[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]



 


                                


 
 INVESTIGATING PANDEMIC FRAUD: PREVENTING HISTORY FROM REPEATING ITSELF

=======================================================================


                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 19, 2023

                               __________

                          Serial No. 118-OS03

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
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                          ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 54-909         WASHINGTON : 2024     
         


                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania          TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma                 SUZAN DelBENE, Washington
CAROL MILLER, West Virginia          JUDY CHU, California
GREG MURPHY, North Carolina          GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee             DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania      DON BEYER, Virginia
GREG STEUBE, Florida                 DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio

                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                                 ------                                

                       SUBCOMMITTEE ON OVERSIGHT

                  DAVID SCHWEIKERT, Arizona, Chairman
BRIAN FITZPATRICK, Pennsylvania      BILL PASCRELL, New Jersey
GREG STEUBE, Florida                 JUDY CHU, California
CLAUDIA TENNEY, New York             BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota        SUZAN DelBENE, Washington
BETH VAN DUYNE, Texas                GWEN MOORE, Wisconsin
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. David Schweikert, Arizona, Chairman.........................     1
Hon. Bill Pascrell, New Jersey, Ranking Member...................     2
Advisory of October 19, 2023 announcing the hearing..............     V

                               WITNESSES

Linda Miller, Founder and CEO, Audient Group.....................     5
Amy Simon, Principal, Simon Advisory.............................    17
Rebecca Shea, Director of Audits, Forensic Audits and 
  Investigative Services, U.S. Government Accountability Office..    27
Robert Asaro Angelo, Commissioner, New Jersey Department of Labor 
  and Workforce Development......................................    54

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record to and Responses from Linda 
  Miller, Founder and CEO, Audient Group.........................    83
Member Questions for the Record to and Responses from Rebecca 
  Shea, Director of Audits, Forensic Audits and Investigative 
  Services, U.S. Government Accountability Office................    88

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................   114
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                     INVESTIGATING PANDEMIC FRAUD:



                        PREVENTING HISTORY FROM



                            REPEATING ITSELF

                              ----------                              


                       THURSDAY, OCTOBER 19, 2023

                  House of Representatives,
                         Subcommittee on Oversight,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 1100, Longworth House Office Building, Hon. David 
Schweikert [Chairwoman of the Subcommittee] presiding.
    Chairman SCHWEIKERT. Good morning, and welcome to today's 
oversight hearing on the investigating pandemic fraud and 
preventing history from ever repeating itself again.
    We have all seen the headlines: biggest fraud in a 
generation. Easy money. The great grift. These terms were used 
to describe the historic amount of fraud that has plagued the 
government assistance program during the COVID-19 pandemic. It 
is my hope today that we will deliver deep--that we will dive 
deeper into how. And this is the key point. Walk us through not 
only your fixes, particularly the technology discussion some of 
you have, but how was it done?
    I think, for many of us, the visualization in our heads of 
how do you move billions of dollars, how--in some of the 
details we are going to hear, how so much of it ended offshore. 
In many ways, this is not partisan; we are actually trying to 
understand how American people that needed the help and 
governments who are struggling to finance it, where did the 
money go and how was it stolen?
    The goal of the hearing is to--is not to cast blame on one 
side of the aisle or the other. Rather, my hope is in this 
hearing we will help identify and--identify corrective action 
needed to prevent massive fraud from happening when resources 
are pushed out in the future.
    There was a great sense of urgency to get a massive amount 
of resources out the door into the pockets of Americans who 
were in need. For example, in the first 14 days of the Paycheck 
Protection Program, the Small Business Administration 
distributed over $300 billion of loans. The unprecedented 
amount of spending naturally made benefit programs more 
susceptible to bad actors. We know the unemployment insurance 
fraud totaled at least--and we are having a running dispute, 
and all of you, I will ask to speak to this if you think you 
have a more accurate number--100 to $135 billion, and the IRS 
now has issued a moratorium on the Employer Retention Tax 
Credit due to its fears of significant fraud.
    There are too many stories of pandemic fraud in today's 
media. Can I give you one example? For one instance--and you 
will love this one--the FBI discovered a Nigerian state 
government official who was in possession of stolen bank credit 
card and tax information of numerous Americans and used these 
identities to obtain $350,000 worth of unemployment benefits 
from several states. But he is just one example of scores of 
foreign fraudsters that use stolen identification to loot the 
aid intended to help Americans.
    In other cases, a man from Michigan who was on parole when 
he filed dozens of fraudulent unemployment claims using the 
identity of federal and state inmates who were not eligible to 
receive the benefits,--he obtained their personal information 
using the website off the dark web by falsely claiming he could 
help improve their credit ratings. This man has since pled 
guilty to wire fraud and aggravated identity theft.
    And those examples only start to scratch the surface. We 
must understand how the fraud was committed so we can stay 
ahead of the criminals and use whatever--the most advanced 
technology available to stop this in the future.
    I will encourage that the Pandemic Response Accountability 
Committee formed by an--the committee formed an initiative by 
data scientists using artificial intelligence and a risk model 
to analyze pandemic spending and identify abnormalities. This 
type of data sharing can help law enforcement agencies pursue 
fraud investigations. It is my hope that using tools like this 
will not only help hold criminals accountable for their actions 
in the past but will also guide the future efforts of Congress.
    We recognize three things. There is a dispute over the 
dollar amounts. We have already spent some time trying to blame 
each other, whether it be on the partisan facts--that is not 
the goal of this committee. But the third thing, it is the 
single thing I think is most important to Mr. Pascrell and 
myself: how did they do it; what do we implement so it never 
happens again?
    Chairman SCHWEIKERT. And with that I yield to the ranking 
member, Mr. Pascrell.
    Mr. PASCRELL. Thank you, David. Good morning, everybody. It 
is good when you see bipartisanship. It happens so infrequently 
up here. And David, thank you for your selection of the 
witnesses today.
    I want to welcome our witness, Rob Asaro-Angelo, New 
Jersey's labor commissioner. He is a very good friend, hard 
worker, relentless, and he has done a great job, even under 
your estimates----
    Chairman SCHWEIKERT. Do you know everyone in New Jersey? 
[Laughter.]
    Mr. PASCRELL [continuing]. In administering and modernizing 
our state's unemployment insurance program during the worst 
employment crisis in generations.
    So, Congress acted decisively in the face of historic 
adversity to keep Americans safe. And I think you heard the 
chairman reiterate that. Our unemployment aid kept families 
together, and it saved lives. More than 1.5 million Garden 
Staters received unemployment from March the 20th to September 
2021. It stopped mortgage defaults, kept the electricity on, 
put food on tables and in children's stomachs.
    Then, in March of 2021, we passed the American Rescue Plan 
because the crisis was not over. It included unemployment aid, 
strong enforcement protections--we thought--to fight fraud and 
recover taxpayer dollars. President Biden used those 
protections to prosecute frauds. States have recovered nearly 
$1.2 billion so far, so enforcement is working.
    As Rob will testify, New Jersey put these dollars to 
excellent use, bringing our system into the 21st century with a 
focus on accessibility and security. In the Federal Government, 
we have not even done that. I don't care whether there is a 
Democratic president or is a Republican president, we have 
failed the Nation by not keeping up to the times.
    The majority claims to care about misuse. I believe they 
are--in their souls. But the other side sought to rescind 
unspent American Rescue Plan money funding allocated to crack 
down on fraud, to recover overpayments, and improve 
unemployment insurance security.
    Our pandemic measures exceeded expectations. We emerged 
stronger than any other country in the world. Every job lost 
during the pandemic was recovered. All our economic output loss 
is regained. Job growth is at a 40-year high. Unemployment is 
at a 54-year low. I think the economy is booming, and I think 
there is a long way to go. And they are not contradictory.
    I am happy to work together with our chairman to ensure 
Federal dollars are well spent. Fraudsters must be held 
accountable, period. Our witness from New Jersey deeply 
understands this, Mr. Chairman, the unemployment insurance 
fraud, has ideas on how we could prevent this in the future.
    It is imperative that, when seeking solutions, we refrain 
from shaming our workers and lying about our strong economy. 
And what is, is. The truth is our actions during the pandemic 
saved lives and saved the American economy.
    Mr. PASCRELL. Mr. Chairman, thank you for putting us 
together this morning, and I look forward to the--hearing from 
the witnesses.
    Chairman SCHWEIKERT. Thank you, Mr. Pascrell.
    Would you like a vanilla cappuccino? [Laughter.]
    Mr. PASCRELL. Thank you very much, Mr. Chairman.
    Chairman SCHWEIKERT. And now to the big chairman, Chairman 
Smith.
    Mr. PASCRELL. Do you have a nomination? [Laughter.]
    Chairman SMITH. ``The big chairman'' just kind of makes me 
nervous. But I would like a cappuccino, if I could have one. I 
am just kidding. More like a monster drink. [Laughter.]
    Chairman SMITH. But thank you, Chairman Schweikert, Ranking 
Member Pascrell. It is always a pleasure to be with you all.
    Part of our oversight responsibilities here in Congress is 
to assess when the fraudulent use of tax dollars occurs, and 
account for what has been lost. But the American taxpayer also 
expects us to put an end to as much of that fraud as--that we 
can to hold the fraudsters accountable and, better yet, stop 
the illegal activity before it happens. That is why I 
appreciate that today's hearing is forward looking. We are 
focusing on not just the when and where, but on the how and why 
fraud occurs, because that is how we get to the solutions that 
will protect the taxpayer and the rightful beneficiaries of 
these programs.
    The numbers are staggering. A recently-released Government 
Accountability Office report pegs the cost of fraud in the 
pandemic-era unemployment insurance program at 100 billion to 
135 billion, doubling GAO's previous estimate that the 
Comptroller General shared with this committee in February. 
Some outside experts put the level of improper payments as high 
as 400 billion. And that is just in the UI programs. As I noted 
in our hearing on this issue back in February of this year, 
this is the greatest theft of taxpayer dollars in American 
history.
    We also know the Employee Retention Tax Credit program has 
been an easy and convenient target for criminals seeking to 
defraud the government as well as small businesses to such an 
extent that, as we discussed at our oversight hearing in July, 
the ERTC program is on the IRS's Dirty Dozen list of worst 
scams in the country. In fact, as of the end of July the IRS 
has initiated 252--252--investigations covering over 2.8 
billion of potentially fraudulent ERTC claims from 2020 to 
2022.
    To be clear, the type of criminals we are talking about are 
not just homegrown fraudsters or lone wolves looking to prey on 
unsuspecting beneficiaries. We are talking about transnational 
organized criminal enterprises. Moreover, we have found that, 
in cities that were able to crack down on the UI fraud they saw 
occurring, violent crime in those same localities went down, 
meaning these were more violent criminals committing this 
fraud. In Baltimore, they found that 60 percent of violent 
criminals were also committing some type of COVID-19 fraud. 
When they started prosecuting COVID-19 fraud cases, they saw a 
20 percent reduction in homicides--20 percent reduction in 
homicides.
    I appreciate the fact that we have witnesses today from 
both within government and outside of government. With an 
estimated $280 billion in stolen COVID-19 relief funds, we need 
to be seeking input from as many experts as we can to bring as 
many perspectives as we can to build a more robust defense 
against fraud. I look forward to the solutions that will come 
from today's discussions.
    Chairman SMITH. And I yield back to you, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you, Chairman Smith. One last 
bit of business to do. I have two vanilla cappuccinos left. 
Raise your hand if you want one of them. I got one sold and--no 
one else? They are really good. Okay, I got the two sold.
    All right. Linda Miller is the founder and CEO of Audient 
Group. Did I say that right?
    Ms. MILLER. Audient Group.
    Chairman SCHWEIKERT. Audient Group, okay. Well, it is a 
weird spelling.
    She also serves as the executive director of the Pandemic 
Response Accountability Committee and spent 10 years working 
for the Government Accountability Office.
    Amy Simon is a principal for Simon Advisors. She is--
previously served as the acting deputy secretary for employment 
and training administration at the U.S. Department of Labor.
    Rebecca Shea, which is a famous name in the Scottsdale 
Phoenix area, so she says, not related to the name, is the 
director of audits and forensic audits and investigative 
services at the U.S. Government Accountability Office.
    And Robert Angelo is the commissioner of the New Jersey 
Department of Labor and Workforce Development.
    Thank you for joining us today. You each have five minutes.
    Also, to--last thing, I want to echo Mr. Pascrell's--you 
are a terrific panel. We are here to do something a little 
different than we often do; we are here to listen.
    Ms. Miller, start to educate us.

