$32.6 billion.
Gone.
Then she got promoted.
California Labor Secretary Julie Su (D), appointed by Governor Gavin Newsom (D), waived the state’s fraud prevention requirements in Spring 2020 — against the Department of Labor’s own guidance. The result: an estimated $32.6 billion in improper unemployment payments, documented by the California State Auditor. California borrowed $20 billion from the federal government to cover the gap. Then President Biden promoted Su to Acting U.S. Labor Secretary — where she oversaw the federal response to the debt her own decisions helped create.
$32.6 billion. The largest UI fraud in American history.
$32.6 billion is larger than the annual GDP of more than 80 countries. It is more than the U.S. Navy’s entire annual shipbuilding budget. It is roughly twice the annual budget of the entire state of Nevada. It is the documented estimate — produced by California’s own State Auditor — of improper or fraudulent payments made by California’s Employment Development Department during the COVID-19 pandemic unemployment surge.
This money did not evaporate through negligence or an Act of God. It was paid out because the state’s Labor Secretary — appointed by the governor, confirmed by no one, answerable to no voters — waived the fraud controls that existed precisely to prevent this kind of theft. California had the tools. California chose not to use them. The person who made that choice went on to run the U.S. Department of Labor.
- →$32.6B — California EDD improper payments (CA State Auditor Report 2022-002)
- →$20B — Amount California borrowed from U.S. federal UI trust fund to cover the gap
- →Larger than the annual budget of 30+ U.S. states
- →Paid to incarcerated individuals, deceased claimants, fraud rings with industrial-scale operations
- →The PRAC (Pandemic Response Accountability Committee) tracked COVID UI fraud nationally: CA accounted for roughly one-third of total U.S. estimated COVID UI fraud
- →California's federal loan is the largest state UI trust fund borrowing in U.S. history
DOL told her not to. She waived the controls anyway.
In Spring 2020, as COVID-19 unemployment claims surged to unprecedented levels, the California Employment Development Department (EDD) — under the direction of Labor Secretary Julie Su — waived standard fraud prevention protocols. These included cross-matching Social Security numbers against federal prisoner databases, verifying employer payroll records before approving claims, and applying income verification checks required by DOL guidance.
The U.S. Department of Labor had issued guidance to states specifically warning against eliminating these controls during the surge — noting that high-volume periods are precisely when fraud rings exploit weaknesses. California’s EDD, under Su’s leadership, chose speed over safeguards. The California State Auditor’s 2022 report documented that EDD “had not fully implemented its pandemic-era fraud prevention measures” — the official government finding for what happened.
- Social Security number cross-matching with federal prisoner databasesConsequence: Prisoners collected UI benefits they were ineligible for — in volume
- Employer payroll verification before claim approvalConsequence: Claims filed by people with no employment relationship to listed employers paid automatically
- Income verification and identity authentication requirementsConsequence: Fraud rings filed at industrial scale using stolen identities — with no checks triggering rejections
- Deceased individual cross-check (SSA Death Master File)Consequence: Payments went to deceased claimants whose Social Security numbers were in circulation
“The EDD had not fully implemented its pandemic-era fraud prevention measures, exposing it to fraudulent claims.”
California State Auditor Report 2022-002, April 2022 — primary source document
The fraud had a governor. And a labor secretary. Both Democrats.
Appointed by Newsom. As California Labor Secretary, Su oversaw the EDD and the decision to waive fraud prevention requirements in Spring 2020. The California State Auditor documented the resulting $32.6B in improper payments under her watch. Biden subsequently nominated her as Acting U.S. Labor Secretary.
Newsom appointed Su and presided over the entire EDD fraud period. He signed California's operating budget for the EDD. When California needed to borrow $20B from the federal government to cover the gap, it was Newsom's administration that executed that borrowing.
Biden nominated Su as Acting U.S. Labor Secretary in 2023. In that role, she had oversight over DOL policies regarding state UI trust fund debt — including California's $20B federal loan, created in large part by her own prior decisions as CA Labor Secretary. The Senate Finance Committee raised this conflict in 2023. The Senate never confirmed her.
From fraud controls waived to Acting Labor Secretary.
She created the debt. Then she was put in charge of it.
When Julie Su served as California Labor Secretary (2019–2023), her decisions — specifically the waiving of EDD fraud controls — contributed directly to California needing to borrow $20 billion from the U.S. federal unemployment trust fund. That federal loan is real money, owed by California to the federal government, financed by taxpayer contributions to the federal UI system.
When Biden nominated Su as Acting U.S. Labor Secretary in 2023, she acquired oversight of the Department of Labor — including DOL’s policies on state UI trust fund debt, loan repayment schedules, and interest assessments. The person whose decisions helped generate California’s $20 billion federal debt was now in a position to influence how the federal government managed that debt.
The Senate Finance Committee raised this concern formally in a 2023 letter to the Department of Labor. Su was never confirmed by the Senate — bipartisan opposition existed, including from senators who had reviewed the EDD record. She served in an acting capacity for over a year without a Senate confirmation vote, utilizing a legal pathway that allowed indefinite service without Senate approval.
- →$32.6B — improper payments from CA EDD under Su's oversight (CA State Auditor)
- →$20B — California borrowed from federal UI trust fund, largest state UI loan in U.S. history
- →0 — Senate confirmation votes for Su as U.S. Labor Secretary (never confirmed)
- →1+ year — Su served as Acting U.S. Labor Secretary without Senate confirmation
- →0 — publicly disclosed accountability measures taken against Su for EDD failures
- →1 — Senate Finance Committee letter raising conflict-of-interest concerns (2023)