge. Dickie seems to believe he had to go a particular distance, or hold the card for some specified amount of time, to violate the law. He's incorrect. Dickie, therefore, is guilty.

Forgery

Forgery (CPC §470(a)) occurs whenever anyone signs the name of another person or a fictitious person to any of the items listed in subdivision (d) of the statute. Forgery is related to Unemployment Insurance Fraud because because Forgery can be used to acquire or alter UIC benefits, permitting the prosecution to charge you with both in the same trial.

Since you can be charged with a misdemeanor or a felony count, depending on the facts of your case, Forgery is a “wobbler” offense.[15] If you're convicted of felonious Forgery, the penalty may be:

  • A term of up to three (3) years in a state prison;[16] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[17]

More information can be found in the California Forgery Crime Lawyers section of the Kann California Law Group's website. If you have questions, contact any of the Kann California Law Group offices in Santa Clarita, Ventura, Encino, Pasadena or Los Angeles/Los Angeles County.  An attorney will take your call. That is always guaranteed.

California Jury Instructions – Forgery

To convict you under CPC §470(a), the prosecution must prove the following beyond a reasonable doubt:

You signed someone else's name or a false name to one of the documents listed in CPC §470(d). You did not have authority to sign that name. You knew that you did not have that authority. Finally, when you signed the document, you intended to defraud.

Example: Desperate to sell a poster for the current LA staging of Hamilton,[18] Defendant Doug forges Alexander Hamilton's signature on the poster. He knows Hamilton has been dead since 1804.[19] But Victim Vern purchases the poster. Only later does he realize that he has been duped. Vern reports Doug for violating CPC §470(d). Doug insists he can't have violated the law, on these facts. Is Doug correct?   

Conclusion: Doug affixed a name to a document. He didn't have the authority to do so. He knew this. He applied the signature to trick someone into buying the poster. These are elements of the offense. But posters are not among the documents covered by the statute. Since Hamilton is long dead, furthermore, he couldn't be victimized by having his signature forged. Though Doug committed Fraud, he is correct.

Forging, Counterfeiting, or Possessing a Fraudulent Public Seal

Forging, Counterfeiting, or Possessing a Fraudulent Public Seal (CPC §472) occurs when anyoneforges or counterfeits the seal of California, the seal of any public officer, the seal of any court, or the seal of any corporation or other public seal recognized by this or any other state, government, or country. The law also covers those who falsely make, forge, or counterfeit any such seal, as well as those who have any counterfeited seal in their possession, knowing it to be counterfeited, if they willfully conceal the fact. The crime is related to Unemployment Insurance Fraud because falsified documents can be used to alter benefits, permitting the prosecution to charge you with both crimes in the same trial.

If you're convicted of Forging, Counterfeiting, or Possessing a Fraudulent Public Seal, the penalty may be:

  • A term of up to three (3) years in a state prison;[20] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[21]

California Jury Instructions – Forging, Counterfeiting, or Possessing a Fraudulent Public Seal

To convict you under CPC §472, the prosecution must prove the following beyond a reasonable doubt:

You forged or counterfeited a seal or falsely made, or forged, or counterfeited an impression representing a seal of this state, or a legally authorized public officer, or a court of record, or a corporation, or a public seal legally authorized or recognized by any state, government, or country.

Additionally, when you did that act, you intended to defraud.

Example: Defendant Deena, a minor, creates a California ID card that says she's in her twenties. The ID includes an image of the state seal. She uses it to gets into Nightclub. But, when she's caught using it by Bouncer, she's reported and arrested for violating §472. She insists she never intended on defrauding anyone; she only wanted to get inside to drink alcohol and spend money. Should she be convicted?  

Conclusion: Deena created a false state identification card that bore an image of the state seal. She did this intending on misrepresenting her age to Bouncer, which, in turn, would illegally permit her to enjoy the services of Nightclub. While this doesn't cost Bouncer any money, it is a fraudulent representation. (However, Nightclub could be penalized for allowing a minor to drink.) Deena should be convicted.

Perjury

Perjury (CPC §118(a)) occurs when anyone speaking under oath in any of the cases in which the oath of the State of California has been administered states as true any material matter which he or she knows to be false. The same applies for every person who testifies under penalty of perjury in any of the cases in which the testimony is permitted by law of the State of California under penalty of perjury.

Section 118(a) applies irrespective of whether the statement is made or subscribed within the State of California. The crime is related to Unemployment Insurance Fraud because false statements made under oath are a part of fraudulently filing to alter a UIC benefit. If you're convicted of Perjury, the penalty may be:

  • A term of up to four (4) years in a state prison;[22] OR,
  • A fine of up to $10,000 (ten-thousand dollars); OR,
  • Both a fine and imprisonment.[23]

California Jury Instructions – Perjury

To convict you under CPC §118(a), the prosecution must prove the following beyond a reasonable doubt:

You took an oath to testify, or declare, or depose, or certify truthfully before a competent tribunal,

or officer, or person under circumstances in which the oath of the State of California lawfully may be given or you testified, or declared, or deposed, or certified under penalty of perjury under circumstances in which testimony, or declaration, or deposition, or certificate was permitted by law. When you did so, you willfully stated the information was true even though you knew it was false. The information was material. You knew you were making the statement under oath or penalty of perjury. When you made the false statement, you intended to testify, or declare, or depose, or certify falsely while under oath or penalty of perjury. Finally, if the statement was made in a declaration, deposition, or certificate, you signed and delivered it to someone else, intending that it be circulated or published as true.

