The OCDA is prosecuting several O.C. suspects who filed fake COVID-19 related unemployment claims

SANTA ANA, Calif. – Orange County District Attorney Todd Spitzer was joined by Assemblywoman Cottie Petrie-Norris at a press conference this morning to announce the prosecution of two business owners who opened up a Garden Grove storefront with the sole purpose of filing false unemployment claims with the state of California for people who did not qualify in order to steal taxpayer dollars intended to help those out of work due to the COVID-19 pandemic.

Nearly $500,000 in cash and bank accounts was recovered during the District Attorney’s investigation in conjunction with the fraudulent activity being carried out by that business.

District Attorney Spitzer also announced the prosecution of eight more people, including six state prisoners, involved in two other unemployment schemes to also defraud California taxpayers of tens of thousands of dollars. Among those charged with filing false unemployment claims are two convicted murders who claimed the COVID-19 pandemic had impacted their ability to work when in reality it was the fact that they are serving sentences up to life in prison that prevented them from being gainfully employed.

The ten individuals were part of three separate and unrelated complex schemes to steal taxpayer dollars intended to help those Californians hit hardest by the COVID-19 pandemic and are struggling to put food on the table and pay for basic necessities after losing their jobs or seeing the business dramatically reduced.

At an Assembly Budget Committee subcommittee hearing Tuesday Assembly Accountability & Administrative Review Chairwoman Petrie-Norris will question the director of California’s Employment Development Department, which administers the state’s unemployment benefits, and directors from Bank of America, which has been contracted since 2010 to electronically pay out unemployment benefits, regarding the failures of the state’s unemployment system that led to rampant fraud.

“I am beyond disturbed that while we are grappling with a worldwide pandemic that has killed millions of people, forced unemployment rates to levels not seen since the 1930s, and left families across America struggling to put feed their children and themselves that opportunists and profiteers are taking advantage of California’s unemployment system to steal money that is meant to help hardworking Californians survive these stressful times,” said Orange County District Attorney Todd Spitzer. “This is not an Orange County problem. This is a statewide problem that has cost California taxpayers nearly $10 billion dollars in fake unemployment claims. Money that should have gone to out-of-work hairstylists, waiters, and other out-of-work Californians instead ended up in the pockets of cold-blooded murderers and businessmen who saw an opportunity to make a quick buck and took it – at the expense of taxpayers. These investigations are not the end; they merely scratch the surface of the depth of unemployment fraud in the state of California. All my fraud investigative resources have been dedicated to EDD fraud over the last few months, leaving no resources for our regular fraud cases. It is simply not sustainable – and it is not fair to the victims of fraud in Orange County and it is not fair to the taxpayers of the state of California.”

“Thank you to District Attorney Spitzer and his team for their determination and dedication to bring EDD fraudsters to justice and recover stolen taxpayer dollars. These latest Orange County EDD fraud cases are incredible, and we know this is just the tip of the iceberg. Fraudsters and criminals have stolen billions of dollars from California taxpayers. This is massive, organized fraud. And the State needs to mount a massive, organized response – this will require a dedicated effort, clear ownership and adequate funding,” commented Assemblywoman Cottie Petrie-Norris. “As Chair of the Assembly’s Accountability and Administrative Review Committee, I am conducting oversight hearings now to understand and rectify the failures of the state’s unemployment system that led to this rampant fraud. And I am committed to bringing all stakeholders to the table – including the Attorney General’s office, local District Attorneys, the Governor’s office and my fellow legislators – in order to beef up statewide EDD fraud prosecutions, appropriately resource these investigations and successfully bring these criminals to justice.”  

The Orange County District Attorney’s Office launched an investigation In November 2020 in conjunction with California’s Employment Development Department (EDD) after receiving a tip that a Garden Grove business was advertising to help individuals apply for the Pandemic Unemployment Assistance program, which provides financial assistance to workers who don’t normally qualify for unemployment, including independent contractors, gig workers and the self-employed.

More than 1,000 fraudulent EDD applications are believed to have been filed by Nguyen Social Services, LLC on behalf of individuals who did not qualify for the benefits, including a 99-year-old woman whose application claimed she lost work as a housekeeper due to COVID-19. The woman did not work as a housekeeper and had not worked for several decades.

The EDD has paid out $113 billion in unemployment benefits over the 10 months of the COVID-19 pandemic, including $43 billion as part of the expedited — and less protected — Pandemic Unemployment Assistance program.

The state contractor hired to identify fraud in EDD claims has reported that at least 10% of unemployment claims may have been fraudulent before restrictions were put in place in October. A 10% fraud rate could total $9.8 billion in fraudulent EDD payments made from March through September.

Summaries of the three Orange County cases announced by District Attorney Spitzer today:

People v. Huy Duc Nguyen and Mai Dac Som Nguyen

Huy Duc Nguyen, 32 of Garden Grove, and Mai Dacsom Nguyen, 40, of Garden Grove, are accused of forming Nguyen Social Services for the sole purpose of filing false unemployment claims with California’s Employment Development Department for people who did not qualify.

Nguyen and Nguyen are accused of blatantly advertising the scheme in Vietnamese to bring people into the business in order to file false claims on their behalf. After they filed the applications on behalf of people who did not qualify, they would collect a kickback fee between $200 and $700.

On December 17, 2020, Orange County District Attorney investigators in conjunction with an investigator from EDD served a search warrant on Nguyen Social Services, LLC located at 9840 Garden Grove Blvd. in Garden Grove and multiple other locations related to the business, including a Garden Grove trailer.

