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Sacramento DA believes fraudulent EDD funds are being used to buy weapons, drugs

“This has become, unfortunately, like I’m saying, a cottage industry, so people are documenting how you do it," Schubert said.

SACRAMENTO, Calif. — A man and woman have been arrested after officers discovered 15 Employment Development Department (EDD) debit cards with various names on them and a red notebook with even more account information inside, Sacramento officials say. 

According to a press release from Sacramento County District Attorney Anne Marie Schubert and Sacramento Police Chief Daniel Hahn, 25-year-old James Smith and his girlfriend, 21-year-old Chyna Hill, were served a search warrant at an apartment on Quay Court on January 14. 

During the investigation, officers say they found several illegally possessed assault weapons with extended magazines, handguns, and more than $1,000 in cash. 

RELATED: Former EDD employees prosecuted in unemployment fraud cases

Officers also say they discovered 15 EDD debit cards with different names on them and a red notebook. According to investigators, inside the notebook was a list of 55 different individual profiles with names, birthdates, social security numbers, usernames and passwords associated with EDD accounts. 

Officers say an examination of the accounts reveals that Hill and Smith had received more than $550,000 in fraudulent EDD claims.

“What we’re seeing is guns, drugs, EDD cards, seems to be very common, and cash, large amounts of cash,” said Sacramento County District Attorney Anne Marie Schubert.

Schubert says there has been a spike in violence that seems to coincide with a lot of the cases of EDD fraud and it's happening much more frequently. Just last month, a 26-year-old man was arrested for having a so-called "fraud bible" in addition to unlicensed guns, fake IDs and EDD paperwork. 

“This has become, unfortunately, like I’m saying, a cottage industry, so people are documenting how you do it, writing about it, I’m sure they’re buying information off the internet," Schubert said.

And it doesn't end there.

“What I can say without going into specifics is that we have a pending murder case where the motivation in our opinion is motivated by EDD cards,” she said.

While she wouldn't say which homicide yet, she believes the EDD cards associated with it were all fraudulent.

“I mean somebody has a backpack full of EDD cards," explained Schubert. "I don’t think it’s all legitimate.”

As for Hill and Smith, the two were arrested by the Sacramento Police Department's SWAT team Friday. According to the Sacramento District Attorney's Office, they face two counts of being in possession of assault weapons, 23 counts of unemployment insurance fraud, 13 counts of possession of stolen property and one count of possessing identifying information with the intent to defraud more than 10 people. 

RELATED: EDD fraud could cost average California family thousands of dollars, said Rep. Tom McClintock

Smith also faces charges of possessing firearms as a felon and possessing ammunition as a felon. Police say he is a validated gang member and has a prior strike conviction for residential burglary. 

Cases of fraudulent activity like this are why the EDD abruptly froze 1.4 million accounts at the end of 2020. Schubert says the goal of aggressively prosecuting cases like these are not only to curb the violence in the community but to get the unemployment money back into the hands of those who need it most fast.

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