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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 7022
Experience:  Significant experience in all areas of employment law.
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I have a question about unemployment insurance. I have been

Resolved Question:

I have a question about unemployment insurance. I have been accused of fraud overpayment because they believed I withheld information and received benefits I should not have received. I received a notice in the mail and was assessed a penalty for the amount of the overpayment. I sent back an appeal stating I was not employed by a company but was on a spec project which I was not to be paid for. I am a freelance artist that does projects like this in order to obtain new paid work. EDD claims that on their forms it clearly states that "have you worked weather you were paid or not" that I falsified info because I was clearly working but not being paid. I have a court case set for this Friday Dec 14th. I am willing to pay for any fines accrued but I just don't want to have any criminal charges held against me. What are my options?
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 1 year ago.
Hello and thank you for entrusting me to answer your question.

First, you should know that the EDD classifies overpayments of UE benefits as either fraudulent or non-fraudulent.

A fraudulent overpayment occurs only when a claimant knowingly gives false information or withholds information and receive benefits that they should not have received. Withholding or giving false information to obtain unemployment insurance benefits is a potentially criminal offense. Specifically, California Unemployment Insurance Code 2101 states:

"It is a violation of this chapter to willfully make a false statement or representation, to knowingly fail to disclose a material fact, or to use a false name, false social security number, or other false identification to obtain, increase, reduce, or defeat any benefit or payment..."

With a fraudulent overpayment, the claimant is assessed a penalty in the amount of 30 percent of the amount of the overpayment and a false statement disqualification of 5 to 23 weeks. Fraud overpayments and penalties must be repaid.

What you have going for you in the present situation is that the information you failed to report likely would not have impacted your ability to collect benefits, since it was unpaid work. Thus, in addition to your argument that the failure to report was not "wilfull" because you did not believe this work needed to be reported, an individual in your circumstance can argue that your ommission did not result in your obtaining, increasing, reducing, or defeating any benefit or payment--your benefits would have remained the exact same even if you had identified this work.

These would be the arguments an individual in your circumstance would want to assert at your upcoming hearing. Even if the administrative law judge determines that the payments you received were obtained by means of fraud (which would obligate you to repay them plus penalties), it is very unlikely that criminal charges will result.

The EDD is not in charge of the decision to bring criminal charges. The most they can do is refer the matter to the District Attorney's Office for consideration of charges--it is up to the DA whether to go from there, and given the mitigating circumstance here, they most likely would decline to proceed.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, I would be most grateful if you would remember to provide my service a positive rating, as this is the only way I will receive credit for assisting you.

Finally, please bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.

Very best wishes and happy holidays to you.
Customer: replied 1 year ago.
The main problem in this case is that I finally did get paid for the work that I did for this company but didn't receive payment until 2weeks later after I turned in my unemployment paperwork for those 2weeks previous. I never did report the money that I received on any future paperwork because I didn't know what to do at that point. I really feel like they will really come down hard on me and wondering if I need an attorney present in the upcoming proceedings this Friday. I am presently working in Canada and flying down to LA to go to this case and get it figured out. I am fully willing to pay the fines I just don't want to get involved in a criminal case because it may effect my traveling back and forth from Canada.
Expert:  Patrick, Esq. replied 1 year ago.
Brian,

Thank you very much for your reply. First, please understand that the proceeding you are attending this Friday is separate from any potential criminal proceeding that may be initiated against you. Your hearing with the EDD on Friday will be to determine whether your conduct was fraudulent for the purpose of imposing penalties against you and mandating that you repay the disbursed sums.

Although the hearing on Friday is not itself a criminal proceeding, it will have important implications with regard to whether criminal proceedings are later initiated, as the EDD has discretion in determining whether or not to refer matters to the DA for prosecution. For this reason, it would not be a bad idea to have an attorney present at the time of the hearing. For attorney referrals, see here: http://www.calbar.ca.gov/Public/LawyerReferralServicesLRS.aspx You will likely want an attorney that specializes in criminal defense. If you can find one that also has experience with the EDD, that would of course be preferable. You may need to call around.

Again, it will be important to emphasize that the failure to report was not willful or intentional, but rather the result of misunderstanding. Full cooperation and repayment of the overpaid sums if so ordered would ordinarily provide you with the best chance that criminal charges will not later be filed against you.

Please do not hesitate to let me know if you have any further questions or concerns. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.

Kindest regards.

Customer: replied 1 year ago.
If they find that I was unlawfully withholding information and payment info to receive compensation but I pay all fines and plead it was all just a misunderstanding. What kind of further case would they have against me? I'm just worried about being prosecuted further into a criminal court...yikes

Thank you very much for your help.
Expert:  Patrick, Esq. replied 1 year ago.
Thank you again for your reply.

Any prospective criminal case is completely separate form the EDD hearing. Paying the fines and principle back demonstrates good faith proceeding forward and will be regarded as a mitigating factor, but this does not negate the underlying criminal offense.

The District Attorney has a lot of discretion whether to prosecute an offense, and so mitigating factors such as prompt repayment may influence the decision to proceed with criminal charges. Once charges are filed, however, the proseuction's case would be reasonably strong.

If you do not have a criminal record, you would likely be able to negotiate a plea that would involve no jail time and perhaps not even any criminal record if you are eligible for and complete a diversion program. A criminal defense attorney would be able to provide you more information with respect to these options and potential outcomes.

Again, it is my sincere hope that I have addressed your concerns. If you would be so kind, please remember to rate my service, as this is the only way I receive credit for my time.

Best wishes moving forward.
Patrick, Esq., Lawyer
Satisfied Customers: 7022
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and 2 other California Employment Law Specialists are ready to help you

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