   STATEMENT OF LINDA MILLER, FOUNDER AND CEO, AUDIENT GROUP

    Ms. MILLER. Thank you so much. It is a real pleasure to be 
here today in this forward-looking hearing with this committee. 
I am really excited.
    My name is Linda Miller, and I have, as Chairman Schweikert 
mentioned, started my own consultancy working on fraud risk 
management. But I have spent my entire career in the government 
fraud space, including serving as deputy executive director of 
the Pandemic Response Accountability Committee.
    In talking about what happened during the pandemic when it 
comes to fraud, there was a combination of inadequate oversight 
and internal controls, large-scale organized fraud rings, and 
antiquated data and information systems that contributed to the 
widespread and massive fraud that we saw during the pandemic. 
Going forward, two significant problems must be solved.
    One, fraud prevention is simply not a priority for Federal 
and state agencies. The pandemic highlighted this critical gap.
    And two, the use of data in government is broken. Data is 
an essential tool, and the fight against fraud and sharing data 
and using it to prevent fraud is simply not working.
    My written statement today outlines five key actions 
Congress can take to help ensure history doesn't repeat itself. 
Today, I am going to highlight a couple of those.
    First, a dedicated anti-fraud office with senior-level 
authority should be created. Agencies struggle with competency 
and fraud and data analytics. They struggle with data sharing, 
and they struggle with a lack of incentives to allocate 
resources to these activities. An all-of-government strategy 
should be established and implemented by a well-funded, 
centralized entity with the authority to effect real change. 
Such an office would have the necessary skills and resources to 
work solely on addressing the data, accountability, and 
technology challenges agencies face at every level of 
government.
    As part of this office Congress should direct the creation 
of a fraud analytic center of excellence modeled on the PRAC's 
Pandemic Analytic Center of Excellence. A centralized analytics 
hub in the management side of government would create an 
economy of scale, and would place a data-driven emphasis on 
fraud prevention, where it can be the most effective.
    Second, we must adopt approaches that are used in the 
private sector. Conventional wisdom today holds that you can 
promote citizen access to government services or you can 
prevent fraud, but you cannot do both. This trade-off doesn't 
exist in the private sector, and it shouldn't in government. 
Banks effectively balance the competing business imperatives of 
attracting and retaining customers and preventing fraud every 
day. Both are vitally important to their bottom line.
    Part of the challenge lies in outdated laws, and--that 
limit agencies' ability to use data and prevent fraud, 
especially given the rise of data breaches and the epidemic of 
identity theft that we are seeing today.
    Developing innovative projects in partnership with the 
private sector can help mature the government's capacity to 
prevent fraud. For example, the Senate Appropriations 
Committee's fiscal year 2024 financial services bill contains 
language directing Treasury to lead a public-private 
partnership to counter the increasing threats of financial 
fraud, which will facilitate information sharing between 
government and private sector, develop best practices, and 
encourage innovations in fraud prevention.
    Another approach Congress should consider is the creation 
of a regulatory sandbox that would allow the private sector to 
work with agencies on data-driven fraud prevention approaches 
with a degree of assurance that those won't run afoul of 
statutory and regulatory requirements such as privacy laws that 
limit the use of data for fraud prevention.
    Third, agency leaders need incentives to prevent fraud. 
Company CEOs respond to the demands of their customers and 
their shareholders. As citizens, we are government's customers 
and its shareholders, and we do not demand fraud prevention, we 
demand timely access to services. Agency leaders need 
incentives to prevent fraud. Congress can incentivize agency 
leaders by holding regular hearings to discuss actions to 
prevent fraud, building fraud prevention into the performance 
metrics of those leaders, and measuring their activities 
against an established benchmark.
    A word of caution, though, on incentives. The hidden nature 
of fraud makes it easy to ignore. If agencies are only measured 
on the amount of fraud they have, they will establish 
meaningless fraud indicators and then give the false impression 
that fraud is controlled. Incentives in fraud prevention should 
be focused on the actions that agencies are taking and the 
rigor with which they are measuring the effectiveness of those 
actions.
    And finally, we need dedicated funding set aside for fraud 
prevention and large spending bills. The Bipartisan 
Infrastructure Law and the Inflation Reduction Act both 
contained enormous grant and loan programs but provided no 
funding or requirements for safeguarding the integrity of those 
funds. Fraud actors will target those programs with the 
coordinated fraud schemes that they did during the pandemic.
    Data and analytics can be a game changer. Massive amounts 
of third-party data can be mined and leveraged to identify 
suspicious indicators. Establishing dedicated funding for fraud 
prevention in these spending bills will provide the focus and 
resources needed.
    When it comes to fighting fraud, an ounce of prevention 
really is worth a pound of cure. We must put fraud prevention 
tools in the hands of government leaders and hold them 
accountable to prevent history from repeating itself. Thank 
you.
    [The statement of Ms. Miller follows:]
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    Chairman SCHWEIKERT. Ms. Miller, that was remarkably 
helpful.
    Ms. Simon.

       STATEMENT OF AMY SIMON, PRINCIPAL, SIMON ADVISORY

    Ms. SIMON. Chairman Schweikert, Ranking Member Pascrell, 
thank you for the opportunity and invitation to testify today.
    As a former leader in the U.S. Department of Labor's 
Employment and Training Administration during the pandemic, I 
was a firsthand witness to both the economic devastation of the 
pandemic and to the extraordinary legislative policy and 
operational responses contained in multiple pieces of 
legislation, starting with the CARES Act. And later, as an 
unemployment insurance claimant and victim of identity theft, I 
was a firsthand witness to the system's flaws and operational 
weaknesses. And so I believe this question of what do we do 
next and how do we move forward is incredibly timely, and I 
appreciate the committee's attention.
    My prepared remarks highlight the incredible scale of both 
the pandemic benefits and the scale of fraud. And due to this 
hearing's focus on fraud, I did not address the many adjacent 
and substantive policy issues in unemployment insurance. That 
would certainly need to be part of a more comprehensive 
conversation. Instead, in my opening statement, I would like to 
highlight just two themes.
    First, I often sense an inherent tension that fraud 
detection and prevention and benefit accessibility are opposing 
goals. This is a false dichotomy. It was often eligible 
claimants who waited for months on end, while fraudsters easily 
stole millions. It was often eligible claimants who found out 
that their benefit accounts had been drained when fraudsters 
socially engineered access. It was often eligible claimants who 
found out that they couldn't get benefits because a fraudster 
had already applied in their name. These claimants are the 
heart of the program's mission to provide temporary partial 
income replacement for workers out of a job for no fault of 
their own. If you care about the program, you need to care 
about fraud. It does not have to be one or the other.
    Second, I think that unemployment insurance pandemic fraud 
lessons are broader than just unemployment insurance. Three 
quick examples.
    Fraud is constantly evolving, targeted, and agile. 
Unemployment insurance fraudsters repeatedly went to public 
sources for tutorials and help on how to more effectively 
accomplish their fraud schemes. Government's response was not 
evolving, targeted, or necessarily agile, especially at the 
beginning of the pandemic. Static solutions to dynamic threats 
are not going to move the needle quickly enough in this 
environment.
    Second, pandemic fraud did not stay in the pandemic. 
Fraudsters are paying attention, and we do not have the luxury 
of returning to pre-pandemic norms. Mission success and program 
performance metrics must reflect the extent to which benefit 
programs are or are not managing fraud risks effectively.
    And third, there are potential national security 
implications for domestic benefit programs when billions of 
fraudulent dollars flow through them to unfriendly 
international or even state-sponsored cyber crime groups. I 
believe there are active roles for Congress to play on each of 
these fronts.
    I appreciate the opportunity to testify and look forward to 
your questions.
    [The statement of Ms. Simon follows:]
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    Chairman SCHWEIKERT. Thank you, Ms. Simon.
    Ms. Shea.

