Murderer Scott Peterson and death row inmates are among prisoners who were paid out more than $140 MILLION in COVID-19 jobless benefits in 'the most significant fraud on taxpayer funds in California history'

Convicted killer Scott Peterson, death row inmates and thousands of other prisoners have together received more than $140 million in COVID unemployment benefits in 'the most significant fraud on taxpayer funds in California history', according to state investigators. 

A group of state and federal prosecutors on Tuesday warned that up to $1 billion in payments may have been made by the state's Employment Development Department to inmates incarcerated in California's prisons and jails from funds designed to provide financial relief to struggling residents during the pandemic.  

The shocking revelation led Governor Gavin Newsom to announce the introduction of a taskforce to investigate and tackle the alleged fraud among the prison population.

Under state law, claimants of the unemployment debit card must be actively seeking work and be available to accept employment. 

In the eight months since the pandemic began ravaging America and shuttered much of the economy, the state has paid out around $110 billion to jobless Californians. 

The system is overwhelmed with about 580,000 claims - many of which will be legitimate - stuck in a backlog. 

However, while many newly-unemployed residents have struggled to access the much-needed funds, scammers inside the state's jails and prisons are skirting around the rules through a number of means such as having family members or friends filing claims outside of facilities on their behalf, investigators said.

Convicted killer Scott Peterson, death row inmates and thousands of other prisoners have together received more than $140 million in COVID unemployment benefits in 'the most significant fraud on taxpayer funds in California history', according to state investigators. Pictured Peterson in 2018 

Cary Stayner , the convicted serial killer who murdered four women near Yosemite National Park and is now on death row, and Isauro Aguirre , who tortured and murdered eight-year-old Gabriel Fernandez have also received state unemployment benefits in recent months, prosecutors said

Nine district attorneys and a federal prosecutor described the scope of the inmate-related scams as 'the most significant fraud on taxpayer funds in California history,' in a letter to Newsom Tuesday, according to the Los Angeles Times. 

In the letter, the prosecutors claim a number of notorious inmates have benefited from the COVID relief funds including Peterson, who was convicted of murdering his pregnant wife Laci and their unborn son back in 2002. 

Another reported successful claimant is death row inmate Cary Stayner, the convicted serial killer who murdered four women near Yosemite National Park and is currently sitting on death row.

Isauro Aguirre, who tortured and murdered Gabriel Fernandez, 8, in 2013, forcing the little boy to eat his own vomit and cat feces before savagely beating him to death, has also received state unemployment benefits in recent months, the Times reported. 

It is not clear if each of the three murderers filed the claims themselves or if they were filed by someone else under their names. 

Sacramento County DA Anne Marie Schubert, who headed up the taskforce investigating the fraud, said prosecutors uncovered more than $140 million had been paid out to inmates across the state's 38 prisons between March and August this year. 

Governor Gavin Newsom announced Tuesday the introduction of a taskforce to investigate and tackle the alleged fraud among the prison population

A total of 35,000 claims were filed by inmates, 20,000 of which have been paid out, the investigation found.

At least 158 claims were also filed and $400,000 paid out to 133 death row inmates. 

One of the biggest claims was a payment of $19,676 to a death row inmate and $48,600 to another unidentified inmate. 

At one facility, Pleasant Valley State Prison in Fresno County, investigators said they have uncovered around 860 questionable claims worth $3.6 million. 

While the investigation has already uncovered millions of dollars of funds have been paid out to California inmates, prosecutors warned the true picture is likely far greater - estimating the total could be as high as $1 billion.

'The murderers and rapists and human traffickers should not be getting this money,' said Schubert. 'It needs to stop.' 

Riverside Distirict Attorney Mike Hestrin told the Times about one instance where a prison inmate was heard boasting about using the benefits to buy his mom a $400 watch. 

The investigators said the scams take on a number of guises with some involving individual inmates and others the work of large organized prison gangs. 

Sacramento County DA Anne Marie Schubert said prosecutors uncovered more than $140 million had been paid out to inmates across the state's 38 prisons between March and August this year

Most often, a friend or family member on the outside will fill out the paperwork and the debit card will be sent to their address, Hestrin told the Times. 

The individual will then put some of the funds from the card into the inmate's prison account. 

However, sometimes claims have been submitted directly by the inmate or are the work of gangs, the Times reported. 

On some occasions, the inmate has not been involved in the scam at all with their identity used fraudulently by people on the outside, prosecutors added. 

Prosecutors called on Newsom to provide 'significant resources' to tackle the problem warning that many counties do not have the capacity to investigate the scale of the issue on their own.   

The governor responded in a statement Tuesday where he called the scams 'unacceptable' and pledged a taskforce to investigate.   

At one facility, Pleasant Valley State Prison in Fresno County , investigators said they have uncovered around 860 questionable claims worth $3.6 million

'Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable,' he said. 

'Earlier this year, I launched a strike team to expedite unemployment payments and to minimize abuse of the system. 

'When we saw evidence of fraud in correctional facilities, I directed the Employment Development Department to review its practices and to take immediate actions to prevent fraud and to hold people accountable when fraud is not prevented.'

The probe marks the latest in a string of issues plaguing California's coronavirus relief package and the EDD's capability in rolling it out to those in need.  

In October, the EDD said 350,000 benefits debit cards were frozen due to suspicious activity.

One month earlier, in Beverly Hills 44 people were arrested and $2.5 million-worth of cards seized in a fraud sting. 

DailyMail.com has reached out to EDD for comment.