[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
TIME'S RUNNING OUT: PROSECUTING
FRAUDSTERS FOR STEALING BILLIONS IN
UNEMPLOYMENT BENEFITS FROM
AMERICAN WORKERS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
WORK & WELFARE
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 6, 2025
__________
Serial No. 119-WW01
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
59-658 WASHINGTON : 2025
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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 DANNY DAVIS, Illinois
JODEY ARRINGTON, Texas LINDA SANCHEZ, California
RON ESTES, Kansas TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DON BEYER, Virginia
DAVID KUSTOFF, Tennessee DWIGHT EVANS, Pennsylvania
BRIAN FITZPATRICK, Pennsylvania BRAD SCHNEIDER, Illinois
GREG STEUBE, Florida JIMMY PANETTA, California
CLAUDIA TENNEY, New York JIMMY GOMEZ, California
MICHELLE FISCHBACH, Minnesota STEVEN HORSFORD, Nevada
BLAKE MOORE, Utah STACEY PLASKET, Virginia
BETH VAN DUYNE, Texas TOM SUOZZI, New York
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
RUDY YAKYM, Indiana
MAX MILLER, Ohio
AARON BEAN, Florida
NATHANIEL MORAN, Texas
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
------
SUBCOMMITTEE ON WORK & WELFARE
DARIN LaHOOD, Illinois, Chairman
MIKE CAREY, Ohio DANNY DAVIS, Illinois
RUDY YAKYM, Indiana JUDY CHU, California
MAX MILLER, Ohio GWEN MOORE, Wisconsin
AARON BEAN, Florida DWIGHT EVANS, Pennsylvania
NATHANIEL MORAN, Texas JIMMY GOMEZ, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Darin LaHood, Illinois, Chairman............................ 1
Hon. Danny Davis, Illinois, Ranking Member....................... 2
Advisory of February 6, 2025 announcing the hearing.............. V
WITNESSES
Haywood Talcove, Chief Executive Officer, LexisNexis Risk
Government
Solution....................................................... 4
Anna S. Hui, Director, Missouri Department of Labor and
Industrial Relations........................................... 17
Jeff Ficke, Chief Executive Officer and Founder, Russell Allen
Partners....................................................... 29
Shelbey Meyenburg, Unemployment Insurance Worker, AFSCME Council
28 Washington Federation of State Employees.................... 41
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record and Responses from Haywood
Talcove, Chief Executive Officer, LexisNexis Risk Government
Solution....................................................... 71
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 75
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
TIME'S RUNNING OUT: PROSECUTING
FRAUDSTERS FOR STEALING BILLIONS
IN UNEMPLOYMENT BENEFITS
FROM AMERICAN WORKERS
----------
THURSDAY, FEBRUARY 6, 2025
House of Representatives,
Subcommittee on Work and Welfare,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to call, at 2:00 p.m., in
Sam Johnson Room, 2020, Rayburn House Office Building, Hon.
Darin LaHood [chairman of the subcommittee] presiding.
Mr. LaHOOD. The subcommittee will come to order. I want to
welcome everybody today to our Work and Welfare Subcommittee
titled Time's Running Out: Prosecuting Fraudsters for Stealing
Billions in Unemployment Benefits from American Workers. I want
to welcome our witnesses here today and thank you for traveling
to be a part of this hearing.
And I want to also welcome our new members to the
subcommittee. A few of them are here. I want to welcome Rudy
Yakym from Indiana who is a new member of Ways and Means and
the subcommittee; Aaron Bean from Florida is a new member here,
too, and welcome back our old members, and he is not new to
Ways and Means but new to the subcommittee, Randy Feenstra from
Iowa. Randy, welcome to the Subcommittee on Work and Welfare.
As the returning chairman of the subcommittee, we have a
unique opportunity to build on our past bipartisan work and
look forward to working with all of you. My district that I
cover is the 16th congressional district, which covers much of
central and northwestern part of Illinois. The purpose of
today's hearing is to learn how Congress can hold fraudsters,
how we can identify fraudsters and other criminal organizations
accountable by extending the statute of limitations for CARES
Act-related unemployment insurance fraud, which will expire on
March 27th of 2025 without congressional action.
The Ways and Means Committee has conducted considerable
oversight since the UI program's weaknesses were exposed during
the COVID-19 pandemic. In February of 2023, the committee held
a hearing with the government witnesses from the GAO and the
Pandemic Response Accountability Committee who testified to
problems with outdated state systems and weak online security
that made the program vulnerable to fraud.
Subsequently, in May of 2023, the House passed the
Protecting Taxpayers and Victims of Unemployment Fraud Act. The
bill would have extended the statute of limitations for an
additional five years and incentivized states to go after fraud
and recover funds. It also included program integrity reforms
to stop the pay and chase model of benefit delivery.
Unfortunately, those reforms fell short of becoming law and
Congressional action is needed now more than ever.
All told, for the unemployment insurance program alone, GAO
has estimated between $100 and $135 billion were lost to fraud
during the pandemic. That number is astounding. Even more
concerning, the Department of Labor tells us that only $5
billion has thus far been recovered. Meanwhile, we know law
enforcement agencies have thousands of cases currently pending.
The Department of Justice has charged more than 600 criminal UI
fraud cases with associated losses of over $300 million.
As of January 28th of this year, DOJ has more than 1,600
criminal matters that remain open and uncharged. Without an
extension of the statute of limitations, these instances of
suspected pandemic UI fraud will go unpunished. First and
foremost, we need to provide law enforcement with the tools and
resources to hold fraudsters accountable while pursuing reforms
that can stop this type of UI fraud from happening again.
Congress must act to extend the statute of limitations. I hope
that in the coming weeks we can work together in a bipartisan
fashion to pass legislation to do just that and get a bill
across the finish line before the March 27th date.
In addition, we need to examine how international crime
rings and hostile nations continue to target the UI program.
There are countless examples of criminals, foreign and
domestic, deploying sophisticated schemes to defraud the
government and UI recipients. For example, my staff recently
shared with me a press release from the Department of Justice
shown on the board behind me here announcing that a
Pennsylvania man pled guilty to obtaining $59 million in public
benefits, including unemployment and laundering the proceeds to
China. As a member of the House Select Committee on China,
cases like this are deeply concerning to me and can confirm our
worst fears regarding the attacks on our institutions by
hostile nations such as the CCP, the Communist Chinese Party.
I strongly believe we have a responsibility to bring
accountability back to Washington and find out what we can do
to bring restitution for taxpayers in the face of such
staggering amounts of fraud. There is a lot more work to be
done to hold these criminals accountable through the criminal
justice system, and recoup the billions of dollars on behalf of
American taxpayers.
So, again, I want to thank our witnesses for being here
today, for traveling, their valuable time, and their insight
that we will hear from a little bit later here. With that, it
is now my pleasure to recognize the gentleman from Illinois,
our ranking member Danny Davis.
Mr. DAVIS. Thank you, Mr. Chairman, and I, too, want to
welcome all of our members back of this subcommittee and to our
witnesses today. For certain, Democrats want to hold criminals
that stole from workers in our unemployment insurance or UI
program during the pandemic accountable unequivocally and
without a doubt. We provided $2 billion in the American Rescue
Plan Act to strengthen program integrity, access, and equity.
Democrats want to work on a bipartisan basis to finish the job.
However, I cannot begin this hearing and pretend that
business is usual in the face of illegal and unethical actions
by this administration. I must recognize and criticize the
firing of the Department of Labor Inspector General whose job
it was to investigate and prosecute UI fraud and who
specifically asked our committee to extend the statute of
limitations for UI fraud.
Inspector General Larry Turner served with distinction in
both the Trump and Biden administrations and led the Inspector
General's Office to 1,400 successful pandemic UI fraud
prosecutions and over $1 billion in court-ordered restitution
and payment.
Mr. Turner was recently fired by President Trump along with
nearly all of the non-partisan inspectors general. After firing
these IGs charged with prosecuting fraud and making sure
agencies followed the law, the Trump administration illegally
blocked states from accessing essential health, childcare,
child welfare, and other funding authorized and appropriated by
Congress and illegally blocked nonprofit organizations from
accessing already appropriated funds just as they were trying
to make payroll. The harm done by short delay in payments gave
us a preview of what might happen if we enacted the cuts being
pushed by my Republican colleagues.
