Inmates Bought Maseratis With Stolen Unemployment Cash

California’s pandemic unemployment system hemorrhaged tens of billions of taxpayer dollars as fraudsters—including prison inmates—exploited lax government controls to steal benefits meant for struggling Americans, with recent cases revealing sentences up to 17 years for schemes ranging from $1 million to tens of millions.

Story Snapshot

California’s Employment Development Department paid out $175 billion during the pandemic, with state audits estimating $20-55 billion lost to fraud—the largest in U.S. history.
Over 35,000 fraudulent unemployment claims were filed by or on behalf of prison inmates between March and August 2020, with more than half paid despite obvious ineligibility.
Recent sentencings include a Granada Hills man receiving 17.5 years for a multi-million dollar fraud scheme and a Glendale man getting 6.5 years for laundering $3 million in stolen benefits.
Fraudsters used stolen identities and purchased luxury items like Maseratis with taxpayer money while legitimate claimants faced delays and denials.

Government Incompetence Enables Massive Theft

California’s Employment Development Department processed over 24 million unemployment claims between 2020 and 2022, distributing $175 billion in benefits with virtually no fraud controls in place. State auditors determined that between $20 billion and $55 billion—up to nearly one-third of all payments—went to fraudsters rather than legitimate claimants. The agency rushed to disburse funds without implementing basic identity verification measures, creating an open vault for criminals. This represents not just bureaucratic failure but a betrayal of taxpayers and those genuinely hurt by pandemic lockdowns who struggled to receive legitimate assistance.

Prison-Based Fraud Exploits System Vulnerabilities

Between March and August 2020 alone, fraudsters filed more than 35,000 unemployment claims using the names and personal information of California prison inmates—individuals clearly ineligible for benefits. Astonishingly, state officials paid out more than half of these obviously fraudulent claims. Inmates accessed phones and personal documents to facilitate schemes, while outside conspirators collected and laundered the proceeds. California State Senator Shannon Grove called the prison-based fraud “unacceptable” and pushed for reforms restricting inmate access to documentation that enabled these crimes. The fact that incarcerated individuals could so easily defraud the system exposes the fundamental lack of oversight that characterized California’s pandemic response.

Lengthy Sentences Reflect Scope of Criminal Enterprise

Federal prosecutors have secured significant prison terms for major fraud conspirators, though these cases represent only a fraction of the total theft. Vahag Gasparyan of Granada Hills received a 17.5-year federal sentence for orchestrating a multi-million dollar scheme involving fake claims filed using stolen identities. In Los Angeles County, Robert Mateer was sentenced to 10 years for stealing $1 million, which he used to purchase a Maserati and other luxury items. A Glendale man received 6.5 years for laundering at least $3 million in fraudulently obtained benefits. The Department of Justice established a COVID-19 Fraud Enforcement Task Force in May 2021, but prosecutions continue years later as the full scope of the fraud becomes clear.

The fraud extended beyond California’s borders, with international criminal rings from Nigeria and Eastern Europe using automated systems to file thousands of fake claims. Domestic schemes involved hierarchical networks of leaders, money launderers, and mules who cashed benefits and funneled proceeds to organizers. Taxpayers bore the entire cost—not just through stolen funds but through delayed processing of legitimate claims as the overwhelmed system struggled to separate real applicants from fraudsters. Identity theft victims faced credit damage and bureaucratic nightmares. California led the nation with an estimated $32 billion in unemployment fraud losses, contributing to state budget deficits and depleting the national unemployment insurance trust fund that legitimate workers depend upon during economic hardship.