Iowa couple victims of EDD fraud in California, caused closing on their new home put in limbo

By Brittany Johnson

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    SACRAMENTO, California (KCRA) — Imagine trying to buy a home only to be told you might not be able to because you have an outstanding bill for thousands of dollars to the Internal Revenue Services – a bill that you never received or knew about.

That is exactly what happened to a couple in Iowa.

Gloria and Steven Clark said they found the perfect home in South Des Moines, but they almost didn’t get it. As the Clarks were about to close on their home, the two received an unexpected tax bill for $5,000 from the IRS after the agency said Steven received $30,000 in unemployment benefits from the Employment Development Department in California.

“It could potentially stop us from getting the house,” Steven said. “On top of that, we had already sent a notice to our, to the apartment complex that we were moving. That was already accepted. Now I was like, Okay, we could potentially not have a place to live right now.”

The problem?

The tax bill wasn’t Steven’s. The couple never lived or worked in California, and never applied for unemployment.

“I had never been to California and I was still working full time, you know, at the same job,” he said.

Steven is among the thousands who had their identities stolen and used to get unemployment from EDD.

The department sent out millions of tax forms and never verified if they were actually legitimate claims getting taxed.

In a statement to KCRA 3 Investigates, the EDD said, “We are actively working to separate those victims from those claims.”

The department said it wants people to call its fraud line to report problems.

“I did the calling to the phone number that they have where they also conveniently say we’re not going to answer or return any phone call,” Steven said.

The IRS threatened to garnish the Clarks’ wages if they didn’t pay the tax bill.

Gloria went searching on the internet for answers as to why they received the tax bill and found KCRA 3 Investigates’ documentary Easy Money: Fraud, Fortune and Failures.

“And when we saw that, it was like, crazy! Like, it’s that big!” Gloria said.

KCRA 3 brought the Clarks’ case to Tracy Congressman Josh Harder, who has been pushing the IRS, the EDD, and President Joe Biden to do more to help the victims of this unprecedented fraud.

“I was responsible for helping us get more money from the federal government to fix EDD, but now we have to hold them accountable if they don’t get these results. And if they don’t actually have a much better situation over the next few months to make sure that they can get this caught fraud caught, to begin with, then we’re going to have to make more drastic measures,” he said.

Ultimately, the Clarks were able to close on their home, but the threat of garnishment, along with paying the mortgage and the bills is taking a toll.

Since KCRA 3 and our sister station KCCI in Des Moines first talked with the Clarks, they received a letter from the Iowa Department of Revenue asking for state taxes.

We reached out to EDD, which said it would open an investigation but was requiring ID verification. Our colleagues in Des Moines reached out to the Iowa Department of Revenue and it has frozen the debt until it completes an investigation.

There is no word on where EDD stands in its investigation.

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