In the last few days, President Trump gave Elon Musk, an
unselected billionaire, and his hackers unfettered access to
the extremely confidential data regarding payments to workers,
businesses, seniors, and entities around the world via the
systems with the Treasury Department centers for Medicaid and
Medicare, Labor Department, and NIH. These systems include
private financial information for seniors receiving social
security or Medicare, workers receiving tax refunds, private
health information about you and your loved ones, and the
privileged information of Mr. Musk's business competitors.
This hearing is about preventing fraud, yet this
administration appears to be gifting Mr. Musk the unlimited
ability to defraud individual Americans to access their most
private financial and health information while inappropriate.
Will Mr. Musk illegally stop your social security, tax,
Medicare, Medicaid, or disability payment? Will he claw back
your tax refund or social security payment if he thinks you
didn't deserve it? Will he use his unchecked power to sell your
social security numbers or bank account information to the
highest bidder or delay government contract payments or grants
to his competitors or people he dislikes?
As much as my colleagues and I want to finish the job of
prosecuting pandemic fraud and ensure that the unemployment
system is ready for the next recession, I cannot ignore the
silence of my Republican colleagues in this offensive fraud
against the American public. And the sad reality is that the
next recession might be very soon given the President's
determination to start trade wars with our closest allies that
will skyrocket prices on nearly everything Americans buy.
I look forward to hearing from Shelby Meyenburg and getting
good advice from the workers on the front lines of making sure
that state UI programs pay the right workers the right amount
at the right time. Yet I am also extremely concerned that any
new inspector generals in this current lawless environment
would not appropriately target true criminal rings and instead
focus on the workers unemployed during the pandemic who
received overpayments due to no-fault of their own.
The first step, the very first step, Mr. Chairman, is for
our committee to work together to protect the privacy and
prevent the defrauding of the American people.
I thank you very much and yield back the balance of my
time.
Mr. LaHOOD. Thank you, Mr. Davis, for your opening
statement. I will now turn to our witnesses here today and I
will introduce them here in a second. Again, thank you for
being here today and look forward to your testimony and our
questions and answers from the committee members.
I will introduce from my left to right. Our first witness
is Haywood Talcove, who is the chief executive officer of
LexisNexis Special Services Incorporated in McLean, Virginia.
Next we will hear from Ms. Anna Hui, who is the director of
the Missouri Department of Labor and Industrial Relations in
Jefferson City, Missouri.
Thirdly, we will hear from Jeffrey Ficke, who is the CEO
and founder of Russell Allen Partners in Cincinnati, Ohio.
And lastly, we will hear from Shelby Meyenburg, who is an
unemployment insurance worker with the Washington Federation of
State Employees. Welcome to you all.
We will begin with you, Mr. Talcove. You are recognized for
five minutes to deliver your opening statement.
STATEMENT OF HAYWOOD TALCOVE, CHIEF EXECUTIVE OFFICER,
LEXISNEXIS SPECIAL SERVICES INCORPORATED, McLEAN, VIRGINIA
Mr. TALCOVE. Chairman Smith, Chairman LaHood, Ranking
Member Davis, and distinguished members of the committee, thank
you for the opportunity to speak on fraud and government
assistance programs. During the pandemic, we witnessed a health
crisis and then a massive wave of fraud that shockingly
continues today. Domestic and transnational criminals likely
stole $1 trillion across all the systems programs meant to help
needy Americans. The money was used to traffic drugs, traffic
children, and threaten our democracy.
COVID-19 was neither the first nor will it be the last
disaster to test this nation. Just this past year we witnessed
storms destroying whole communities in North Carolina and
wildfires that burnt across southern California, and once again
we are seeing the criminals attack at scale. Fraud is a
financial problem, fraud is a national security problem, and
fraud is a human problem.
I would like to suggest three proven solutions that can
significantly reduce this transfer of assets to criminal
organizations. Number one, apply identity verification on the
front end; number two, end self-certification; and number
three, continuously authenticate beneficiaries. For too long
the government has treated identity verification as an
afterthought. For years we have seen the catastrophic result.
Criminals from across the globe flooding state and federal
systems, stealing trillions meant for Americans.
We must finally understand that pay and chase does not
work. In fact, of the $250 billion stolen from taxpayers from
the unemployment insurance program during the pandemic, less
than $5 billion has been recovered thus far. Criminals do this
because the pandemic taught them that government programs are
the mark. They never run out of money and you likely won't be
arrested. If we fail to act, we are complicit in funding
fraudsters, organized criminals, nation states, and even
terrorists who use these programs as their personal checking
accounts.
At the beginning of the pandemic, I spoke with a state UI
director who assured me her program had no fraud. Three short
weeks later, they had more benefit claims than residents over
the age of 18. Criminals move faster than government systems.
But fraud does not stop at the door. It is just not external
actors gaming the system. Insiders, corrupt employees, and
contractors steal from the programs taking advantage of their
access to systems and passwords bilking the very people they
are supposed to be serving.
Today the threat is growing exponentially. AI-powered fraud
networks generate fake identities that pass dated
misverification standards from 2017. Frauds file thousands of
applications in seconds. Deep fake technology generates, quote,
unquote, real people that bypass security safeguards. Criminals
are evolving in realtime. Our response must be just as fast,
just as smart, and just as relentless.
To stop this, we need AI, we need data sharing, and we need
changes to the 1974 Privacy Act. Fraud is a data problem and
can be mitigated in today's world. Fraud on this scale is not
inevitable. It is the result of legacy systems, outdated and
complex regulations, lack of data, and failure to act. This is
all achievable today.
Taxpayers do not want their funds going to criminal groups.
The funds should go to those in need. I am not suggesting we
need technological breakthroughs. The solutions are clear
tested and available now and used by the private sector whose
fraud rate is less than 3 percent compared to 20 percent in the
public sector.
If we do the following: Number one, verify identities;
number two, eliminate self-certification; and number three,
continuously authenticate beneficiaries, then we can restore
integrity to our assistance programs, ensure taxpayer dollars
reach those who truly need them, and prevent criminals from
exploiting the American people. I would also urge you to extend
the statute of limitations related to the CARES Act that
expires on March 27th.
We are failing the single mother who relies on food
assistance, the unemployed worker who genuinely needs support,
and families. We are also failing the taxpayer by allowing
around $1 trillion annually to be lost to fraud and improper
payments.
Thank you, Chairman Smith, Chairman LaHood, Ranking Member
Davis, and members of the committee for the opportunity to
testify today.
[The statement of Mr. Talcove follows:]
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Mr. LaHOOD. Thank you, Mr. Talcove.
We will now turn to Ms. Hui. You are now recognized for
five minutes.
STATEMENT OF ANNA HUI, DIRECTOR, MISSOURI DEPARTMENT OF LABOR
AND INDUSTRIAL RELATIONS, JEFFERSON CITY, MISSOURI
Ms. HUI. Chairman LaHood, Ranking Member Davis, and
distinguished committee members, my name is Anna Hui and I am
the director of the Missouri Department of Labor and Industrial
Relations and have served in that position since 2017. I thank
you and Chairman Smith for the invitation to come today and
testify before you all.
Our division of employment security administers our state's
unemployment insurance or UI program and was responsible for
administering pandemic unemployment programs. I am proud that
Missouri is consistently among the nation's leaders in
preventing improper UI payments, providing benefits to the
rightful recipients, and along with state agency partners,
providing high quality reemployment services to unemployed
Missourians.
But first let me explain the basics of regular unemployment
insurance. Imagine you are purchasing car insurance. You pay
premiums. In turn, the insurance company covers potential
losses like car accidents. The more accidents you have, the
higher your premiums. Conversely, a clean driving record can
lead to lower premiums.
The UI program operates similarly. Employers pay taxes and
those funds provide temporary partial income support to
eligible workers who lose their jobs through no fault of their
own. The system encourages employers to maintain a stable
workforce, minimize layoffs, and reduce the number of claims
filed against their accounts. Just as your car insurance
premiums will increase with accidents, an employer's UI tax
rate increases with frequent valid claims. This built-in
incentive motivates employers to actively participate in the
claims process and creates a greater likelihood that only
legitimate claims are paid out. Additionally, individuals
filing for unemployment insurance not only have to meet
eligibility requirements for the initial claim, but also every
week they make a request for benefits.
Prior to the pandemic, UI fraud typically involved
claimants failing to meet work search requirements or receiving
benefits while employed. That was essentially what traditional
improper payments were. However, the pandemic dramatically
shifted the landscape. Fraud evolved to encompass large scale
identity theft with criminals stealing personally identifiable
information, PII, to file fraudulent claims. This shift was
driven by the massive influx of money into the system and the
rush to distribute it making traditional safeguards less
effective.