Example: Defendant Davida has been deposed as a material witness in an LA trial. She goes to Nevada for another trial to give material testimony. She makes a sworn trial statement proving that she lied in her sworn LA deposition. When she returns, she's shocked to be charged under CPC §118(a). She insists she can't be guilty of perjury in California for making a statement in another state. Is Davida correct?

Conclusion: Davida testified under oath in an LA trial, then made another sworn statement in a Nevada trial, one making her LA statement untrue. Furthermore, her testimony was material. These are the elements of the crime. It's irrelevant that Davida was in Nevada when she perjured herself. The actual harm from Davida's perjury occurred by lying in the California courts. Davida, therefore, is incorrect.

Conspiracy

Conspiracy (CPC §182(a)) involves agreeing with another person to commit a specified crime. At the time of the agreement, you and at least one other conspirator must've intended that at least one of you would commit the crime. At least one of you must also have committed at least one alleged overt act to accomplish the crime. Finally, at least one overt act must've been committed in California. Conspiracy is related to Unemployment Insurance Fraud because agreeing with another to alter a benefit can permit the prosecution to charge you with both crimes in the same trial.

Since you can be charged with a misdemeanor or a felony count, depending on whether you conspire to commit a misdemeanor, Conspiracy is a “wobbler” offense.[24] If you're convicted of felonious Conspiracy, the penalty may be:

If you're convicted of felony Conspiracy, the penalty may be:

  • Any term consistent with punishment of the underlying crime.

California Jury Instructions – Conspiracy

To convict you under CPC §182(a), the prosecution must prove the following beyond a reasonable doubt:

You agreed with another person to commit a specified crime. At the time of the agreement, you and at least one other conspirator intended that at least one of you would commit the alleged crime. At least one of you also committed at least one alleged overt act to accomplish the crime. Finally, at least one overt act was committed in California.

Example: Defendant Dean and Partner are thieves. They agree to steal a vehicle at a particular place and time. But when Dean goes to the location, prepared to steal the car, he finds police waiting. Partner told them the plan when he was arrested (after agreeing to steal the car). Now Dean faces charges under CPC §182(a). He says he can't be guilty if Partner didn't show up to complete the theft. Is Dean correct?

Conclusion: Dean and Partner agreed they would steal a car. They agreed on a particular place and time to do it. Then, although he didn't know Partner wouldn't arrive, Dean went to steal the car, as agreed. This is an overt act meant to accomplish the crime after they'd specifically agreed they would steal the car. No further facts are required to convict Dean; Partner didn't need to arrive. Dean is incorrect.  

What Can I Do If I'm Charged With Unemployment Insurance Fraud?

The State of California regards Unemployment Insurance Fraud as a serious offense. If you're charged with Unemployment Insurance Fraud, it's essential that you retain a skilled, dedicated criminal defense attorney as soon as possible. Your rights, freedom, and livelihood are at stake.

Remember, a professional criminal defense attorney may be able to:

  • Negotiate a lesser charge in a plea bargain;
  • Reduce your sentence;
  • Or even get charges dismissed completely.

The attorneys at the Kann California Law Group have an excellent understanding of the local courts and an extensive knowledge of California's criminal justice system. We can represent you in Ventura, Santa Clarita, Los Angeles, Encino, Pasadena and many other Southern California cities. 

If you or someone you know has been arrested for, or charged with, Unemployment Insurance Fraud, our attorneys will analyze the facts of your case and plan a strategy that will help you obtain the best possible outcome.

Contact the Kann California Law Group today to schedule your free and confidential consultation.      

References

[1] See “Eligibility Requirements” at EDD State of California. 

[2] See “Wobbler Law and Legal Definition” definition at UsLegal.com

[3] See Unemployment Insurance Code [UIC] §2122.

[4] See California Penal Code [CPC] §19.

[5] See Endnote 3.

[6] See Endnote 3.

[7] See Endnote 4.

[8] See Endnote 5.

[9] See Endnote 2.

[10] See CPC §489 (a).

[11] See CPC §489 (c) (1).

[12] See CPC §1192.7 (c) (26).

[13] See CPC §667 (e) (2) (a) (ii).

[14] See “T206 Honus Wagner baseball card sells for record $6.6 million” by Erin Walsh. Yardbarker, Aug. 16. 2021. 

[15] See Endnote 2.

[16] See CPC §473 (a).

[17] See CPC §672.

[18] See “Hamilton (musical)” at Wikipedia.org.

[19] See “Alexander Hamilton” at Wikipedia.org.

[20] See CPC §18 (a).

[21] See Endnote 17.

[22] See CPC §126.

[23] See Endnote 17.

[24] See Endnote 2.

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