Information — United States v. Phyllis Hope Stitt and Kenneth Earl Riley, C.D. Cal. (Document 1)

Summary

A criminal information in United States of America v. Phyllis Hope Stitt and Kenneth Earl Riley, filed December 2, 2024 as Document 1 in No. 2:24-cr-00717-AB in the U.S. District Court for the Central District of California. It charges both defendants with conspiracy to commit mail fraud and bank fraud under 18 U.S.C. § 1349. The information alleges that Stitt, an employment program representative at the California Employment Development Department, filed fraudulent unemployment insurance applications from about March 2020 to September 2021 for people who were employed, not unemployed due to the pandemic, or deceased, and backdated claims. It alleges that debit cards went to addresses Riley could access and that Riley activated them and withdrew cash, listing overt acts such as $1,000 ATM withdrawals. The signature block names United States Attorney E. Martin Estrada.

Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

      Case 2:24-cr-00717-AB   Document 1   Filed 12/02/24   Page 1 of 9 Page ID #:1



 1

 2

 3

 4                                                                  12/02/2024
 5                                                                      ASI

 6

 7

 8                            UNITED STATES DISTRICT COURT

 9                     FOR THE CENTRAL DISTRICT OF CALIFORNIA

10

11   UNITED STATES OF AMERICA,                 No.    FU$%
12              Plaintiff,                     I N F O R M A T I O N

13              v.                             [18 U.S.C. § 1349: Conspiracy to
                                               Commit Mail Fraud and Bank Fraud]
14   PHYLLIS HOPE STITT and
     KENNETH EARL RILEY,
15
                Defendants.
16

17

18        The United States Attorney charges:

19                                 [18 U.S.C. § 1349]

20                                  [ALL DEFENDANTS]

21        INTRODUCTORY ALLEGATIONS

22        At times relevant to this Information:

23        1.    The California Employment Development Department (“EDD”)

24   administered the unemployment insurance (“UI”) benefits program for

25   the State of California.

26         2.   On March 13, 2020, the President of the United States

27   declared COVID-19 an emergency under the Robert T. Stafford Disaster

28   Relief and Emergency Assistance Act.            As a result, Congress passed
     Case 2:24-cr-00717-AB   Document 1   Filed 12/02/24   Page 2 of 9 Page ID #:2



 1   the Coronavirus Aid, Relief, and Economic Security Act (“CARES

 2   Act”), which the President signed into law on March 27, 2020.               The

 3   CARES Act provided over $2 trillion in economic relief protections

 4   to the American people from the public health and economic impacts

 5   of COVID-19.

 6        3.   Prior to the enactment of the CARES Act, to be eligible for

 7   UI benefits administered by EDD, a person had to have been employed

 8   and worked in California and received at least a certain amount of

 9   wages from an employer in the 18 months preceding his/her UI

10   benefits claim.    Because of this requirement, self-employed workers,

11   independent contractors, and employees with insufficient earnings

12   were not eligible to receive regular UI benefits.

13        4.   The CARES Act established a new program — Pandemic

14   Unemployment Assistance (“PUA”) — to provide UI benefits during the

15   COVID-19 pandemic to people who did not qualify for regular UI

16   benefits, including business owners, self-employed workers,

17   independent contractors, and those with a limited work history, who

18   were out of business or had significantly reduced their services as

19   a direct result of the pandemic.        UI benefits provided under the PUA

20   program were sometimes referred to as PUA benefits.

21        5.   Under the PUA provisions of the CARES Act, a person who was

22   a business owner, self-employed worker, independent contractor, or

23   gig worker could qualify for PUA benefits administered by EDD if

24   he/she previously performed such work in California and was

25   unemployed, partially unemployed, unable to work, or unavailable to

26   work due to a COVID-19-related reason.

27        6.   Persons applying for PUA benefits did not need to submit

28   any supporting documents to EDD with their applications.              Claimants
                                            2
      Case 2:24-cr-00717-AB    Document 1   Filed 12/02/24   Page 3 of 9 Page ID #:3



 1   reported their total income for the 2019 calendar year on the

 2   application.     The stated income was used to calculate the benefits

 3   to be paid, which were at least $167 per week.