In Missouri, we are fortunate to have already put in place
in 2016 a modernized information technology system, advanced
fraud detection methods, and tools and partnerships with third-
party vendors specializing in fraud prevention. Additionally
for years, Missouri has been a member of the National
Association of State Workforce Agencies, NASWA, Integrity
Center and has actively participated in the integrity data hub.
This multifaceted approach was and is still critical to our
success, to the integrity of Missouri's UI system, and to the
value of every tax dollar.
With the right systems, tool, and partnerships, stopping UI
fraud is not impossible, but extending the statute of
limitations for CARES Act related UI fraud and overpayment
recovery is crucial. The current deadline is March 27 of 2025
and it looms large. Without an extension, prosecutions will be
impossible after that date allowing criminals to escape justice
and potentially leaving billions of dollars in overpayments due
to fraud unrecovered. This is unacceptable.
Beyond extending the statute of limitations, broader UI
program reforms are essential as proposed in H.R. 1163, the
Protecting Taxpayers and Victims of Unemployment Fraud Act. We
must move away from the pay and chase model, which is
inherently vulnerable to fraud, and implement more robust
preventative measures.
The current Department of Labor administrative funding
model often penalizes efficient states. Its heavy reliance on
workload is a means to redistribute funds can serve as a
deterrent for states to pursue transformative efficiencies.
This disincentivizes efficiency and perpetuates systemic
problems. The current funding model plays catch up to actual
program needs, especially during economic downturns. It is also
a disincentive to long-term investment as a short-term nature
of some funding sources discourages the state from making
critical investments in technology and cybersecurity that incur
ongoing costs for licensing, maintenance, and support.
In 2023, Missouri businesses paid approximately $130
million in federal unemployment tax act, food to taxes, to the
U.S. Treasury, yet Missouri only received $38.5 million in UI
program administrative funding from DOL. This chronic
underfunding forced us to lobby for state funds in the Missouri
legislature to shore up funding for our UI program and create a
long-term modernization plan. For every state UI administrator
in the U.S., this situation is unsustainable. In line with
NASWA'S 2025 legislative priorities, dedicated technology
funding should be a separate consistent stream for
modernization, including cybersecurity AI and data analytics.
Finally, adequate funding investments in modernization
remain relevant and secure and we must make sure that ongoing
maintenance and support are there. The pandemic underscored the
need for modern resilient secure UI system. By prioritizing
accuracy, investing in technology, and reforming the funding
model, we can ensure that the UI program continues to serve its
vital function providing a safety net to workers during times
of economic hardship while safeguarding the integrity of the
system and the trust of the American people.
Thank you. I am happy to answer any questions you may have,
and as this is a public forum, I cannot provide any specific
details to the fraud measures that we have in place in
Missouri.
[The statement of Ms. Hui follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. LaHOOD. Thank you Ms. Hui.
We will now turn to Mr. Ficke. You are recognized for five
minutes.
STATEMENT OF JEFFREY FICKE, CEO AND FOUNDER OF RUSSELL ALLEN
PARTNERS, CINCINNATI, OHIO
Mr. FICKE. Thank you, Chairman LaHood, Ranking Member
Davis, and members of the subcommittee. I want to thank you for
the opportunity to present. My name is Jeff Ficke and I am the
CEO of Russell Allen Partners located in Cincinnati, Ohio. My
entire career is focused on technology, innovation, and
operations around payments. I will give you a little background
about that, because it covers government and financial
services.
In the '90s I was a founding member of a payments company
that supported government service organizations, several
federally funded state-operated programs including
unemployment. After that company was sold, I moved to the
financial services industry working for Fifth Third Bank. I led
central operations which transferred approximately $14 trillion
a year in funds using ACH wire card and check. After that I
moved on to run Fifth Third's commercial payments line of
business for the last six years of my career in banking.
Before I present about the opportunities I see exist
between these agencies and financial services, I want to
discuss my role in the pandemic and the unemployment. At that
time, early phase of the pandemic, the pandemic unemployment
assistance program was being deployed to those not eligible for
traditional unemployment. Ohio was experiencing cybercrime
attacks that resulted in Ohio reporting about $1.8 billion in
fraudulent overpayments. $1.4 billion was for PUA and about
$400 million were about traditional unemployment. I do
understand that today the COVID-era pandemic unemployment
support is due to expire. I would encourage that to be
extended.
I want to start by explaining my involvement in Ohio. It
started in 2021. My expertise in government services and
banking aligned well with Ohio's needs. I was named to run
Ohio's public private partnership. The volume of claims were
skyrocketing, the unadjudicated claims and backlog was growing
out of control, and citizens in crisis to the agency were
overwhelming.
Governor DeWine made the decision to engage the private
sector. He worked directly with the Ohio Business Roundtable, a
group of about a hundred of Ohio's largest public sector CEOs
to engage their membership for expertise. The Ohio Business
Roundtable is run by former U.S. Congressman Pat Tiberi.
Governor DeWine recognized that the private sector had
experience in these crisis situations. My role was to lead the
coordination of all these activities between Ohio's Department
of Jobs and Family Services and the private sector.
We provided advice and guidance during the execution of
these recommendations. We had access to senior leaders in
these--from places like Fifth Third Bank, Western Southern,
KeyBank, Nationwide Insurance, and others. As I had testified
multiple times that I had to testify, had the opportunity to
testify multiple times in front of the state's legislative
subcommittees. Governor DeWine and ODJFS's director Matt
Damschroder gave three clear objectives at that phase. The
first goal was to stop the fraudulent claims from being
submitted. In early 2021, the state was receiving over a
million claims a month for new unemployment claims and POA
claims.
With advice from the private sector and ODJFS team, we were
able to deploy a new fraud stack, and that happened within the
first 60 days of our engagement. The results were overwhelming.
New fraud claims--new unemployment claims dropped in two months
to less than 25,000 a month. Over a 97 percent reduction in
fraud with a new set of technology that was deployed.
LexisNexis was a key partner for us at that point in the
process. And you can see on the graphic some of the reductions
that took place as a part of the PUA.
The second objective was really clear. There was
approaching 5 million unadjudicated claims-related issues. We
actually took a new approach to actually engage the big data
corporations, data analytics teams to actually help us to
accelerate that. We did take advantage of programs that were
completed by Innovate Ohio, advanced data analytics platform
supported by then Lieutenant Governor John Husted, who is now a
U.S. senator for Ohio. The P3 team engaged subject matter
experts from the private sector and big tech to help segment
those. Within 90 days of the project starting, Ohio had all
fraud free claims for Ohio citizens had been adjudicated and
proper payments were being sent.
The third goal was to answer questions from enormous volume
of citizens. Many Ohioians were victims of cybercrime while
others who needed benefits were not being processed because of
the backlog. During this period the service centers were
overwhelmed. Citizens experienced difficulties getting through
and sometimes had up to a six hour hold time. You can see in
the chart that is displayed here that we returned all those to
commercially acceptable standards with call times--call handle
times increased and call times--hold times less than three
minutes.
The governor's reasoning for seeking this advice and
collaboration, Ohio's sector proved to be an outstanding
decision. I also want to acknowledge that Ohio's ODJFS
employees welcomed the support, worked endless hours to
deliver, and truly cared about every citizen who needed the
support from the organization.
And the last segment I want to talk about is what I feel is
a partnership that can exist between government and financial
services. Collaboration. One of the key initiatives launched at
the direction of Director Damschroder was to understand that if
there was any funds that would be available and left to be
returned, we did confirm--we started by confirming our
understanding of how this money flowed from initial claims. The
traditional unemployment PUA program solutions required claims
adjudication that--as well as collection of payment history.
Programs checks were focused on claimants payments were sent to
the----
Mr. LaHOOD. Mr. Ficke, I am just going to interrupt you
there for a second. You are a little bit over. We are going to
ask you to just pause there if you don't mind and we will take
the rest of your statement, for the record, if you don't mind
doing that.
Mr. FICKE. Sure. I just want to talk about future
recommendations and I will pause. First of all, the banks and
the agencies are both accountable to multiple regulatory
organizations. Aligning them so that we can actually get data
sharing between the banks and the agencies is a very clear
opportunity.
Secondly, the digital payment networks in this space have
actually introduced new threats, new opportunities, and, for
example, PayPal returned almost $70 million to the State of
Ohio on money that they held. Not all fraud--not all mobile
payment networks had that kind of diligence.