STATEMENT OF REBECCA SHEA, DIRECTOR OF AUDITS, FORENSIC AUDITS 
  AND INVESTIGATIVE SERVICES, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Ms. SHEA. Good morning, Chairmen Smith, Schweikert, and 
Ranking Member Pascrell, and members of the subcommittee. Thank 
you for inviting me to discuss some of GAO's resources and 
recommended actions to better prevent fraud in normal 
operations after the unprecedented levels of fraud in COVID 
relief programs.
    GAO's goal in general, and my goal in particular as a 
director in our forensic audit group, is to encourage agencies 
to prevent fraud in order to avoid the very costly pay-and-
chase approach. The importance of prevention is the cornerstone 
of GAO's fraud risk framework. Requirements have been in place 
for many years for agencies to manage fraud risk. But, as GAO's 
comptroller general testified earlier this year, agencies' lag 
in implementing these requirements led to significant fraud in 
COVID programs.
    Yes, agencies across the Federal Government acted quickly 
to stand up new programs and greatly scale up existing programs 
to combat the effects of the pandemic. And yes, that made for 
an unusually attractive target to fraudsters. But the nature of 
COVID relief schemes was not dissimilar from fraud schemes that 
occurred in years prior.
    Some schemes were simple and benefited a simple--a single 
fraudster, like a case where an individual received a quarter 
million dollars from the Coronavirus Food Assistance Program 
for claimed loss of livestock at a commercial farming 
operation, despite not owning or operating a farm. Others used 
technology or brought others along to scale up the impact of 
the fraud, like a case where the owner of a tax preparation 
business recruited people to prepare fraudulent tax returns and 
COVID EIDL loan applications. She charged her clients up to 50 
percent of the fraudulent proceeds and paid her employees a 
flat fee for each application that received funding, and she 
also claimed fraudulent EIDL, PPP, and unemployment benefits 
for herself.
    Regardless of scale, misrepresentations of eligibility and 
identity are primarily at the core of these schemes. Had 
agencies been better prepared to prevent and detect identity 
and eligibility representations in normal operations, they 
would have been better prepared for the emergency, which leads 
us to the question of why agencies weren't prepared and what is 
needed to get them there.
    Based on my audit experience, I would put the root causes 
for this in two buckets: mindset and direction. The mindset 
issue I have seen is that program managers often don't think 
fraud is a problem, at least not in their programs, or they 
don't think fraud is their problem, particularly when the 
program is administered through grants, contracts, or other 
third parties. And if agencies don't think there is a problem, 
or that it is theirs to manage, they aren't going to spend time 
and resources on it. The unprecedented scope and scale of COVID 
relief fraud has put a dent in that mindset, but we need 
sustained focus on accountability to eliminate that mindset 
once and for all, and that is where GAO resources and 
congressional action can provide direction.
    In addition to our audits and recommendations to address 
specific fraud vulnerabilities, GAO has developed resources 
like our conceptual fraud model, our fraud risk framework, our 
anti-fraud resource, and, most recently, our framework for 
managing improper payments, all of which provide a roadmap for 
fraud prevention. Providing this direction was a key driver for 
developing our conceptual fraud model that lays out the who, 
what, how, why, and where of fraud schemes so agencies can 
better understand what fraud looks like and how it happens in 
order to respond to those vulnerabilities.
    GAO has also suggested actions Congress can take, including 
reinstating requirements for agencies to report on their 
progress with fraud prevention, making permanent the data 
analytics function in the oversight community, and making 
permanent Treasury's access to Social Security's full death 
data to help prevent payments to deceased individuals.
    In addition to these efforts, GAO has work underway to 
identify possible incentives for fraud risk management such as 
funding options, ways to measure prevention activities, and 
enhance data sharing and analytic programs.
    Unfortunately, not everyone's moral compass points due 
north. Fraud will happen, and bad actors will be creative in 
finding vulnerabilities and exploiting opportunities for their 
personal gain. But with a better understanding of how fraud 
happens, by leveraging available resources to prevent fraud, 
and by taking actions GAO has recommended to agencies and to 
Congress, the Federal Government as a whole will be better 
positioned to prevent fraud in any environment.
    I thank you for this opportunity and look forward to your 
questions.
    [The statement of Ms. Shea follows:]
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    Chairman SCHWEIKERT. Thank you, Ms. Shea.
    Mr. Asaro-Angelo.

  STATEMENT OF ROBERT ASARO-ANGELO, COMMISSIONER, NEW JERSEY 
         DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT

    Mr. ASARO-ANGELO. Good morning, Chairman Schweikert, 
Chairman Smith, and Ranking Member Pascrell, members of the 
Subcommittee on Oversight, and to all your hard-working members 
of your staff. Thank you for inviting New Jersey to this 
important conversation. I can assure my colleagues to my right 
that anti-fraud measures have always been a priority in New 
Jersey.
    In the winter of 2020, we were in great shape, with record 
numbers of people working. Nobody could have predicted the 
economic and personal chaos of the global COVID-19 crisis. From 
February to April, in just 2 months, our state lost over 
730,000 jobs, more than 1 in 6. On April 1, we saw a 2,700 
percent increase in UI claims from that same week the prior 
year--2,700 percent.
    With Congress's quick action through the Families First 
Coronavirus Response Act and the CARES Act, we provided 
lifelines to those who needed help staying afloat when they 
lost their jobs. In just 21 months, we distributed close to $40 
billion to 1.6 million workers. But, unfortunately, there are 
those who took advantage of the situation as an opportunity for 
ill-gotten gain.
    Since New Jersey has a higher-than-average benefit rate, we 
have always taken fraud very seriously. We have instituted 
aggressive measures and applied several anti-fraud processes. 
We rely on this layered approach, from analytics to third-party 
identity-proofing, to both catch suspicious claims and act as a 
deterrent, greatly reducing fraud attempts to begin with.
    Prior to the pandemic, UI fraud generally meant someone was 
illegally collecting benefits while working, or otherwise being 
dishonest on their application or weekly certification. 
Identity theft had been a long-time but manageable issue. But 
now, with the vast amounts of personally identifiable 
information--or PII--available on the dark web, fraudsters were 
ready to weaponize it.
    To be clear, I am not just talking about domestic attacks. 
There are global fraud rings, as mentioned earlier, who share 
vulnerabilities of various state systems and cherry pick the 
ones easiest to deceive.
    With a dramatic increase in claimants and a dramatic 
increase in benefits, there is a dramatic increase in 
fraudulent claims. Fraudsters saw the pandemic as the perfect 
time to attack, as--and they saw almost--an almost perfect 
target: Pandemic Unemployment Assistance, or PUA. While enacted 
with the best of intentions, PUA added a whole new population 
of beneficiaries to our system that we had never had before. We 
simply did not have the mechanism and, more importantly, the 
statutory authority to verify their employment.
    For PUA, eligibility was based solely on self 
certification, and states were prohibited by law from 
confirming this information: the perfect recipe for fraud. 
Unlike regular UI, where every individual claim is verified or 
contested by an employer, a crucial backstop for fraud, states 
didn't have the ability to check this information until the end 
of 2020 with passage of the Continued Assistance Act. The 
constantly changing rules, along with the pressure to get these 
payments out as quickly as possible, made every state all the 
more vulnerable.
    So the challenge during the height of the pandemic and 
still to this day has been balancing our efforts to get 
payments out quickly to the claimants who deserve them while 
safeguarding our trust fund from cheaters and criminals. And 
these steps take time.
    During the pandemic our anti-fraud efforts were challenged 
like never before, battling dark web tutorials on how to commit 
fraud, caches of stolen PII, and tutorials on social media with 
step-by-step instructions on how to commit fraud to get 
benefits. But our seasoned professionals rose to the occasion, 
identified risks, acted swiftly, and went above and beyond 
their traditional fraud prevention and risk management 
operations.
    Our Cyber Fraud Investigations team was created out of 
necessity during the pandemic due to the tremendous and 
relentless attacks. They teamed up with our IT division to 
combat the cyber-fraud attempts, with a focus on technology to 
support their efforts. Partnering with ID.me, a federally-
credentialed security vendor, New Jersey became the first state 
to offer three ways to digitally verify claimant identity that 
all meet heightened Federal security standards: self-service, 
live video chat, and in-person. During the pandemic, New Jersey 
halted hundreds of thousands of fraudulent payments, protecting 
billions of dollars.
    Although claims have slowed overall, including false ones, 
we are always shoring up our defenses. Through the National 
Association of State Workforce Agencies, or NASWA, we are 
collaborating with other states to share findings, trends, and 
best practices. The funding we have received through the 
American Rescue Plan to modernize our unemployment system has 
been critical. Building a newer, more modern system improves 
equity of access and security, which go hand in hand with 
fighting fraud.
    It is vitally important we continue supporting efforts for 
national improvements to create overarching systems that work 
with each other, instead of having each state operate 
independently. Fraudsters love nothing more than having 53 
separate systems to pick through to see which can be hit the 
easiest and the hardest.
    There is no silver bullet to completely eradicate fraud 
from our benefit system, but we can combat it in every way 
possible, continually learning and training so we stay one step 
ahead. We look forward to working with our Federal partners 
across multiple agencies to combat fraud, apply lessons 
learned, solidify policies, and see concrete action at the 
national level to ensure we never see such widespread UI fraud 
ever again.
    I am grateful for this time to speak with you all. I am 
happy to address any questions you may have to the extent that 
I can without revealing any of our trade secrets to the 
fraudsters who are most certainly watching this hearing. Thank 
you.
    [The statement of Mr. Asaro-Angelo follows:]
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    Chairman SCHWEIKERT. Thank you, Mr. Asaro-Angelo.
    All right, as the chairman I guess I get to ask the 
questions first. Yay.
    I still remember when the pandemic started off, and have--
how many of you had this family experience where you pick up 
the phone and it is your wife, and your wife is going, ``You 
know, I am here handling all these unemployment requests'' at 
the surgery center she ran, and a lot of it were people who had 
never worked there, people who hadn't worked there in years. 
But the best one was when she was getting unemployment requests 
or the verifications for herself. And the phone call was, ``Do 
you want me to quit now? Because apparently I am already asking 
for the unemployment.'' And okay, a small surgery center, I 
think they may have had 20 to 30 employees. And she said they 
added up over that year--hundreds of these came in.
    I have a board here, and this is sort of going on the 
theme--and forgive me, I am going to do something a little 
awkward, but I don't have a better way to do this. We are 
trying to not only--and this is going to go to you 
substantially, Ms. Miller, because you have actually touched on 
things that everyone else also touched on. We were trying to 
get our heads around if we had a national data exchange for the 
verification as our friend from New Jersey just spoke about.
    Does it stop it where the identities--the identities are 
out there, they have been stolen. We have actually, as Members 
of Congress, had our identities stolen not too long ago. Does 
it stop it where the actual applying--where in this process--
because we have been tracking some crazy stories of UI fraud 
that was converted to gift cards, that got moved into buying 
cars, and then the cars were shipped to North Africa as a way 
to wash the money.
    Let's say we had your data exchange. Where do I break the 
fraud loop, the information, the ability to make the requests?
    Ms. MILLER. Yes, well, thank you. The data is the way to 
address this significant problem, which is identity theft that 
you are talking about. And we saw unprecedented identity theft 
because of the vast number of data breaches that we have 
experienced.
    Every single American's information is available for sale 
on the dark web today. You can buy Social Security numbers for 
about $0.25 a piece now. They have gone down. There were about 
$1 a piece about a year ago. And so, as a result of having so 
much information available for so little money and fraud actors 
being able to monetize that information, what agencies need at 
the Federal and the state level is the ability to identify 
quickly those indicators that would suggest that somebody who 
is applying for a benefit is, in fact, a stolen identity, 
things like the device geolocation.
    So, in the UI fraud, for example, if somebody was applying 
for pandemic benefits and they lived in Nigeria, and you were 
sitting in the UI office in Iowa, you did not have any kind of 
IP address tracking to know that.
    Chairman SCHWEIKERT. But, Ms. Miller, can I bust that by 
using, you know, a VPN?
    Ms. MILLER. Yes. You can--most of these tools to steal--to 
use--to effectively use stolen identities can be circumvented, 
especially in the age of generative AI. So now we have even got 
much more sophisticated tools than we did at the beginning of 
the pandemic that they are using and exploiting right now.
    And so, as a result, as Amy mentioned, the concept of, you 
know, a dynamic and a static, we have got a dynamic adversary, 
and we have very, very static processes that address them. 
Agencies need to be able to use the kinds of tools that banks 
use, that technology companies use, that--you know, where they 
can very quickly identify these patterns. And that is a data 
problem. And we have a data problem in government.
    We are very protective of the privacy of citizen data. And 
I am not saying we shouldn't be, but in--today, when every 
single one of our identities are being stolen on the dark web, 
but the government is protecting our information to the degree 
that the adversaries can use the data, but the government can't 
use it to stop them.
    Chairman SCHWEIKERT. Okay, and I have a handful of 
questions, but I want to finish one last with Ms. Miller.
    In your testimony, what do I have to change statutorily or 
redefine statutorily so I don't run into the constant excuse 
that we often, as Members of Congress--``Well, that has a 
privacy concern, or that is over there.''
    Ms. MILLER. Yes.
    Chairman SCHWEIKERT. At the same time that these people's 
privacy has long since been violated.
    Ms. MILLER. You know, honestly, I am for privacy. I am a 
good--I believe in privacy. But the privacy--there is a very, 
very robust protection of privacy sort of lobby and group on 
one side, who has gone so far--and it is--we need to consider 
that we live in a different world now. The Privacy Act and the 
Computer Matching Act were written at a time that we are in--
this environment that we are living in is changing monthly. 
Literally, it is changing every month. And we have got laws 
that we haven't changed in years.
    So the Privacy Act, the Computer Matching Act, and the Fair 
Credit Reporting Act, the FCRA, all three of those need to be 
considered on the basis of how we can better use data to 
prevent fraud across the government.
    Chairman SCHWEIKERT. Okay.
    Mr. ASARO-ANGELO. Chairman Schweikert----
    Chairman SCHWEIKERT. New Jersey----
    Mr. ASARO-ANGELO [continuing]. Back to your original 
question on that chart--and Mr. Fitzpatrick, I don't want to 
hurt--with bringing it up again, but, you know, this is where I 
think we need to marry technology and policy because on that 
chart you had, you know, the stolen identities, then the 
applying for unemployment, and then getting the benefits.
    Right now, under statute, we have to let everybody apply 
for UI benefits, no matter if we know that they are stolen in 
advance. The way this current statute is that we have to let 
everybody apply----
    Chairman SCHWEIKERT. Okay, so----
    Mr. ASARO-ANGELO [continuing]. And then do the security 
check afterward.
    Chairman SCHWEIKERT. Say that sentence again. So even when 