Investigators seized more than $300,000 in cash during the search. Investigators also froze bank accounts tied to the business. In total, investigators seized approximately $490,000 they believe is related to EDD fraud being committed by Nguyen Social Services, LLC.

Nguyen and Nguyen were arrested on December 17, 2021.

Mai Nguyen has been charged with four felony counts of perjury, four felony counts of false statement, and one felony count of conspiracy to defraud another of property. Huy Nguyen has been charged with one felony count of perjury, one felony count of false statement, and one felony count of conspiracy to defraud another of property.

They are scheduled to be arraigned on March 19, 2021. Additional charges may be filed as investigators continue interviewing witnesses and reviewing bank records.

Mai Nguyen faces a maximum sentence of 7 years, 8 months in state prison if convicted on all charges. Huy Nguyen faces a maximum sentence of 4 years, 8 months in state prison if convicted on all charges.

People v. Sandra Pineda, Hector Jimenez, Ryan Vargas, Leonel Hernandez, and Greg Garcia

An Anaheim tax preparer has been charged with conspiring with four state prisoners, including two convicted murderers, to file false unemployment applications with EDD.

The Orange County District Attorney’s Investigation, in conjunction with the California Department of Corrections and Rehabilitation revealed Sandra Pineda, 35, of Anaheim, filed an unemployment claim for a state prisoner sentenced to 50 years to life for murder. Sandra Pineda claimed in the application that Leonel Hernandez, 30, had worked 40 hours a week in the last 18 months and had an income of $45,263 and was forced to stop working because COVID-19 has severely limited his ability to perform his “customary work activities.”

Hernandez has been incarcerated in Kern Valley State Prison since February 24, 2010.

Pineda has also been accused of conspiring to file false unemployment applications with three other state prisoners, including:

• Greg Garcia, 29, who is incarcerated at the Substance Abuse Treatment Facility and State Prison, Corcoran.
• Ryan Vargas, 36, third striker serving a 64 year sentence at Kern Valley State Prison for assault with a firearm
• Hector Jimenez, 31, third striker serving a 23 year, 4 months in Solano State Prison for first degree burglary

The state prisoners are accused of providing their personal identifying information to Pineda for her to file the false unemployment claims with EDD. Pineda is accused of using the fraudulently obtained EDD debit cards to withdraw money. The suspects were able to obtain this money due to a lack of checks and balances within the EDD system and lack of cross-check with CDCR incarcerated persons who would have been ineligible to receive benefits.

Assemblywoman Petrie-Norris introduced Assembly Bill 110 last month that would require EDD to access incarceration records for the purpose of cross-checking benefit applications. The bill was co-authored by Assemblymembers David Chiu and Adrin Nazarian, and Senator Ben Allen.

Pineda was arrested by Orange County District Attorney investigators on January 14, 2021. She has been charged with five felony counts of perjury, five felony counts of making a false statement, and one felony count of conspiracy to defraud another of property. She faces a maximum sentence of 8 years and 8 months in state prison if convicted on all charges.

Pineda was released on $0 bail as a result of Covid-19 bail rules and is scheduled to be arraigned April 14, 2021.

Garcia, Hernandez, Vargas, and Jimenez have all been charged with one felony count of filing a false statement and one felony count of conspiracy to commit theft by false pretenses.

Jimenez, Vargas, and Hernandez all face a maximum sentence of 7 years and 8 months in state prison if convicted on all charges. Garcia faces a maximum sentence of 3 years and 8 months if convicted on all charges.

People v. Rosalva Bahena, Bruno Galindo, and Guillermo Rodriguez

Rosalva Bahena, 35, of Irvine, is accused of conspiring with her brother, Bruno Galindo, who is currently serving 44 years to life in High Desert State Prison for attempted murder and gang charges, and Guillermo Rodriguez, also a state prisoner,  to defraud the EDD out of at least approximately $50,000. Rodriguez is a third striker who is serving a 110 years to life sentence at High Desert State Prison for strangling his female neighbor to death in Fullerton.

Bahena is currently on parole after serving time in state prison for carjacking.

Bahena, Galindo and Rodriguez are accused of filing fraudulent applications using CDCR inmate information which were processed without issue through the EDD. Bahena is accused of then using the fraudulently obtained EDD debit cards to withdraw thousands of dollars a week.

Bahena, who was operating out of Orange County motels, was arrested by Orange County District Attorney investigators on January 14, 2021.

Bahena has been charged with three felony counts of perjury, three felony counts of filing a false statement, three felony counts of money laundering derived from criminal activity, and one felony count of conspiracy to commit theft by false pretenses.

She is currently being held on $125,000 bail at the Orange County Women’s Jail.

She has pled not guilty and is scheduled to appear in court on February 2, 2021. Bahena faces a maximum sentence of 17 years, 4 months in state prison if convicted on all charges.

Galindo is accused of providing personal identifying information of other prisoners to his sister for her to file false unemployment claims.

He has been charged with three felony counts of filing a false statement, three felony counts of money laundering derived from a criminal activity, and one felony count of conspiracy to commit theft by false pretenses. He faces a maximum sentence of 14 years in state prison if convicted on all charges.

Rodriguez has been charged with one felony count of filing a false statement and one felony count of conspiracy to commit theft by false pretenses. He faces a maximum sentence of 7 years, 4 months in state prison if convicted on all charges.