The third opportunity is that the--excuse me, fourth, the
banks also are a point where they can follow sheet metal law,
which would actually allow the funds to be held for a period of
time and then returned into unclaimed funds. I don't understand
how that is going to actually play out in the long run and
issues that still need to be determined.
I understand the statute of limitations. I do encourage it
to be passed along with House Bill 1163. We have spoken at
multiple NASWA and UWC conferences on it. We look forward to
answering your questions. Thank you again.
[The statement of Mr. Ficke follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. LaHOOD. Thank you very much.
Lastly, we will recognize Mr. Meyenburg. You are recognized
for your opening statement.
STATEMENT OF SHELBY MEYENBURG, UNEMPLOYMENT INSURANCE WORKER,
WASHINGTON FEDERATION OF STATE EMPLOYEES
Mr. MEYENBURG. Okay. Good afternoon, Chairman LaHood,
Ranking Member Davis, and members of the subcommittee. My name
is Shelby Meyenburg. I am an employment service worker in the
State of Washington. In this role I also help UI claimants file
their benefits. I am a proud member of AFSCME Council 28 and
the Washington Federation of State Employees Local 443.
I help Washingtonians file for unemployment insurance and
safeguard the UI system against fraud. My job is to get the
right benefits to the right people on time.
In 2020 the pandemic hit Washington State quickly. Our
state unemployment rate rose from 5.1 percent in March to over
15 percent in April immediately placing a lot of stress on our
system. Unlike other states, Washington hired non-permanent
staff instead of outsourcing UI work during the pandemic. I was
one of those non-permanent staff. At this time, non-permanent
staff had received less than half of the normal training for
the UI program. It was a chaotic and challenging time where UI
claimants were desperate and the caseloads were enormous.
In the spring of '22 I was laid off from my non-permanent
position and had to file for unemployment benefits myself. It
was a humbling experience to go from processing UI claims to
applying for UI. After being laid off, I applied for a
permanent position under the state's merit-based personnel
system and was hired in July of '22. My evolution from non-
permanent to permanent staffer showed me the value of being a
highly skilled employment service worker who understands the
complexities of the UI program.
UI workers are the first line of defense protecting hard-
earned benefits from fraud. We safeguard the system with
identity checks, reviewing and securely transmitting personally
identifiable information. We help jobless workers make sense of
the sometimes confusing language in the UI program. As an
example, we let them know when they should file for an appeal.
We resolve complex claims, which takes training, a deep
understanding--deep knowledge of the program, persistence and
dedication to our mission. This is important work that highly
skilled and well-trained UI workers do every day for American
workers.
UI workers hired under a merit-based personnel system as
required under federal law ensures that the services provided
to job seekers and employers across the country are unbiased
and high quality. UI workers cannot have any other interest
that play other than serving the jobless workers and
maintaining the integrity of the UI program.
There are ways to prepare for future surges in unemployment
without undermining merit staffing. One solution is for states
to cross-train existing merit staff for other programs to
process UI claims. I am a cross-trained employment service
worker, what we call a UI ambassador. If a state experiences a
surge of unemployment claims, these cross-trained merit staff
state employees would receive a brief refresher training and be
able to hit the ground running in order to help workers and
keep our system and communities moving forward.
As you work together on UI reform, I urge that you talk to
UI workers directly as they are the subject matter experts. We
want to protect the UI system and make sure that it works well
enough for everyone and protect the system from fraud. We can
accomplish these goals with increased funding for staffing, IT
modernization, program improvements, and cooperation between
the state and federal levels, not by outsourcing the work much
skilled merit-based UI staff.
I would like to thank the chair, ranking member, and
members of the subcommittee for the opportunity to testify
today.
[The statement of Mr. Meyenburg follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. LaHOOD. Thank you, Mr. Meyenburg, for your testimony
here today.
I will now move to questions from the committee members to
our panelists today. Again, grateful for your contributions
here today to this important topic. I will now recognize myself
for my questioning.
I am going to start with you, Mr. Talcove. For years this
committee has been sounding the alarm really on fraud from
organized criminal organizations, particularly from a number of
hostile nations, Russia, China, and others. As you saw in my
opening statement, I referred to a case in Pennsylvania
involving a defendant caught laundering money back to China.
These cases are complex. They are nuanced, involve federal
crimes, but they also raise serious national security concerns.
Mr. Talcove, can you explain the current state of the UI fraud
and how international criminal organizations are continuing to
be associated with fraudulent activity.
Mr. TALCOVE. Yeah. Thank you very much for the question. It
is interesting in that I was just out in California, in L.A.
this week, and the fires are going there, and you are now
seeing the same groups that stole at scale in California $32.6
billion from the unemployment insurance program, they are now
stealing from the disaster unemployment insurance, the disaster
SNAP program.
So what these criminal groups do, and in particular China,
Russia, Nigeria, Romania, is they use stolen information. Some
of it they collect it directly. For example, China, when they
had the OPM breach years ago, they have all that information,
and they file claims on behalf of legitimate individuals in the
afflicted areas, and then they use that money for just terrible
things.
And what I find incredibly frustrating having followed
fraud since Hurricane Katrina in 2006, it is the same groups
doing the same thing. And if you just apply data and analytics,
just as Mr. Ficke was showing on those charts, you can stop it,
but we continue to allow these groups to steal. They use the
money for horrible things, child trafficking. They use it for
drugs in our communities. They use it for terrorism. So I would
like to tell you that things are better today, but just
watching what is going on in California, seeing what happened
in North Carolina, same groups, same playbook, stealing at
scale.
Mr. LaHOOD. Thank you for that. Just to follow up, you
know, in terms of criminal prosecutions that have been
successful, are there any that come to mind that have had
somewhat of a deterrent effect on continuing criminal activity?
Mr. TALCOVE. Yeah. So I would give Washington State credit.
During the pandemic they were the first group to get hit by a
Nigerian fraud organization. They actually did capture the
ringleader in that. But for the most part, these people do not
live in this country. They will never come to this country.
They are protected by their states, and that is why you have to
protect things on the front end. You can't let the money out.
Now, if it does go out, remember my estimate, $250 billion
was stolen, $5 billion recovered. If it does go out, state and
local law enforcement can't do it. You need the Secret Service
and you need the FBI, because these are complicated
multifaceted criminal enterprises.
Mr. LaHOOD. Thank you for that. I am going to turn now to
Ms. Hui. In your testimony, you mentioned the Missouri
Department of Labor. They currently have a UI program that's
effective in preventing improper payments and providing high
quality re-employment services. Last Congress Ranking Member
Davis and I worked on a bill called the Bridge to Workers Act
that was passed into law to provide the flexibility states need
to strengthen those connections to employment. Can you talk
about the work with re-employment services and how you see that
growing and developing into a core part of unemployment
programing in the future.
Ms. HUI. Certainly. Thank you for the opportunity to answer
your question, and thank you, Chairman LaHood and Ranking
Member Davis, for actually getting the Bridge for Workers Act
passed. It has really afforded states a great deal of
flexibility to approach individuals that have potentially more
challenges to actually getting back to work. Missouri was one
of the few states that actually kept our re-employment and
eligibility assessment program, RESEA, going during the
pandemic. And by having this expansion of flexibility to allow
for states to better address what their local workforce needs
are and basically providing targeted professional workforce
development services to individuals, originally it was for
folks who are most likely to exhaust their benefits, but now,
again, it allows states to really be able to better fit what
their local state needs are.
This program in particular has the built-in component that
when we require somebody to report for these required workforce
services, if they are utilized unemployment benefits, their
benefits are not continued if they don't report for those. So
it builds in that incentive, again, to make sure that workforce
services that are needed are actually being taken and, again,
to stress the re-employment roots of unemployment itself,
right? Because we really see that unemployment and workforce
services as part of the two sides to the same coin. It is
really about making sure that workers have the services and
support needed to get back to sustainable employment.
Mr. LaHOOD. Thank you for that, Ms. Hui.
Mr. Ficke, in your testimony, you described how you were
recruited by Governor DeWine in Ohio to help right the ship
recovering over $400 million in fraudulent benefits held by
banks and automated payment networks. I am particularly
interested in that success story, because according to a report
issued by the Illinois Auditor General in my home state, we
lost approximately $5 billion and only $189 million has been
recovered. Can you talk about how you were able to turn that
around in Ohio through your UI program and recoup the funds.
And then maybe before you answer that, we have heard the
expression ``pay and chase.'' Can you explain for the members
of the Committee what that means, and what that is.
Mr. FICKE. Well, first of all, with the pay and chase, I
might defer that to----
Mr. LaHOOD. Well, maybe answer my question on how you did
that, and I will have Mr. Talcove answer the pay and chase.