it hits your door, you still have to----
    Mr. ASARO-ANGELO. We have to process that application. Now, 
clearly, the identity verification and all the other checks can 
be part of that process afterwards. But we can't deny anybody 
the ability to apply for unemployment benefits at this time.
    Chairman SCHWEIKERT. Okay. Ms. Shea--and this is one-off--
but I--for my own sanity, I need to ask. Have you seen any 
research done on how many bad actors around the world this 
fraud may have helped finance? Because, you know, think about, 
you know, what is going on in the Middle East right now, and we 
have had some things come to our office saying some of these 
organized international criminal cartels were washing the money 
for violence. Any place I can go to chase that down?
    Ms. SHEA. Well, so no specific numbers and amounts, but we 
did look at some of that information through the Department of 
Justice press releases on cases. And so, we have some 
information about foreign actors exploiting the various 
pandemic programs--in different programs, not just unemployment 
insurance.
    But I do want to get back to this issue of addressing 
unemployment insurance fraud issues. In 2020, there is an 
integrity data hub that provides services to states to check 
the verification of whether or not there is an application 
across states if somebody applies in multiple states. The bank 
account verification--it will do a validation of the bank 
account. It will check to see whether their identity flags on a 
particular application. In 2020, 34 states participated in that 
integrity data hub, and the other states did not.
    Chairman SCHWEIKERT. For the 34, how effective was it?
    Ms. SHEA. Well, notwithstanding some of the issues Rob 
mentioned about prohibitions against certain checks, it 
provides information to the states about where there are flags, 
where there are areas of concern where the payment should not 
be made. Now, Department of Labor has since been able to get 
all 50 states and 3 territories signed up for that service. It 
is a free service. It is available to them.
    So I think, as we are thinking about resources and, you 
know, additional data sources and new technologies that we can 
be--that can be applied, it is also important to think about 
what is already available to federally-funded programs and to 
Federal programs to prevent fraud.
    Chairman SCHWEIKERT. Okay, my very last question. Could I 
take that data hub and enhance it with Ms. Miller's AI and 
other database touches?
    Is there a way that this isn't reinventing the wheel, but 
making the wheel much more efficient?
    Ms. SHEA. I----
    Chairman SCHWEIKERT. Now I forced the two of you to talk to 
each other. [Laughter.]
    Ms. SHEA. Yes, that is what really needs to get done. I 
mean, if we want to fix this, we have to think about the states 
working together. And so there is this hub that does have--it 
is--it provides an opportunity for those--for them to share 
data across the states. If they augment that with third-party 
data, they are going to have a whole lot more robust data sets 
to be able to share information and identify fraud schemes much 
quicker and more effectively.
    Chairman SCHWEIKERT. Okay, thank you, witnesses. It is 
actually appreciated.
    Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Chairman.
    Ms. Miller, we can't legislate directly identity theft. 
That is my contention. So, we need to work from the front end, 
and put into legislation reasonable--and unreasonable, 
sometimes--as you pointed out, we are in a different world--but 
basically, reasonable attempts to prevent the fraud or the 
possibilities of fraud from ever happening. That is not only 
true here, unemployment insurance. We talked about it 
yesterday, every Federal program.
    I am not a--never met anybody on this panel, this 
committee, on either side--now, no one is privy to virtue in 
politics. Let's get that straight. But we can't be helpless to 
the problem, knowing it is going to get worse. The chairman has 
pointed that out vividly. But everybody on this panel doesn't 
simply send their support for legislation because so what? 
Somebody gets it that doesn't deserve it, so what? No, no, that 
undermines the credibility of the program. You know that better 
than I do. So, we need to take a very close look at this, and 
it is a serious, serious problem dealing with serious, serious 
money.
    Mr. Commissioner, the title of this hearing is ``Keeping 
History from Repeating Itself.'' What are the top things we 
here can do to keep this criminal activity--this is criminal, 
what we are talking about here--from happening again? Because 
there are going to be programs in the future that are ripe for 
those who wish to deceive. And those who wish to deceive are 
taking money from their peers who are getting the advantage of 
the programs.
    So I don't want to hear generally about the poor. The poor 
are many times crooks. Really? Are you serious?
    So what do you think we can do about it?
    Mr. ASARO-ANGELO. Well, hopefully, we never have to have a 
situation like COVID ever again. But if one does arise, if some 
kind of national emergency, don't ever pass a program like PUA 
again. PUA was primarily for independent contractors and self-
employed. It should have been in Treasury or SBA. The 1099 
workers, the self-employed are inherently small businesses. PUA 
was the main cause of UI fraud during COVID, and sort of got 
the camel's nose under the tent, as they say. In regular UI the 
employers of the workers are the crucial part of the anti-fraud 
process.
    Congressman Schweikert, you talked about your wife working 
at the surgery center. That is how we stop fraud. Very often we 
hear from the employers who say, ``Hey, I got a filing for this 
person, and they don't--one, they don't exist, or two, they 
don't work for us, or three, they are still employed.'' That is 
one of our most important ways to fight fraud.
    Mr. PASCRELL. The specifics that you are talking about, 
would you please, at your leisure, put them down in very 
specific order in terms of the--being in parallel to what you 
testified today, and get it to everybody on this panel? I would 
ask you to do that. Is that asking too much?
    Mr. ASARO-ANGELO. Not at all, Congressman.
    And to answer Congressman Schweikert's question of before--
--
    Mr. PASCRELL. And let me ask----
    Mr. ASARO-ANGELO [continuing]. He does know everybody in 
New Jersey, yes.
    Mr. PASCRELL. Thank you. Every Democratic member on this 
panel worked very closely with the President to include $2 
billion. Correct me if I am wrong, anybody--for unemployment 
insurance fraud-fighting measures in the landmark the American 
Rescue Plan was not that long ago.
    Can you provide some examples of how New Jersey spent these 
Federal dollars to modernize its UI program in support of 
workers to prevent fraud?
    Mr. ASARO-ANGELO. There is a lot. I will try to keep it 
really brief.
    We have increased staff, fraud staff specifically, with the 
creation of our cyber fraud investigations unit. We contracted 
with an identity credentialing vendor. We have--now we have a 
dark web monitoring service. We procured IT services to enhance 
an existing data analytical tool, which allowed us to ingest 
numerous data elements like Ms. Miller talked about to identify 
fraud trends and patterns. Supported our pilot, along with 
Arkansas from U.S. DOL, our claimant experience pilot, which 
informed much of our current research and best practices on our 
new application, which we will launch in just a couple of 
weeks. We established our Office of Unemployment Modernization 
to deliver a UI system built with smaller modular pieces, not 
one big chunk all at one time. That usually leads to failure. 
And all other forms of our UI modernization, which is always 
going to make our systems more secure.
    Mr. PASCRELL. Go ahead.
    Chairman SCHWEIKERT. Mr. Pascrell, are you telling me I 
have things to learn from New Jersey?
    Mr. PASCRELL. Yes.
    Chairman SCHWEIKERT. We are going to go to two-to-one on 
this, just because we are running into some interesting 
conference time.
    Mr. Fitzpatrick.
    Mr. FITZPATRICK. Thank you, Chairman Schweikert, for 
holding the hearing. My first question is for Ms. Miller.
    In December of 2022, the Secret Service announced that 
hackers linked to the Chinese Government stole at least 20 
million in U.S. COVID relief benefits, including UI funds in 
over a dozen states. A former assistant U.S. attorney who 
indicted these hackers from this Chinese criminal group in both 
2019 and 2020 said that the hackers have ``tens of thousands of 
machines'' going at one time to obtain personally identifiable 
information and generate criminal profits.
    Even more concerning, officials and experts told one media 
outlet that other Federal investigations of pandemic fraud seem 
to point back to foreign state-affiliated hackers. So, my 
question, Ms. Miller, American officials have blamed Chinese 
hackers for the breaches of OPM, of Anthem Health, and Equifax. 
And it is clear that COVID fraud is not just a domestic issue; 
this is a matter of national security.
    So, based on your experience working with the Pandemic 
Response Accountability Committee, which is a member of, of 
course, of DOJ's International Organized Crime Intelligence and 
Operations Center, what are the national security implications, 
in your view, of foreign state-affiliated hackers stealing 
taxpayer funds that were intended to be for COVID relief 
benefit programs?
    Ms. MILLER. Yes, we--data on this is still being evaluated. 
But there are some estimates that half of the Pandemic 
Unemployment Assistance fraud went to adversarial nations, and 
that is pretty problematic when you consider that people, when 
they think about fraud, they think, oh, it is just a little 
rounding error, it is a problem. These are--this was fraud that 
is funding our adversaries. That is what happened during the 
pandemic, and that is why there is so much attention on it, 
which is valid.
    These hackers--and they--there is a full underground market 
of fraud actors today. We call it fraud as a service. And it is 
a full--those fraud actors, they have at their disposal really 
sophisticated artificial intelligence tools. They have the 
flexibility and agility to be able to move. If something is not 
working, they can just take something down and put it back up. 
We have seen where the DOJ has taken down a malware site, and 
it has been back up two months later, and it is even more 
effective.
    So we cannot fight this adversary the way that we are 
currently fighting this adversary, because this adversary is 
serious, and they are looking to steal money to create not just 
a financial problem, but a national security problem.
    Mr. FITZPATRICK. Thank you, Ms. Miller.
    Ms. Shea, what are the existing tools that agencies can be 
using to prevent money that is fraudulently claimed from going 
out the door?
    Ms. SHEA. So GAO is dedicated to helping agencies enhance 
their strategic approach to fraud risk. You know, we are always 
going to come back to what it is that the program managers can 
do. And, you know, you are hearing a lot about the risk 
involved.
    And so trying to encourage them to better understand that 
risk so that they can strategically plan for it, identify what 
the best solutions are. And we do that through things like our 
fraud risk framework, which lays out 38 leading practices, a 
roadmap for agencies to understand how best to strategically 
manage risk. We have developed an anti-fraud resource, which is 
a web-based, interactive, user-friendly guide that lays out the 
who, what, when, where, why, and how of, you know, how fraud 
happens, so that they can understand and take action.
    There are other tools and resources like Treasury's Anti-
Fraud Playbook, which helps agencies figure out how to best 
manage their risk and understand them, so--in addition to a 
couple of matters that we have recommended to Congress to take 
to help address these issues.
    Mr. FITZPATRICK. And in your position of director of 
forensic audits, you made recommendations to Federal agencies 
on how to improve their fraud prevention.
    So, number one, have the agencies agreed with those 
recommendations?