 4         7.   A PUA benefits claimant was required to answer various

 5   questions on his/her application to establish his/her eligibility

 6   for the benefits.        The claimant was required to provide his/her

 7   name, Social Security Number, and mailing address.               The claimant was

 8   also required to identify a qualifying occupational status and

 9   COVID-19 related reason for being out of work.

10        8.    After it approved an application for UI benefits, including

11   an application submitted pursuant to the PUA program, EDD would

12   create a debit account (“EDD debit account”) with Bank of America, NA

13   (“Bank of America”).       An Electronic Bill Payment (“EBP”) debit card

14   linked to the EDD debit account would then be mailed via the United

15   States Postal Service from Bank of America to the claimant at the

16   address the claimant provided as his/her mailing address on his/her

17   UI benefits application.

18        9.    EDD would deposit UI benefits, including pandemic benefits,

19   to the EDD debit account. The debit card could then be used to

20   withdraw the benefits from the EDD debit account in cash, using

21   automated teller machines (“ATMs”), including ATMs that Bank of

22   America and U.S. Bank operated, and to pay for purchases.

23        10.   Bank of America and U.S. Bank were financial institutions

24   that were insured by the Federal Deposit Insurance Corporation.

25        11.   Defendant PHYLLIS HOPE STITT and defendant KENNETH EARL

26   RILEY were residents of Los Angeles County, California, and in a

27   relationship with each other between at least as early as in or

28   around March 2009 and continuing to approximately March 2021.
                                              3
      Case 2:24-cr-00717-AB   Document 1   Filed 12/02/24   Page 4 of 9 Page ID #:4



 1        12.   Defendant STITT was employed by EDD as an employment

 2   program representative whose job duties included determining claimant

 3   eligibility for UI benefits and performing claim processing

 4   activities.

 5        THE OBJECTS OF THE CONSPIRACY
 6         13. Beginning no later than in or around March 2020 and
 7   continuing until at least in or around September 2021, in Los
 8   Angeles County, within the Central District of California, and
 9   elsewhere, defendants STITT and RILEY conspired with one another and
10   with others known and unknown to the United States Attorney, to
11   commit offenses against the United States, namely: (a) mail fraud,
12   in violation of Title 18, United States Code, Section 1341; and
13   (b) bank fraud, in violation of Title 18, United States Code,
14   Section 1344(2).
15        MANNER AND MEANS OF THE CONSPIRACY
16         14. The objects of the conspiracy were carried out, and were to
17   be carried out, in substance, as follows:
18              a.    Defendant STITT would acquire the names, dates of
19   birth, social security numbers, and other personal identifying
20   information of individuals.
21              b.    As an employee of EDD, defendant STITT would file, and
22   cause the filing of, fraudulent EDD applications for UI benefits,
23   including pandemic benefits, for individuals who were ineligible
24   because, among other reasons, they were: (i) employed; (ii) not
25   unemployed due to the pandemic; or (iii) deceased (the “fraudulent
26   EDD applications”).
27              c.    To cause EDD to approve the fraudulent EDD
28   applications, defendant STITT would submit materially false

                                             4
      Case 2:24-cr-00717-AB   Document 1   Filed 12/02/24   Page 5 of 9 Page ID #:5



 1   information to EDD on the fraudulent EDD applications, including that

 2   the named claimant had been employed in California and had become

 3   unemployed as a direct result of the COVID-19 pandemic and was

 4   entitled to UI benefits.      Defendant STITT would also falsely document

 5   in the EDD claim records that the named claimant had provided

 6   employment history and driver’s license information.             In fact, as

 7   defendant STITT knew, the information about the claimants’ employment

 8   status and records those claimants had purportedly provided was not

 9   true.