Mr. FICKE. Absolutely. Thank you for your question. I think
it is really important to understand how much manual effort and
personnel effort went into actually discovering these funds. At
the very early phases of our opportunities to recover funds, we
partnered very well with the leadership of Ohio Jobs and Family
Services, and we would ask a simple question. Is there still
money out in the networks to be able to do this.
I think it is really important fundamentally to understand
that in the UI claims environment for approval on adjudication,
there is a lot of work done to identify an individual. In the
banking industry, when payments flow through, especially since
9/11, post that period, there is regulation that is also very
tightly covered by the banking industry, financial services
that actually require them to not allow money to get out of
banks into the hands of fraudsters. The one looks at identity
and the banking system can look at activity within a bank
within specifically a bank account.
In a very simplistic level, it is looking at multiple
unemployment claims from multiple states going into the same
accounts, unusual spending happening within those financial
service institution accounts, large overseas transactions that
actually are pulling money out of a consolidation to pull them
overseas. That effort has resulted in the U.S. banking industry
setting up multiple advanced analytics programs, case workers,
and processes to actually prevent that from happening.
The difficult work we had in that is that we are actually
required at that point to work with all the banks who received
funds. They didn't have a specific contractual relationship
with each individual state because they were the receiving
banks. Simplifying it, it basically means that is the bank of
the claimant who was actually getting the information. And in
our case, that required us to go beyond the individual head of
ACH or operations leaders and get to the newly established or
recently established groups within the banks that actually
allowed those fraud measures to be kept in place. We were able
to find the money. We were able to confirm it. We actually
coordinated activities to compare data between fraudulent--
potential fraudulent claims at the state with fraudulent
account activity, identify what was remaining.
What ended up happening in that case is that we actually
then had to have legal agreements, sometimes referred as hold
harmless agreements, limitations of liability that actually had
to be executed post this whole process happening. Many banks
cooperated.
I will give credit to ODJFS, because Director Damschroder
made it a clear initiative he wanted those funds back. We
prioritized it. They invested people and time and energy into
it, and we got great cooperation from many financial
institutions.
Mr. LaHOOD. Thank you for that. Maybe quickly, Mr. Talcove,
you have used the expression ``pay and chase.'' Tell members of
our audience and the committee members what that means.
Mr. TALCOVE. I believe it is a false paradigm that says
that you can't have speed in security, and I would just
reference that most of you have probably used Amazon. You
placed an order, it gets there quickly, and everything works
out really well for you.
In government, sometimes what they do is they would rather
just pay it really quickly and then try to get the money back
later. And as you noted in your opening statement, only $5
billion of the $250 billion has been returned.
The second point I want to make on that, I would encourage
you to try to go and look on your state's UI page and try to
fill out an unemployment insurance form. Sometimes the
overpayments or underpayments are related to the complexities
of the forms, and it really does create a whole set of backlogs
for those that are administering the programs. Those forms are
complicated.
Mr. LaHOOD. Thank you for that. I will now recognize the
ranking member Mr. Davis for his questions.
Mr. DAVIS. Thank you, Mr. Chairman, and thanks to all of
our witnesses.
Mr. Meyenburg, let me ask you, given that Elon Musk and
hackers with no security training, our policy expertise now
have unlimited access to confidential financial and health data
for workers and businesses. I am going to talk a little bit
about how we are supposed to safeguard data. As a front-line UI
worker, you collect confidential identity and banking
information. What kind of training do you have to keep that
data safe and private?
Mr. MEYENBURG. So during initial UI worker training, there
is a heavy emphasis on how to properly conduct identity
information verification. Throughout the entire process, six to
eight weeks, you are constantly having to do that process.
There is role playing scenarios that covers a lot of topics,
and during all of those you do have to conduct the correct
identification verification.
There is several reasons why a UI claimant's identity would
be flagged for further review. If I clearly spot fake
information or misdocumented information, I have to send that
up for review. If a claimant's personal information does not
match what is on the state's driver's license system, that
one's also flagged for review by the fraud team. We work
together to safeguard the UI benefits from fraud and we also
ensure that we are using our training and experience to help
claimants who have challenges accessing benefits because they
are not tech savvy. This is why the role of a UI ambassador who
can see through those challenges to help a worker in need is so
critical.
Mr. DAVIS. Why is this information safer when we limit
access to public employees like yourself?
Mr. MEYENBURG. It is safer because we have no ulterior
motive. We are there to help the people of Washington State in
my case. We don't have to worry about those expectations of a
quota system, or anything like that. We meet the people where
they are at and we help them where they are at.
Mr. DAVIS. Let me just re-emphasize that my democratic
colleagues and I are strongly committed to good service by
workers like yourself and especially people who have no need to
access their earned unemployment benefits. We are committed to
preventing fraud and safeguarding the UI trust fund. I am
grateful to you and your colleagues and especially to AFSCME
Council 31 workers in Illinois for their critical work. Is
there anything that we have to give up in order to do both,
provide the good service and have no other purpose for doing
it, ulterior motives?
Mr. MEYENBURG. I don't believe so. I believe we can
accomplish both goals at the same time. In fact, this is built
into our process. Before we talked to a UI claimant about their
benefits, we verify their identity every single time we talk
with an individual, no exceptions. After identification, we can
then provide excellent customer service, whether that be filing
an initial claim or reviewing an active claim.
Mr. DAVIS. Let me again just thank you and your workforce
and your colleagues for the work that you have done and the
faith and trust that we have in what it is that you do.
Thank you, Mr. Chairman, and I yield back.
Mr. LaHOOD. Thank you, Mr. Davis. I will now recognize one
of our new numbers, Rudy Yakym, of South Bend, Indiana.
Mr. YAKYM. Thank you, Mr. Chairman, and thank you to our
witnesses for being here today. Unemployment insurance improper
payments and fraud ran rampant during the COVID-19 pandemic.
The Government Accountability Office, GAO, estimates that
pandemic unemployment fraud totaled $135 billion. That is about
15 percent of total UI benefits paid during the pandemic. But
the Department of Labor's Inspector General says that number is
at least $191 billion.
Even worse, outside experts estimate that the total could
be upwards of $400 billion. California alone accounts for $20
to $33 billion of fraudulent pandemic UI payments. One estimate
put the state's improper payment rate at nearly 37 percent
during the first six months of the pandemic. No business could
survive allowing for over one third of payments that are made
to be fraudulent. We should expect more of our government and
of our states. We should expect that fraud--and we know that
fraud isn't just money going out the door. It is money that
undermines the faith that the American people have in the
system and the confidence that Congress has in states to manage
federal resources.
Hardworking measures in my district don't want their
taxpayer dollars going to subsidize California or any other
state with such lax payment controls unless the state
implements reforms, upgrades systems, and demonstrates a
commitment to chasing down fraudsters. Despite these eye-
popping fraud numbers, we have only recovered about $5 billion
of it or less than 4 percent. The statute of limitations to
prosecute these cases expires at the end of March. Congress
must extend that deadline so that we can continue unwinding
these criminal rings and hold the fraudsters accountable.
One of our most important responsibilities as members of
Congress is to be good stewards of taxpayer money, because
after all, the only money that we in the federal government
have is money that we take from the American people in the form
of taxes. Allowing this level of fraud to occur and not taking
every possible step to recover these funds and these fraudulent
payments would be irresponsible.
Mr. Chairman, I ask that this email from the DOJ pertaining
to uncharged UI fund matters be entered into the record.
Mr. LaHOOD. Without objection.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Mr. YAKYM. Thank you.
Mr. Talcove, as of January 28, 2025, the Department of
Justice had 1,648 open cases. These are uncharged criminal
matters relating to COVID-19 fraud. The Department of Labor's
Inspector General has shown approximately 157,000 open UI fraud
complaints assigned to its hotline office. Are you surprised
about the sheer number of unemployment insurance fraud cases
our federal law enforcement agencies are actively
investigating?
Mr. TALCOVE. Thank you so much for the question. I want to
start with I really believe in unemployment insurance. The
number that was lost was approximately $250 billion across the
country, and California was ground zero for it. Unfortunately,
because they paid some of the highest benefits in the country
and their then-Commissioner Julie Su had some of the least
amount of safeguards in place.