    And number two, have they implemented those 
recommendations?
    Ms. SHEA. So we have made a number of recommendations in, 
you know, normal operations and, of course, in the COVID 
programs. And I would say about 27 overall, 28 overall related 
to COVID-specific fraud risk management, and there are still, I 
think, about 18 of those left open.
    So agencies do not always agree, and that is true in normal 
operations. We don't always get agreement. And that relates 
back to the mindset issue. They aren't always appreciating the 
risk that exists.
    Mr. FITZPATRICK. Thank you. Thanks to the panel for being 
here.
    I yield back.
    Chairman SCHWEIKERT. Thank you, Mr. Fitzpatrick.
    Mr. Steube.
    Mr. STEUBE. Thank you, Mr. Chairman.
    The COVID-19 pandemic and the resulting shutdowns imposed 
tremendous costs on our nation. Unfortunately, criminals 
exploited our dysfunctional Federal Government to steal 
American taxpayer funds intended to alleviate the suffering. 
This resulted in the fraudulent transfer of over $280 billion 
to criminals, according to an Associated Press analysis. 
American taxpayers were fleeced, and their government failed in 
its duty to protect their tax dollars.
    GAO has estimated the unemployment fraud during the 
pandemic may reach as high as 135 billion. That figure 
represents 15 percent of all unemployment insurance benefits 
paid out during the pandemic. Meanwhile, criminals further 
victimize American citizens through identity theft schemes. The 
Federal Trade Commission reported a 3,000 percent increase in 
identity theft claims related to government benefits in 2020. 
This caused difficulty in accessing benefits for many law-
abiding Americans.
    The sad fact is that much of this could have been 
prevented. The Federal Government should be better stewards of 
the hard-earned dollars American families pay in taxes. Law 
enforcement must track down these criminals and recover the 
illegally-obtained funds, but we also need to plan for the 
future to ensure this never happens again. The tools exist for 
the Federal Government to prevent this kind of fraud, we just 
need to make sure that the tools are actually used.
    Ms. Miller, the Pandemic Response Accountability Committee, 
where you served as the deputy executive director, developed an 
analytics tool called the Pandemic Analytics Center of 
Excellence, which used analytic technology to uncover patterns, 
anomalies, and red flags that point to potential fraud. This 
tool has been used by numerous law enforcement agencies to open 
over 500 investigations into 6,000 subjects, representing an 
estimated potential fraud loss of 500 million.
    Can you comment on the development of the PACE tool, as 
well as other ways that technology can be used to address fraud 
in the future?
    Ms. MILLER. Yes, thank you. The PACE is one of the bright 
spots in government anti-fraud activities that is in the 
history of American government. The PACE has created a center 
of excellence, a center, a hub. They--and they negotiated 95 
data use agreements. Honestly, that is probably the biggest 
accomplishment of the PACE.
    It is--I can't overstate how challenging it is for agencies 
to share data. They actually usually just stop trying because 
of how hard it is to put a data use agreement in place. But 
because the PACE's whole focus was on trying to gather a lot of 
data in one place in order to use it to prevent fraud, they 
were able to get those 95 data use agreements in place. They 
also have FinCEN data, they have suspicious activity reports 
data. They are using a lot of third-party data, and they are 
using really impressive artificial intelligence tools. This 
should be the model going forward.
    And--but my--the important point I want to make, though, is 
that is only for investigations. We know that we recover about 
$0.50 on every dollar of fraud that has been stolen. And with 
identity theft it is even less than that. We need a PACE inside 
of the management side of government, so that these kinds of 
tools can be used prior to making a payment, which is why I 
have been advocating for the creation of a management-side 
center of excellence. Where that sits is open to discussion. 
Treasury could be one area that you could put it in, but it 
needs to have the same capabilities, and it needs to have that 
dedicated focus because, again, the people at the PACE, that is 
their entire job is negotiating data sharing agreements, 
acquiring data, pulling data scientists in.
    The other thing the PACE did was create a data science 
fellowship, and they were able to get recently-graduated data 
scientists from different universities to come and work on 
these projects. It is very difficult to get the data science 
resources within the Federal Government. And so such an 
analytic center of excellence sitting on the management side 
should also look at that as a model in order to acquire the 
data science expertise that is needed.
    Mr. STEUBE. So you are proposing the creation of a 
dedicated anti-fraud office for basically the entire Federal 
Government. What is preventing agencies from using these 
existing tools to protect against fraud instead of creating 
that?
    Ms. MILLER. So agencies, number one, most of them don't 
have--they will tell you--I am not there, but they will tell 
you that they don't have the resources. They will say, hey, 
our--and this is--this gets back to this whole incentives 
piece. They will say, ``Our job is to get a benefit out. That 
is our job. Our mission is benefit delivery. Our mission is not 
prevention of fraud. That is the IG's mission.'' And the focus, 
what we have been trying to do at GAO, and when I was at GAO 
and ever since, is trying to get agencies to understand that 
their job is to prevent fraud.
    But until they don't--so they will say they don't have the 
resources, they will say that they don't have the ability to 
get the data. They will tell you that the data is the problem. 
The problem is partly because they can't negotiate these data 
sharing agreements, it is partly because they think privacy 
laws and FCRA requirements limit them from using that data. So 
they will tell you all kinds of things. But really, the 
challenge is that they are not sitting in this hearing today. 
And, you know, typically we weren't having hearings about fraud 
until the pandemic happened. Once they sit in the hot seat, I 
think you will start to see them take this more seriously.
    Mr. STEUBE. All right, thank you. I have seven seconds.
    So, Ms. Simon, are--can you just explain quickly some cases 
which COVID relief benefits were stolen and subsequently used 
for criminal activity?
    Ms. SIMON. Certainly. Just one quick P.S. on Linda's point. 
When I was in the Department of Labor and we tried to get data 
on incarcerated individuals at the Federal level during the 
pandemic, which, as you know, would have been very helpful, we 
ran straight into a brick wall of legal and financial 
obstacles. And so I just want to say, from experience, that is 
an incredibly real reality.
    Yes, pandemic fraud is effectively a vertical for many 
criminal organizations, and it is an income source. And there 
was a recent DOJ indictment, I believe, in Michigan that was a 
sprawling scheme that was funded by multiple kinds of pandemic 
fraud, including unemployment, that had murder for hire as one 
of its services. So these are not run-of-the-mill, someone down 
the street claimed a few extra weeks that they shouldn't have 
claimed. This is serious street crime.
    Mr. STEUBE. Thank you for being here today.
    I yield back.
    Chairman SCHWEIKERT. Thank you, Mr. Steube.
    Ms. Chu.
    Ms. CHU. Yes, I would like to start by reminding my 
colleagues that the Pandemic Unemployment Assistance program 
was authorized by the CARES Act and extended by the 
Consolidated Appropriations Act of 2021, both in overwhelmingly 
bipartisan votes.
    Additionally, Ways and Means Democrats secured funding to 
fight fraud and recover taxpayer dollars in the American Rescue 
Plan.
    The pandemic was an unprecedented disruption of our 
economy, and we hope that this does not happen again. But what 
was clear was that there was necessity for benefits, 
unemployment benefits, and that is why Democrats and 
Republicans acted together to expand unemployment benefits as 
quickly as possible to assist American families who, through no 
fault of their own, suddenly found themselves without a way to 
provide for their family's basic needs. This was a success, 
which is why the U.S. has had a stronger economic recovery than 
any of our peers.
    From my district, I have heard from many individuals that 
federal pandemic unemployment benefits were a lifeline for 
providing for basic necessities like food and lifesaving 
medications. That includes Gretchen from Altadena, California, 
who has been in the film and television industry for the last 
30 years, and is a cancer survivor whose medical coverage is 
predicated on the number of hours worked; and Mary from 
Pasadena, California, a nursery school teacher whose employer's 
doors closed and had to file for unemployment for the first 
time in her 26-year career; and May, the primary breadwinner 
for her family living in Sierra Madre, trying to stay afloat, 
all while distance learning with her three kids. The swift 
action of Congress mitigated the hardship that jobless workers 
and their families suffered, and it was essential in 
stabilizing an economy that lost a staggering 22 million jobs 
in just 2 months in early 2020.
    We know that there are lessons to be learned from these 
efforts that can strengthen and sustain the UI system for 
future emergencies, and I hope that it is the goal of the 
hearing to not neglect our duties to protect our workers in the 
midst of a global pandemic.
    So, Mr. Asaro-Angelo, I do want to note that Democrats took 
the issue of fraud seriously as part of the American Rescue 
Plan Act, or ARPA. Democrats provided the Department of Labor 
with $2 billion to strengthen the integrity and preparedness of 
state UI systems, as well as to provide grants to states for 
fraud detection and prevention and overpayment recovery 
efforts. However, earlier this year, the Fiscal Responsibility 
Act of 2023 rescinded ARPA funding for UI programs and reduced 
the total funding for UI programs from 2 billion to $1 billion.
    So, in your testimony, you mentioned that New Jersey used 
these funds to modernize your unemployment system. Can you talk 
about how these modernization efforts are critical to 
preventing fraud, and what would be the impact on fraud 
mitigation by cutting these funds?
    Mr. ASARO-ANGELO. Thank you for your question, 
Congresswoman.
    Yes, as I mentioned earlier, these funds have been critical 
because modernization is key to fighting fraud as well. And the 
important part of this is that modernization doesn't end, and I 
think it has been a real problem for our systems for far too 
long that a state would spend millions of dollars--sometimes 
hundreds of millions of dollars--to go get a procurement for a 
new system that may or may not have included anti-fraud 
measures. Then years later, they would be delivered this system 
that is already out of date, and any changes they want to make 
to that system they need to go back and get change orders, get 
a new contract. I don't think I need to tell anybody here 
government procurement is not fast or agile.
    But what we have done is used the agile method using the 
GSA contract, where we are working with a team, a vendor team 
that is working together about building this product, about 
building small modular parts, which was considered in ARPA, by 
the way. That way, not only can we be more agile about putting 
new programs in, we can share them with other states.
    And the funding that came out of the ARP for modernization 
specifically states that states who use these funds have to be 
able to share that with other states, because right now, when 
you go to the vendor, they own the code, for the most part, and 
sharing amongst states on this stuff is very difficult. So I am 
really thrilled that the U.S. DOL put that in their grant 
writing for the modernization. We were very proud to receive 
one of the $11.35 million grants. Because of that rescission, 