10              d.    To increase the amount of UI benefits to be paid,

11   defendant STITT would backdate UI claims to generate UI benefit

12   payments to be paid out for a period prior to the filing of the claim

13   and would falsely certify that that the named claimant was unemployed

14   due to the pandemic and was actively searching for employment in

15   order for UI pandemic benefits to be disbursed.

16              e.    To gain control of and access to the UI benefit

17   payments that the fraudulent EDD applications were intended to

18   generate, defendant STITT would include as the mailing address on the

19   fraudulent EDD applications addresses to which defendant RILEY and/or

20   his associates had access.

21              f.    As a result of filing fraudulent EDD applications and

22   processing claims that falsely represented and caused to be falsely

23   represented that the named claimants were entitled to UI benefits

24   administered by EDD when, as defendant STITT then knew, they were

25   not, defendant STITT would cause EDD to:

26                    i.      Authorize fraudulent UI benefits, including

27   pandemic benefits, to be provided via EDD debit accounts established

28   at Bank of America in the names of the named claimants who were
                                             5
      Case 2:24-cr-00717-AB   Document 1   Filed 12/02/24   Page 6 of 9 Page ID #:6



 1   ineligible for pandemic benefits administered by EDD because, among

 2   other reasons, they were (i) employed; (ii) not unemployed due to the

 3   pandemic; or (iii) deceased; and

 4                     ii.    Cause EBP debit cards, that is, debit cards in

 5   the names of the named claimants linked to the EDD debit accounts at

 6   Bank of America, to be mailed to the mailing addresses to which

 7   defendant RILEY and/or his associates had access.

 8              g.     After EDD approved the fraudulent EDD applications and

 9   claims and disbursed the UI funds (including pandemic benefits) to

10   the EDD debit accounts, and after Bank of America issued the EDD

11   debit cards linked to those accounts, defendant RILEY would call Bank

12   of America to activate the EBP debit cards.

13              h.     Thereafter, defendant RILEY and his associates would

14   fraudulently assume the identities of the EDD debit account holders

15   and use the corresponding EBP debit cards to make fraudulent cash

16   withdrawals of the benefits, knowing that they were not entitled to

17   the withdrawals.     The withdrawals would be made through cash

18   withdrawals from ATMs (including ATMs that Bank of America and U.S.

19   Bank operated in Los Angeles and San Bernardino Counties, and

20   elsewhere), electronic transfers, and point-of-sale retail purchases.

21        OVERT ACTS
22         15. On or about the dates set forth below, in furtherance of
23   the conspiracy, and to accomplish its objects, defendants STITT and
24   RILEY, and others known and unknown to the United States Attorney,
25   committed and willfully caused others to commit the following overt
26   acts, among others, within the Central District of California, and
27   elsewhere:
28

                                             6
      Case 2:24-cr-00717-AB   Document 1     Filed 12/02/24   Page 7 of 9 Page ID #:7



 1                                     Victim J.G.

 2             Overt Act No. 1:            On August 25, 2020, defendant STITT

 3   filed a fraudulent application for pandemic assistance UI benefits
 4   that falsely asserted that the named claimant, victim J.G., was
 5   unemployed as a stylist/barber due to the COVID-19 pandemic, and
 6   verified J.G.’s driver’s license information, which resulted in the
 7   approval and disbursement of UI benefits.
 8             Overt Act No. 2:            On September 5, 2020, defendant RILEY
 9   contacted Bank of America to activate the EBP debit card ending in
10   6332 that was linked to the EDD debit account established to disburse
11   UI benefits to victim J.G.
12             Overt Act No. 3:            On September 5, 2020, defendant RILEY
13   used the EBP debit card ending in 6332 issued in the name of victim
14   J.G. at a Bank of America ATM in Long Beach, California, to withdraw
15   $1,000.
16                                     Victim R.W.
17             Overt Act No. 4:            On May 26, 2021, defendant STITT
18   accessed EDD records relating to a UI claim for pandemic assistance
19   benefits in the name of victim R.W., who died on September 25, 2020,
20   and requested certification for unemployment eligibility for 16 weeks
21   of UI benefits backdated to January 2, 2021.
22             Overt Act No. 5:            On May 29, 2021, defendant RILEY used
23   an EBP debit card ending in 6977 and issued in the name of victim
24   R.W. to withdraw $1,000.
25             Overt Act No. 6:            On June 27, 2021, defendant RILEY
26   contacted Bank of America to activate a new EBP debit card ending in
27   6356 and linked to the EDD debit account established to disburse UI
28   benefits to victim R.W.
                                               7
      Case 2:24-cr-00717-AB   Document 1     Filed 12/02/24   Page 8 of 9 Page ID #:8