I am actually surprised that there are that many open
cases, because I truly believe a lot of the fraud took place
and individuals don't even know their information was used. As
I mentioned in my testimony, a lot of this happened with
criminal groups, both domestic and transnational, who use the
stolen PII that went into these eligibility determination
systems that knew how to manipulate them better than your
constituents. And to this day, we were talking about it before,
you had individuals that got a notice from the State of
California, the State of Ohio, saying you know, you got your
benefits, and those people threw those notes away because they
never got benefits. So I am not surprised by that.
But I also want to note that it is not just unemployment
insurance. It is the SNAP program. It is the other programs,
including rental assistance. Anywhere where the government is
providing a check, these criminal groups are now working at
scale.
Mr. YAKYM. Thank you. And briefly, Mr. Talcove, do you
believe that there is still more unemployment fraud carried
over from the pandemic out there that could result in
prosecution or recouping funds if we were to extend the statute
of limitations?
Mr. TALCOVE. Yes, I think there is.
Mr. YAKYM. Thank you. Mr. Chairman, I yield back.
Mr. LaHOOD. Thank you, Mr. Yakym.
Recognize Ms. Chu of California.
Ms. CHU. Well, first let me say that I can't believe that
Republicans are holding a hearing purportedly about going after
pandemic-related fraud in the unemployment insurance program
without addressing the fact that a few days ago President Trump
illegally fired the inspector general who is responsible for
doing that very work. Inspector General Larry Turner was a
well-respected non-partisan Senate-confirmed professional. His
leadership investigating UI fraud had already resulted in over
2,000 individuals charged, more than 1,400 convictions and $1.1
billion in taxpayer dollars recovered. And IG Turner even
testified as a witness for the Republican majority for the
hearing they held on UI fraud back in 2023 during which time he
warned that despite the office's successes, insufficient
funding from Congress was limiting their investigative capacity
and causing lost opportunities to hold fraudsters accountable.
The Republican majority still hasn't addressed that funding
shortfall, and now President Trump has fired the person
responsible for reducing that fraud.
If Republicans want to better combat and prosecute UI
fraud, we need to push back against President Trump's illegal
firing of our nation's top UI fraud investigator and get Mr.
Turner and other independent non-partisan inspector generals
across government whom the President illegally removed back on
the job.
And then if we have the fraud, who is going to do the work
of actually deterring it? Well, it would be our federal
employees. And yet the Trump administration's undermining of
the federal workforce goes far beyond inspector generals. It is
part of the systematic attempt to politicize the civil service
and make services worse for everyday Americans who rely on
safety net programs like unemployment insurance.
Ms. CHU. Those attacks on our Civil Service include mass
emails to almost all federal employees asking them to resign
and then threatening layoffs if not enough employees comply
with this.
It includes the administration's proposal to politicize the
federal workforce by stripping nonpartisan federal employees of
their job protections to make it easier to fire and replace
them with Trump loyalists.
And it includes putting tens of thousands of employees on
administrative leave without cause.
We have career civil servants for a reason. They are
professionals with expertise who are essential to the
successful operation of federal programs and benefits for the
American people.
And that includes the staff responsible for investigating
UI fraud.
In fact, Inspector General Turner led a team of over 300
federal employees, including criminal investigators, auditors,
attorneys, and other subject matter experts dedicated to
combatting waste and fraud in all of the Department of Labor's
programs including UI.
The Trump administration's actions put us at risk of losing
this expertise, and it is jeopardizing our able to successfully
continue going after this fraud.
I am also concerned that the Trump administration's threats
to fire federal employees will lead to further outsourcing of
core government responsibilities.
We saw during the pandemic what happened when States
outsourced their UI work to untrained contractors, and that, in
some cases, actually caused waste and fraud in the program by
giving employers incorrect information, resulting in
overpayments, or by exposing workers' sensitive information to
fraud rings.
Now, Mr. Meyenburg, you testified about the risks of
outsourcing during the pandemic. Can you expand on that and why
investing in an experienced government workforce leads to
better outcomes than outsourcing to contractors?
Mr. MEYENBURG. Yes, I believe it comes down to two
different things--it is training and the mission. With
dedicated staff that have dedicated time for implementing
robust training programs, this offers the ability to highlight
those safeguards and make sure that they are utilized in the
proper way.
Ms. CHU. And could you have more waste and fraud happening
with the contractors?
Mr. MEYENBURG. Potentially. I would say potentially.
Ms. CHU. Yes. Thank you. I yield back.
Mr. LaHOOD. Thank you.
Pursuant to committee practice, we will now move to 2-to-1
questioning. I will recognize a new member of the Committee on
Ways and Means, Max Miller of Ohio.
Mr. MILLER. Thank you, Chairman LaHood and Ranking Member
Davis, and excuse my voice. Thank you for the opportunity to
hold this important hearing.
We must make every effort to equip and empower Americans to
reenter the workforce and unlock the full potential of our
Nation's economy.
To achieve that, it is imperative that we safeguard the
integrity of our employment safety net. Since coming to
Congress, I have been a strong proponent of building our
Nation's future workforce by providing individuals with
opportunities to acquire qualifying work skills, and keep the
United States at the forefront of innovation and productivity.
Like many, I am very concerned this view I have heard from
a lot of our colleagues on this side of aisle on the
unprecedented fraud that occurred during the pandemic, which
the GAO has estimated, which we have heard a lot today, that
anywhere between $100 billion to $135 billion and possibly
more.
Just in northeast Ohio alone, where I am from, the United
States Attorney for the Northern District of the State
sentenced perpetrators who stole millions of dollars from the
program intended to assist the unemployed, which was all over
our area.
This commitment to prosecute and to hold criminals
responsible demonstrates that we must continue to be vigilant
of those who try to scam federal leave programs and waste our
tax dollars, including providing federal investigators with the
continued authority to prosecute those stealing from American
workers.
It is my understanding that 2,000 individuals have been
prosecuted with $47 billion--I will say it again--$47 billion
in potential fraud to date. But there are at least 157,000 open
cases and much more to be done that are unaccounted for at this
moment in time to date.
Fortunately, efforts such as those undertaken by my home
State of Ohio and others will help their respective States'
unemployment system stop unemployment insurance fraud before it
starts and get resources to eligible workers in a timely and
accurate fashion. And I believe that is what everyone would
like regardless of political affiliation.
Mr. Ficke, as you testified, the State of Ohio was
experiencing a high volume of fraudulent claims. In fact, the
unadjudicated claims backlog was growing exponentially, and as
you know, Ohio's governor made a decision to engage the private
sector for support, including the Ohio Business Roundtable's
members' expertise that you had mentioned earlier, with a goal
to stop fraudulent claims, reduce the backlog, and reengineer
the customer experience. I understand the project's results
exceeded expectations.
How can such public and private partnerships be effective
in reducing fraud, safeguarding public resources, and allowing
funds to be targeted to those who are truly in need?
Mr. FICKE. Thank you for the question. You know, in Ohio's
case, I think that some of the key factors involved is
collaboration across agencies, across state and federal
resources, especially when it comes to, as an example, the
prosecution of those cases.
If you look at the amount of work that Ohio Department of
Jobs and Family Services did, they focused a lot on advanced
analytics, taking advantage of Big Data technology programs to
really segment off the claims that actually were fraud-free, so
that we could actually get to the point of real citizens in
need were getting paid.
And as we--and the other thing I think that the State did
an excellent job at is, the claims that were submitted that
were actually--had significant amount of fraud indicators on
them, were all processed, and they were all ultimately looked
at and freed.
In the long run, I think the other thing that was really
important was taking all that advanced analytics and data and
actually providing it to the law enforcement sides to actually
enable the actual prosecution with good data and with things
that go with it.
I think it is very important, and it is a core part of my
testimony, is the collaboration between the financial services
industry and the unemployment agencies.
There is lots of really important analytics work that has
been done in both of those worlds that actually required the--
and can provide a collaborative effort to go between those.
The work that NASWA has done around the Integrity Center, I
think, is very important, and Lieutenant Governor Husted's
focus on advanced analytics for the State of Ohio clearly put
Ohio in a very good position coming into this at a time when in
Ohio's case, they had to stand up a brand-new system for the
pandemic unemployment assistance programs that went with it.
So collaboration, advanced analytics, and really working
with some of the key private sector organizations to enable
that, I think, is critical. Thank you.
Mr. MILLER. Thank you, Mr. Ficke, and I just want to thank
you again for all the work you do in my home state, in our home
state. It is very much needed, and just thank you again from an
Ohioan to another Ohioan.
Mr. Chairman, I yield back.
Mr. LaHOOD. Thank you, Mr. Miller.
I now recognize Mr. Bean of northern Florida. Welcome.