though, not every state could receive it. It became a 
competitive process, as opposed to every state receiving those 
dollars. So--but it was very smart how they wrote that--
whenever dollars are being used out of that, we have to be able 
to share that product and those victories with other states, as 
well.
    Ms. CHU. Very good.
    I yield back.
    Chairman SCHWEIKERT. Thank you, Ms. Chu.
    Ms. Tenney.
    Ms. TENNEY. Thank you, Mr. Chairman and Ranking Member, and 
thank you to the witnesses. Great testimony, lots of great 
documents in here. I really appreciate it.
    And I come from New York State, which got a tremendous 
amount of money for unemployment insurance and a tremendous 
amount of fraud. And I just wanted to address this first, I 
think, to either--well, first I will go to Ms. Miller. Maybe 
Ms. Simon first, and then, Ms. Miller, have you comment.
    The previous Department of Labor OIG report provided 
oversight on the Unemployment Insurance Program stated that 
some internal controls had traditionally been used or 
recommended by--to the states but were not used. So, I cite 
back to a recent committee hearing that we had with the Office 
of the Inspector General wherein they cited the State of New 
York was warned back in 2010 that they did not have adequate 
controls in place to handle the existing unemployment insurance 
claims that they had.
    And I will just give you a--pre-pandemic, an improper 
payment amount was roughly about 10.34 percent. After the 
pandemic it was almost 30 percent. The fraud rate of 4.5 
percent--and this is before pandemic, with poor controls in 
place--it went to almost 18 percent. The claims before the 
pandemic in 2019, the quarter before, there were $530 million 
in claims went to--in 2021, after the first quarter of 2021, 
went to 6.5 billion, from 530 million to 6.5 billion, an 1,124 
percent increase in claims because of the lack of New York 
State to have controls.
    And while my colleague wants to make this partisan, all of 
this information is coming from Democratic Comptroller Tom 
DiNapoli, who has provided numerous reports on warning New York 
on what is happening to taxpayer money.
    And the reason I am so concerned about this is we have 
created this huge burden on our unemployment insurance trust 
fund and that our small employers, who were forced to lay off 
during the pandemic, are now paying for this, as are New York 
State taxpayers, because the funds were squandered that came 
through either the American Rescue Plan or other CARES Act 
monies.
    What can we do to get New York up to speed, and really 
being a true, sound steward of taxpayer dollars that have been 
wasted?
    And, you know, you mentioned, you know, ring--international 
rings up to 50 percent of the monies. What can we do? What can 
New York do today to protect its small businesses and its 
taxpayers in preventing this colossal fraud that we have seen, 
largely due to the inability of the Department of Labor in New 
York State to properly implement programs?
    What can we do, like today, in the next few months, to curb 
the costs that we are seeing to prevent this fraud?
    And, Ms. Simon, I think I will address it to you first, and 
then maybe Ms. Miller.
    Ms. SIMON. Certainly. I think the one thing that--
specifically about this hearing and the question that you asked 
is that the questions I have started asking when I look at a 
state's posture is, are the use cases across the fraud life 
cycle being addressed? So----
    Ms. TENNEY. Is your microphone on?
    Ms. SIMON. I think so. Should I----
    Ms. TENNEY. Yes, talk right----
    Ms. SIMON. Can you hear me? Okay.
    Chairman SCHWEIKERT. You have to be really close.
    Ms. SIMON. Okay, perfect. One of the questions I ask is, if 
you think about the use cases across the fraud life cycle and 
ask hard, specific, clear questions of the New York Department 
of Labor before a claimant applies, ``What tools do you have, 
what information are you getting, what are you doing with that 
information as the claimant is applying, how are you verifying 
their identity, what do you do with high-risk identities,'' and 
then, after they have applied, ``When you see suspicious 
activity, how do you handle that? What tools do you have in 
place? What processes, how many fraud investigators do you 
have? How many cases are going to prosecution?''
    But those kinds of questions have not traditionally been 
asked to state departments of labor, certainly not by Federal 
counterparts. And often folks like the state auditor are the 
ones asking those questions.
    So I am happy to have a conversation also offline, and give 
you specific advice. But I think one of the questions is to get 
very, very specific about the entire life cycle. What is the 
state doing? What tools does it have in place? And what is it 
doing with the information it gathers?
    Ms. TENNEY. Thank you.
    Ms. Miller, if you could just------
    Ms. MILLER. Yes, I would just------
    Ms. TENNEY. Just a plan.
    Ms. MILLER. Sure. I mean, I just think------
    Ms. TENNEY. To start.
    Ms. MILLER [continuing]. One of the things is, though, is 
when no one else is looking.
    So who calls one of you guys? Someone who says they didn't 
get a benefit, right? Nobody really calls and says, ``Oh my 
God, there is a ton of fraud in the UI program.'' That only 
happens later, when the IG puts out a report and everyone gets 
alarmed. And so when this is done, and when this blows over, 
they are still going to go back to worrying about getting that 
benefit out quickly, because that is who they are going to hear 
from. They are going to hear from a congressperson when a 
constituent is saying, ``I am not getting my benefit.''
    So I am going back to incentives to fraud prevention. 
Internal controls is not exciting stuff. They don't want to 
worry about internal controls until there is a hearing. And so 
we have to--you, Congress, has to incentivize them and build 
this into their performance metrics: ``We are glad you are 
getting benefits out the door quickly, but we also want to make 
sure that you are doing things to make sure only eligible 
benefits--beneficiaries are getting those benefits, and not 
just worrying about the squeaky wheel, which is did I get my 
benefit and did I get it quickly?''
    Ms. TENNEY. Right, yes. We keep flooding these agencies 
with billions of dollars in taxpayer money, and we are hurting 
our small business community.
    So, thank you so much for your expertise, I appreciate it.
    Chairman SCHWEIKERT. Thank you, Ms. Tenney.
    Ms. TENNEY. I yield back.
    Chairman SCHWEIKERT. Those are terrific questions.
    Mr. Feenstra.
    Mr. FEENSTRA. Thank you, Chairman Schweikert and Ranking 
Member. Thank you very much.
    I want to also thank our witnesses, and for all your 
information that you have given. To me, it is all about 
solutions. We have got to figure out solutions. We have got to 
really dig down and understand. Obviously, we know what is 
happening and we have improper payments, we have fraud, we have 
waste. We have criminals trying to take advantage of our 
taxpayers. So here is my question to Ms. Miller and Ms. Simon.
    We have AI. We have private companies that deal with this 
all the time. When it comes to credit card companies, they do a 
great job. We have bank companies that are also doing the same 
thing. What can we take from them, as a Federal Government and 
say, hey, let's apply this to what we are doing and to reduce 
this fraud?
    And Ms. Miller, first, how can we handle this? I mean, how 
can we identify the fraud with these new techniques, and then 
how can we apply it?
    Ms. MILLER. Sure, yes. We--the private sector has really, 
really advanced tools that they use at the front of what they 
call the front of the sale, so at the very beginning, right? So 
when someone is applying for a new benefit, if they are opening 
an account at a bank, or if they are looking to make a 
transaction, the bank can very quickly, in what they call in 
their words as a low-friction technology, right?
    They can take a ton of data about me when I apply and say 
this looks like Linda's--we have seen this Social Security 
number and this address associated with Linda, but we have 
never seen it coming from that IP address. Or, you know, this 
person says that they are applying for this benefit here, but 
we have information that shows that that bank account is 
actually in an entirely different state, or maybe even a 
different country.
    Mr. FEENSTRA. Right.
    Ms. MILLER. And so they are able to take all that kind of 
information and triangulate it.
    They are also able to say, oh, this new applicant for this 
loan is actually affiliated with four other people, all of whom 
have been indicted with--for fraud. This looks like this person 
might be a shell company associated with a number of--in a 
fraud ring.
    These are the things that the private sector can do. The 
government has very little, if any, ability to use that kind of 
data to make those determinations. And that is why the------
    Mr. FEENSTRA. Why not?
    Ms. MILLER [continuing]. Fraud actors are------
    Mr. FEENSTRA. Well, why can't we use that data?
    Ms. MILLER. Well, partly it is that most agencies don't 
even--honestly, most of them don't even know that these are 
capabilities they can have. There needs to be a lot more 
education of agency leadership, of what kinds of tools could 
they put in place.
    But again, it gets back to no one is really telling them 
this is an important priority. So when they get a budget, their 
budget is focused on getting benefits out the door, it is not 
focused on preventing fraud. If instead there is built in this 
money here, we are going to give you this $10 million, but we 
expect you to use 1 million of that to build in fraud 
prevention tools using data------
    Mr. FEENSTRA. Yes.
    Ms. MILLER. And if they are told that, then they can go and 
find those. But right now they are not even looking for it.
    And so you see things like the Inflation Reduction Act or 
the Infrastructure Act, where money is going out to states and 
local governments all across the country. There is very likely 
enormous fraud in those programs, and there is very little 
fraud prevention tools being used today.
    Mr. Feenstra. So it is the dollars and it is the 
technology. And that is why I am saying------
    Ms. MILLER. Exactly.
    Mr. FEENSTRA [continuing]. This is ripe for AI.
    Ms. MILLER. Yes.
    Mr. FEENSTRA. I mean, absolutely, we--I mean, we have to 
look at the private sector and solve our problems with what 
they have been experts on.
    Ms. MILLER. Yes, and you can use large language models 
like------
    Mr. FEENSTRA. Yes.
    Ms. MILLER [continuing]. Generative AI, like a ChatGPT to--
within seconds you could take applications to a program and 
identify anomalies.
    Mr. FEENSTRA. I understand.
    Ms. MILLER. You could identify text that is duplicative 
that indicates that someone is using the same information.
    Mr. FEENSTRA. Agreed.
    Ms. MILLER. This could be done in seconds if agencies could 
adopt those technologies.
    Mr. FEENSTRA. Thank you.
    Ms. Simon, if you could, add on to this. I mean, and what 
are your thoughts on--I mean, I just don't see this as rocket 
science. It is just a matter of getting the tools to our 
Federal Government.
    Ms. SIMON. Absolutely. So I think two things.
    One, to underscore both of your points, I had a vendor call 
me. This was after I left government. This is a vendor that is 
used by most of the large banks for that front-end piece sort 
of intelligence. And he said, ``I have been calling state 
workforce agencies and I can't get people to call me back. I 
want to help. I want to be part of the solution.''
    So, I think, on one side, there is--that is an issue. 
However, it would be unfair to say workforce agencies if we 
didn't acknowledge the administrative funding struggles that 
they have. There is not a dedicated line of funding for fraud. 
I think there should be, quite frankly. The------
    Mr. FEENSTRA. So the cost--it is really the------
    Ms. SIMON. But------
    Mr. FEENSTRA. I mean there are not dollars to do this. Is 
that a fair statement?
    Ms. SIMON. That--the dollars are not prioritized to do 
that, so the trade-offs are extremely steep for states.