 1              Overt Act No. 7:           On June 27, 2021, defendant RILEY used

 2   the EBP debit card ending in 6356 issued in the name of victim R.W.

 3   at a Bank of America ATM in Los Angeles, California, to withdraw

 4   $1,000.

 5                                     Victim D.W.

 6              Overt Act No. 8:           On August 31, 2021, defendant STITT
 7   accessed EDD records relating to a UI claim for pandemic assistance
 8   benefits in the name of victim D.W. and changed the mailing address
 9   on the claim in the name of victim D.W. to a mailing address to which
10   defendant RILEY had access.
11              Overt Act No. 9:           On August 31, 2021, defendant STITT
12   accessed EDD records relating to a UI claim for pandemic assistance
13   benefits in the name of victim D.W. and reactivated a dormant UI
14   claim in the name of victim D.W.
15              Overt Act No. 10:          On August 31, 2021, defendant STITT
16   accessed EDD records relating to a UI claim for pandemic assistance
17   benefits in the name of victim D.W. and requested certification for
18   unemployment eligibility for 11 weeks of UI benefits in the name of
19   victim D.W., backdated to June 19, 2021.
20              Overt Act No. 11:          On August 31, 2021, defendant RILEY
21   contacted Bank of America by telephone regarding an EBP debit card
22   ending in 2402 issued in the name of victim D.W. and linked to the
23   EDD debit account established to disburse UI benefits to victim D.W.
24              Overt Act No. 12:          On September 10, 2021, defendant RILEY
25   contacted Bank of America by telephone twice regarding an EBP debit
26   card ending in 2402 issued in the name of victim D.W. and linked to
27   the EDD debit account established to disburse UI benefits to victim
28
                                               8
      Case 2:24-cr-00717-AB   Document 1     Filed 12/02/24   Page 9 of 9 Page ID #:9



 1   D.W., the same day that the 11 weeks of the backdated UI benefits

 2   referenced above in Overt Act No. 13 were approved.

 3             Overt Act No. 13:           On September 11, 2021, defendant RILEY

 4   contacted Bank of America by telephone twice regarding an EBP debit
 5   card ending in 2402 issued in the name of victim D.W. and linked to
 6   the EDD debit account established to disburse UI benefits to victim
 7   D.W.
 8              Overt Act No. 14:          On September 11, 2021, defendant RILEY
 9   used the EBP debit card ending in 2402 issued in the name of victim
10   D.W. at a Bank of America ATM in Los Angeles, California, to withdraw
11   $1,000.
12

13
                                                E. MARTIN ESTRADA
14                                              United States Attorney
15

16
                                                MACK E. JENKINS
17                                              Assistant United States Attorney
                                                Chief, Criminal Division
18
                                                KRISTEN A. WILLIAMS
19                                              Assistant United States Attorney
                                                Chief, Major Frauds Section
20
                                                ROGER A. HSIEH
21                                              Assistant United States Attorney
                                                Deputy Chief, Major Frauds Section
22
                                                STEVEN M. ARKOW
23                                              Assistant United States Attorney
                                                Major Frauds Section
24

25

26

27

28
                                               9


File and source

File

1-information.pdf

Size

128,747 bytes

SHA-256

ec0fcce7065083bc9793ffd39a799d77f439b04017a3e3e69fd7fe732f631d3e

Our copy

1-information.pdf

Original

archive.org