Mr. BEAN. Thank you very much, Mr. Chairman. Good afternoon
to you, and good afternoon to you Work and Welfare Committee
family. I am one of the new guys. It is an honor to be here.
I was sent to Congress. I believe one of the reasons that
northeast Florida sent me to Congress was, I want to go after
spending. I think we have an out-of-control government that
just spends far more money than it has.
And so I am a man on a mission, a man on a mission, to
fight fraud, abuse, waste, and to get spending under control.
So, Mr. Chairman, I want to thank you for your draft
selection in allowing me to serve.
Ranking Member Davis, it is an honor to be with you as
well.
My first question--well, first of all, Mr. Talcove, I
appreciate you. You have actually mentioned, anywhere
government is giving away checks, you will find fraud, and,
indeed, we did that.
I come from the Small Business Committee, where we did the
PPP program and the EIDL loan program, and we have reports that
23 percent--over 1 in 5 loans that we made back then are pure
fraud, not somebody making a mistake on an application, not
somebody checking the wrong box, but fraudsters that had the
sole intent of stealing our money.
We actually had an administrator come before us with the
Biden administration and said, you know, it might be too much,
maybe we just need to all let it go.
I say no, the American people say no, and so we want our
money back. I actually filed the bill ``We Want Our Money
Back'' to not let anything go. We want all of our money back.
We heard from fraudsters that used Barbie dolls to take a
picture. We had a program, a FinTech that administered the
program that would take a picture of you just to make sure you
are an individual person, and the program fraudsters could take
a Barbie doll and stick it in front of a webcam and the program
said approved, you are approved for a loan.
So we called it Swindler Barbie. A new Barbie is in town,
Swindler Barbie. Ken got in on it too by the way, of people
stealing money.
So the first question goes to you, Mr. Chairman. Where are
we on the statute of limitations? How can we make sure that we
don't let it go, that we want our money back, and we are going
after fraudsters? Where does that stand? Who is running it? Who
is in the lead? What is going on?
Mr. LaHOOD. Well, thanks for the question, Congressman
Bean. So as was alluded to by the witnesses and a number of us
today, we are coming up on the March 26th date where the
statute of limitations will expire. So we have legislation that
has been introduced that will be marked up to extend that
statute of limitations, so we can go after the fraudsters and
get to the criminal elements of this and make sure that we get
that money recouped for taxpayers.
Mr. BEAN. Amen, amen, we are on schedule, we are on flight.
It is a very tricky thing.
So you and Mr. Davis last year did a program that is called
the Reemployment Services and Eligibility Assessment, the
RESEA, which really was to help prevent fraud and designate
support to those who need it.
Does anybody know about that?
Mr. Talcove, are you aware of that? Did that program work,
did it work with the intent of delivering help to people that
needed it but not the fraudsters? Good program?
Mr. TALCOVE. Unfortunately, I am not aware of that program.
Mr. BEAN. Ms. Hui.
Ms. HUI. Yeah, so that program really allows for local
workforce boards and other professionals who are working with
individuals who are currently getting unemployment benefits to
really----
Mr. BEAN. Did it prevent fraud or help fraud? Did it help
or not?
Ms. HUI. I think it does help with fraud because you
actually have to show up in person or virtually to actually do
an employment about workforce development. So there is that
verification and engagement, and we feel that those more
personalized service will result in better workforce outcomes,
more sustained employment for those individuals.
Mr. BEAN. Great.
Ms. HUI. So there is that that individual touch to that. So
if someone is getting that benefit, they are also then required
to either report in person or do the virtual visit.
Mr. BEAN. So it has given some benefits.
Mr. Talcove, I know we got time. Everything is in a hurry
here. We got to boogie.
What do we need to do? I helped launch a DOGE. I think some
of us up here are part of the DOGE caucus, to say, we have got
to--enough, enough with the stealing of our money, enough with
the fraud, waste, and abuse.
I think American taxpayers are celebrating some of the
early wins that we have discovered, fraud and abuse.
Where should we start? Where should this committee start to
say enough with the waste, fraud, and abuse?
Mr. TALCOVE. It is three things. It is front-end identity
verification, it is no more self-reported information, and it
is managing the back-end to beneficiaries.
Mr. BEAN. Three small hurdles. It doesn't sound like it is
that hard. It shouldn't be that----
Mr. TALCOVE. The private sector does it every day. Their
fraud rate is 3 percent. The public sector is 20 percent.
Mr. BEAN. Thank you. Thank you very much.
Witnesses, thank you so much.
Mr. Chairman, I yield back.
Mr. LaHOOD. Thank you. I will now recognize Ms. Moore of
Wisconsin.
Ms. MOORE. Thank you so much, Mr. Chairman, and I want to
thank our ranking member and all of our witnesses for being
here today.
I did have a conflict in my schedule, so I was unable to be
here an hour ago, but I did have an opportunity to review your
testimony, and I appreciate your appearance here today.
I want to welcome particularly Mr. Talcove to the Ways and
Means Committee. Are you a member? Is he a member of the Ways
and Means Committee now.
I am talking about my new colleague here.
Mr. LaHOOD. Oh, Mr. Bean?
Ms. MOORE. Mr. Bean.
Mr. BEAN. Hey there.
Ms. MOORE. Hi. Welcome to the Ways and Means Committee.
Your enthusiasm, of course, is very welcome. And I am learning
now about the DOGE caucus and your efforts to reduce waste,
abuse, and fraud.
So I guess what I am concerned about, Mr. Talcove, is, if
we are indeed going to combat fraud and waste, how does firing
the Inspector General of the Department of Labor contributing
to this?
I mean, this is a person who successfully prosecuted 1,400
cases, and, of course everybody on the committee would like to
see fraud reduced. So how can we expect to do that without an
Inspector General on board?
Mr. TALCOVE. If you go back to--and hopefully you read my
opening statement--I think the biggest challenge we have is, we
don't want to pay and chase. What we want to do is, we want to
prevent this at the front end. We want to use----
Ms. MOORE. Okay. Okay. Thank you for that. I don't have a
lot of time. So, your notion is that this DOGE caucus and Mr.
Musk, the billionaire, going in, is an effective strategy for
start--we don't know exactly what he is doing. And I checked
with the Speaker of the House. He also has no idea what they
are doing.
So, what information do you have to provide the
subcommittee to demonstrate that this is indeed a better
strategy than having an Inspector General on the back end? What
are they doing that is making them more effective?
Mr. TALCOVE. I have nothing to do with the DOGE. I don't
know what they are doing.
Ms. MOORE. So, you don't know what they are doing?
Mr. TALCOVE. No, ma'am.
Ms. MOORE. Okay. But somehow you feel like the inspectors
general is not a good strategy. Okay.
Mr. Talcove, you also recommended eliminating broad-based
categorical eligibility. You know, just like an infant born at
1 pound, 2 ounces, for example, is categorically eligible for
Medicaid because they are disabled. Their mother might also be
eligible for WIC or for SNAP.
Why do you think disconnecting and making it inconvenient
for them would be helpful, particularly since our having
disconnected these benefits has cost $2.3 billion in
administrative expenses over 5 years?
Mr. TALCOVE. So during the pandemic, I saw over a trillion
dollars of taxpayer money get stolen, and unfortunately, by
having broad-based eligibility determination in place, the
criminals were stealing at scale, and they were impacting
legitimate individuals that live in Wisconsin, that live in
Illinois. It created a huge opportunity for them to exploit the
system.
Ms. MOORE. So, you just punish the eligible people, like
the 99 percent who are eligible, having them run all over the
place? You got your 1 pound, 2 ounce baby, and you got to go to
five offices to get your benefit so that you can--okay, I get
it.
Mr. Meyenburg, we are talking about accountability a lot.
Can you explain to me how an unelected, unaccountable
billionaire who has accessed this personal information with, I
guess, microwave security clearances for his team, how is--and,
you know, sticking thumb drives in the sensitive information--
how is this appropriate?
Mr. MEYENBURG. I honestly have no idea. I am not even
allowed to stick a thumb drive into my own computer to copy any
data over. So I don't know why they would have access to that.
Ms. MOORE. Mr. Chairman, my time is winding down, but I do
appreciate your hearing from me.
Mr. Ranking Member, I thank you for your leadership as
well, and I thank the witnesses, and I yield back.
Mr. LaHOOD. Thank you, Ms. Moore.
I will now recognize Nathaniel Moran, a new member of the
Ways and Means Committee, a new member of the subcommittee,
from east Texas. Welcome.