    Mr. FEENSTRA. Got you.
    Ms. SIMON. And so I think thinking about the funding that, 
if we want fraud to be part of the mission, then the funding--
the mission funding needs to involve fraud-specific funding.
    Mr. FEENSTRA. Right. And I would like to see the ROI on 
this.
    Ms. SIMON. Yes.
    Mr. FEENSTRA. I mean, return on investment of saying, all 
right, if we put X amount of dollars for prevention, what do we 
get back in return? And not only that, you are protecting your 
taxpayers. So I just think this is not hard to solve, but we 
just, as a government, got to do it.
    With that I yield back. Thank you.
    Chairman SCHWEIKERT. Thank you, Mr. Feenstra.
    Mr. Pascrell would like to touch base on something you were 
speaking of.
    Mr. PASCRELL. I have no problem with what you just 
produced, I really don't. However, if you turn to what I think 
is a parallel example: the IRS, in terms of the debates we had 
over that. Again, neither side is privy to virtue.
    But the point is, some folks use the data that you talk 
about to destroy the program. And I am very fearful of that. 
You may say, well, you are too fearful, but that is my thought 
in my mind.
    Mr. FEENSTRA. And there has got to be protections for that, 
100 percent.
    Mr. PASCRELL. Well, I hope they stand up.
    Mr. FEENSTRA. Yes, that is right.
    Chairman SCHWEIKERT. Okay. For both of you, let's have a 
side conversation, because I think there is a simple technology 
solution that actually fixes for both of your concerns.
    Ms. Moore.
    Mr. PASCRELL. Thank you.
    Ms. MOORE. Well, thank you so much, Mr. Chairman, for 
convening this hearing, and I do want to thank our panel for 
their patience and their extraordinary testimony, extraordinary 
efforts to stop fraud and abuse.
    I do want the chairman to know that I had my very first 
vanilla cappuccino. [Laughter.]
    Ms. MOORE. I am not going to become a latte liberal. 
[Laughter.]
    Ms. MOORE. I am from the Midwest. We just drink plain old 
coffee all the time. But I do appreciate your effort.
    Having said that, I just want to join everyone on this 
panel to say we are against fraud and abuse. We are against 
taxpayers footing the bill.
    And just to look through some of this extraordinary 
testimony, I am just looking, for example, with Ms. Simon, with 
your testimony, I mean, who knew identity theft, synthetic 
identity, account takeover, phishing schemes, benefit cards, 
skimming, bribery schemes, self-dealing, document fraud, bot 
attacks--I mean, not to mention places like Wisconsin, where 
our technology for unemployment--and I think you made this 
point, Mr. Asaro-Angelo, was from 1970. I don't even think you 
have to be all that bright to figure out how to breach 
something like that.
    That being said, you know, at the beginning of the 
pandemic, 22 million people lost their jobs due to no fault of 
their own. And just looking at the material here, it seems like 
we had a surge of like 33 million extra unemployment claims.
    And one of the things that I guess I want to hear from the 
panel is we had a hearing earlier on this committee--on the 
full committee--on unemployment fraud, and it seemed that there 
was a tremendous effort going to be put into going after fraud 
for people who may not even know that they got an overpayment. 
I mean, it might have been somebody who got an overpayment of 
$1,200 they didn't deserve, but we had expanded unemployment 
benefits. They may not have even known.
    And so, I just want to hear from you, maybe Ms. Miller, Ms. 
Simon, maybe Mr. Asaro-Angelo--I am running out of time--what 
were the benefits versus the losses that we had in rescuing 
people from poverty, making sure that some people could pay 
their mortgages, keep up with their bills, continue consumer 
spending?
    And what message does it send for us to expend government 
resources running after, you know, Joanne Smith, who got $1,500 
she didn't deserve and may not have even known that she didn't 
deserve it?
    Ms. Miller.
    Ms. MILLER. Yes, I mean, I think what you are raising is a 
really, really good point about risk. And when we talk about 
fraud--and certainly GAO is the expert in this area--focusing 
on risk is really important. We are not going to get back all 
the dollars, and they are not all equal. When we are talking 
about organized crime rims and nation state actors, that is who 
we need to be focusing on, not someone who got an extra $1,500.
    And it is really important, because we don't have the 
resources anyways, right, to go back and try to go after that 
money. And we don't want to send that message that it is--you 
know, we are turning the United States into some sort of police 
state, where we are trying to make sure that everybody only 
gets exactly what they are entitled to. That is why we want to 
use risk, and that is why we want to use data and technology so 
that we can focus those efforts on those most serious, most 
egregious actors that are operating rings, and we can do that 
using technology.
    And then, you know, when we have additional resources, the 
priorities need to be set by the agencies, but the priorities 
should not be on the small-dollar frauds. The priority should 
be on the large nation state and organized crime rings. And 
that is where, I think, all of us up here are in agreement that 
that should be the focus.
    Ms. MOORE. Mr. Asaro-Angelo.
    Mr. ASARO-ANGELO. Thank you for your question.
    First of all, as far as the overpayments, I am proud that 
NASWA, which I mentioned before, which includes my counterparts 
across the country, voted in a unanimous and bipartisan manner 
to urge Congress to waive all non-fraudulent pandemic-related 
unemployment compensation overpayments. The amount of time and 
staff needed to pursue these non-fraud overpayments with a very 
low return absolutely undermines our efforts at fighting 
current and future fraud.
    Just real quick, I also want to mention we keep talking 
about as if there is one unemployment system. There are 53 
different systems. I mean, if we want to solve or have a way 
better handle on the fraud, combine such--have more tools from 
the Department of Labor, where all states can be talking to 
each other, where there is one set of applications, one set of 
security procedures, one set of anti-fraud measures. By these 
fraudsters being able to pick and choose, they couldn't be 
happier.
    And to--whatever we can do to be talking more--and we do a 
lot of this through NASWA, and I am very proud of our work on 
these efforts. The IDH was mentioned before. I must say, 
though, even though there were only 36 in 2020, it wasn't as 
important then because it was only regular UI. So we always had 
the employers as the backstop. PUA made the IDH really 
important.
    So I think if whatever we do can consolidate our efforts 
across the states and in the Federal Government, that we should 
be able to do.
    Ms. MOORE. Thank you. My time has expired.
    Thank you for your indulgence, Mr. Chairman.
    Chairman SCHWEIKERT. Thank you.
    Ms. MOORE. I yield back.
    Chairman SCHWEIKERT. Mr. Davis.
    Mr. DAVIS. Well, thank you, Mr. Chairman and Ranking 
Member, for giving me the opportunity to waive on to this 
hearing.
    Although I am not a member of the subcommittee, my state of 
Illinois, which is a rather large state, as a matter of fact, 
had tremendous challenges and problems. But I also remember the 
great work that the state employment agency did in terms of 
fielding questions, all the requests that came through.
    And so, when we discovered that this kind of fraud was 
taking place, we were outraged, quite frankly, that criminal 
rings stole unemployment insurance benefits during the 
pandemic, which is the reason that we Democrats worked so hard 
to make sure that we would provide the resources to do 
something about it. And I can't help but recall that not a 
single Republican voted for these anti-fraud funds. So we also 
are proud of the work that we and all of you in the states did 
to keep workers afloat during the pandemic, which led to the 
fastest economic recovery in our history.
    Commissioner Asaro-Angelo, would forgiving overpayments and 
you have partially answered that a moment ago, but would 
forgiving overpayments made to workers who were completely 
without fault free up resources that your state would need to 
improve benefit access and prevent future fraud?
    Mr. ASARO-ANGELO. There is no doubt about it. The going 
after overpayments, as I mentioned before, is a really low 
return on investment. And we also need to remember that during 
the time of the COVID--the Pandemic Unemployment Assistance, 
all those programs, the rules were changing, literally, day by 
day for us and for claimants.
    So to have a claimant be in a position where, if you apply 
in March the rules are different than when you apply in 
December, or the guidance we are getting from the U.S. DOL, 
through no fault of their own--very clear, you know, things are 
changing very quickly--our rules were different almost from 
week to week. So being able to be eligible one week and not 
eligible the next week, it was very difficult for our claimants 
and for our staff, who are newly trained up, newly implementing 
programs.
    So certainly, as I mentioned before, we are all in favor of 
waiving all non-fraudulent overpayments that came from the 
pandemic programs.
    Mr. DAVIS. And what happened when the pandemic hit to the 
number of requests for benefits in New Jersey?
    Mr. ASARO-ANGELO. Well, during the week of March--ending 
March 6, we had 7,900 claims; 2 weeks later, during--March 21, 
we had 155,000 people applied for UI. New claims increased to 
205,000 the following week. Within five weeks, we had one 
million claims in new Jersey.
    Mr. DAVIS. Well, I know that you and your staff worked hard 
to get the benefits out as quickly as you could. What effect 
did this have on the workers?
    Mr. ASARO-ANGELO. Well, I would say the benefits served 
their purpose, as laid out in statute and regulation and--
desire to provide workers with an income during loss of 
employment and, most importantly, keep them on their feet so 
that they can look for work while still supporting themselves, 
their families, and their communities.
    The system also helped sustain our economies by sustaining 
the purchasing power of millions of workers, as Congressman 
Pascrell mentioned earlier. And so, over the past few years, 
even with COVID, we have had a remarkable increase in the 
number of small businesses in New Jersey, and I think largely 
because of the investment that came through to help workers 
during this trying time.
    Mr. DAVIS. Thank you very much.
    And Mr. Chairman, after your treatment of giving me the 
opportunity to waive on, and also the refreshments that you 
served, maybe I will waive on----
    Chairman SCHWEIKERT. I have a coffee problem, Mr. Davis. I 
hope everyone else will. But thank you for joining us. And 
forgive the tyranny of our schedule and our clock.
    Mr. Pascrell and I have a running agreement here as part of 
the discussion that, in many ways, this is shorter than we 
would like it to be, but one of the more interesting hearings 
we have ever had. You did something unique as a group, all of 
you. You actually gave us a path where we think we can do 
something positive, and maybe make the future more robust, 
everything from things we are going to need to know how to--New 
Jersey--meet the privacy standards and the security standards 
of the Federal Government to the ability--could we actually 
take what Ms. Miller spoke about, the AI, and Ms. Simon touched 
on, the--what is available out there, and how it changes so 
rapidly, and could we ever wrap that around some of the 
services that Ms. Shea spoke about that already exist?
    It is traditional, as the chairman, at the end I need to 
tell you that you are subject to potential written requests 
from members that will be made part of the permanent record.
    Please be prepared also for maybe more than just two weeks 
of asking for your help as staff speaks to staff of what could 
we do to never go through this again.
    And with that, this hearing is over.
    [Whereupon, at 11:31 a.m., the subcommittee was adjourned.]
      

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