Mr. MORAN. Thank you, Mr. Chairman. I look forward to being
part of the subcommittee and the full Ways and Means Committee
this next session.
I have got a number of questions based on the testimony
that has been given here today. I wanted to, and I am prepared
to, talk about foreign adversaries and their role in the
unemployment insurance fraud issue, but let me start with this.
Mr. Talcove, I think you said this earlier. Your quote was,
``It is the same groups running the same playbook, stealing at
scale.'' And you even gave some examples of after certain
disasters and you said, ``We need to use data and analytics to
effectively prevent some of this.''
I want you to go back though because your three
recommendations were: apply ID verification at the front end,
end self-certification, and continuously authenticate
beneficiaries.
And I love that because it really is front-end oriented,
but be more specific when you talk about applying ID
verification. I mean, how onerous would this be, or what kind
of verification are we talking about, to be able to make sure
that before the money goes out--because I agree with you and I
will come back around to this in a second. Once it goes out, it
is so hard to get back. So we need to make sure that every
dollar that goes out is the appropriate dollar. How do we just
do some simply ID verification on the front end?
Mr. TALCOVE. It happens every single day. Every single one
of you goes through that identity-verification process when you
go to your bank, when you use Amazon, when you go online to do
e-commerce.
And the great thing about the technology today is, you
don't even know it is happening, right? Think about it. You are
at the gas station, you put your credit card in, and all of a
sudden you get a text on your phone, and it says, Congressman,
are you really in Washington, D.C.?
So that technology is used in the private sector every
single day.
One of my frustrations is, government seems to use this
thing called NIST 863-2, I think. It was created in 2017. It is
complicated. It is hard. Nobody in the private sector uses it.
So the technology is out there every single day, and we all
use it. It is just different in government.
Mr. MORAN. And you are making the exact point that I was
hoping would be brought out here, that it is easy. It is not
that difficult. In fact, today I got one of those texts from my
bank, asking me if a particular charge, an $85 charge, was, in
fact, me using that charge. All I had to do was respond yes,
and we are good to go.
So I think there is an easier way, a more effective way for
us to stop the fraud on the front end, and certainly it is
going to benefit us on the back end because we have got a
number of those cases that are out there, that we need to
prosecute.
But I am a little bit concerned, I will just tell you,
about the return on investment, the cost-benefit analysis of
doing that.
What are the size of the claims, and I will give this to
all three of the witnesses--Ms. Hui, Mr. Ficke, and Mr.
Talcove--what is the average size of the claim that we are
dealing with once we extend this statute of limitations if we
are able to do that? And what is the cost for actually moving
forward to prosecute those claims?
Mr. TALCOVE. So what I would say is, I wouldn't look at the
average size of the claims. I would look at the criminal
groups. Some of the groups, the China group, APT41, Scattered
Canary, you are talking literally hundreds of millions of
dollars, but you need sophisticated law enforcement at the
federal level, agencies like the Secret Service, who have been
outstanding in this area.
So it is worth it, but you have to get to these large fraud
rings, primarily located overseas.
Mr. MORAN. Yeah, I have got a financial crimes
investigation center for the State of Texas located in my
hometown of Tyler, and they chase after these groups that do
this, and it is, it is the same groups moving about, but using
the same technologies and the same methodology.
Ms. Hui, you were talking about the stealing of personal
identification information on the front end which gives them
the gateway to steal and to create fraud. How are they doing
that? How are they obtaining the personal identification
information of American citizens?
Ms. HUI. They just buy it off the dark web. I mean, with
all these different data breaches that have happened, it is
really kind of open season on the dark web and purchasing
legitimate personally identifiable information, and therefore,
you know, you can--at least in Missouri, you can get in perhaps
and file a claim, but we do have flags within the application
that then clue us into there is something not quite right,
right?
And the partnerships, both between government agencies and
private sector, whether it is a vendor like Mr. Talcove's or
association like Mr. Ficke's, it is really important that all
the partnerships across the board work together and understand
what may be some limitations but also challenges and
opportunities.
I think the biggest thing for us to realize, though, is
that it is not a one-and-done situation, like, this, if you
don't accept that update on your operating system, it is a
paper weight, an expensive paper weight, right.
So we have to adopt that mentality when it comes to
protecting taxpayer dollars that are invested, whether it is a
UI trust fund or any other beneficiary fund. We want to make
sure the eligible people are getting the benefit.
Mr. MORAN. Yeah, I agree.
And, Mr. Chairman, I see my time is over. I didn't even get
to my foreign adversary questions. I am part the China Select
Committee, and I will tell you, it is really concerning to me
that China is at the forefront of this, of stealing our
personal information and then being part of obtaining these
dollars from American taxpayers, using it against us. It is a
national security issue in my opinion.
Mr. Chairman, I yield back.
Mr. LaHOOD. Thank you, Mr. Moran.
I recognize Mr. Evans of Pennsylvania.
Mr. EVANS. Thank you, Mr. Chairman and Ranking Member
Davis. Today I want to discuss improving our unemployment
insurance for the betterment.
Unemployment insurance is a critical benefit for American
workers. During the pandemic, unemployment insurance was a
lifeline for Pennsylvanians in getting fast emergency
assistance.
I support increasing the funding for the State unemployment
operations so that the workers can get more resources. They
need help.
I specifically want to discuss the important work that
merit-based staff do the U.S. The best way that we can fight
and prevent unemployment insurance fraud is to hire well-
trained merit-based staff.
We know that certain States during the pandemic hired
untrained contractors in staff roles which only led directly to
more fraud in errors in the system. It is interesting that the
Musk administration is trying to do the same thing right now,
inside certain federal agencies, replacing employees with their
own outside contractors.
Right now, the last thing we need is someone unqualified
scooping our constituents' private data, including our
unemployment system.
Mr. Meyenburg, I would like to ask you a question. In your
testimony, you highlighted the importance of merit-based
staffing in the UI system as opposed to States who are
outsourcing work through untrained contractors.
Mr. MEYENBURG. Yes. I believe that merit staff UI workers
are key and ideal for helping prevent fraud because there is
no, like, third-party system. It is, you know, State workers
performing the work of the State and making sure that it stays
within the State. It is not a third-party by any means.
Mr. EVANS. Can you speak more about experience under merit-
based systems and the advantage it has in preventing fraud.
Mr. MEYENBURG. Yes. When you, say, are a trainer, training
folks that are unfamiliar with the system, after years of
experience, you understand the complexities within the system
and how to get from A to B to C in a timelier fashion.
This allows you to conduct the training at a faster level
but still maintain that high level of training that is required
in order to do the position.
Mr. EVANS. Can you please explain the level of job training
that State worker agencies, employees, go through to provide
the highly qualified servicing of the UI system and how this
training differs from non-merit staffing training?
Mr. MEYENBURG. I will say, during the pandemic, I received
a minimal amount of training. It was enough to allow me to
process claims.
Now, with regular merit-based staff, they receive, at a
minimum, 6 to 8 weeks of training, so that way, they are
sufficient when they hit the floor and talk with claimants on
the phones.
Mr. EVANS. I want to, one, thank the chairman and thank the
ranking member for the conduct leaders here.
Mr. LaHOOD. Thank you. Appreciate it, Mr. Evans.
Now, I will turn to Ms. Van Duyne who is a new member of
our subcommittee. Welcome, Ms. Van Duyne, and you are
recognized.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
It is egregious and actually disheartening that in the wake
of a global pandemic that disrupted the lives of millions--we
all saw it--that forced thousands of small businesses to close
their doors and robbed millions of Americans of their loved
ones, bad actors and international criminal gangs that would
seek to take advantage of good-faith efforts to help those
negatively impacted by a once-in-a-lifetime tragedy.
The GAO estimates that pandemic unemployment fraud may be
as much as $135 billion, with some estimates even higher.
And I think it is vital that Congress act so that
prosecutors have the opportunity to track down and to hold
these criminals accountable.
But this committee also has a responsibility to ensure
proper oversight in the administration of the UI program as a
whole.
Mr. Talcove, government officials, state employees, and
contractors routinely participate in insider UI fraud, and
states either ignore the problem, or they try to infer that
embezzlement is not an issue with state employees.
This problem is often overlooked by government officials as
in Delaware, for example, where the Public Integrity Commission
refused to investigate a Delaware Department of Labor employee
who was embezzling money directly from the state's Unemployment
Trust Fund.
Can you please speak about your experience regarding
insider UI fraud, and is it being taken seriously by government
officials?
Mr. TALCOVE. Yeah. I would say, of the $250 billion that
was stolen from unemployment insurance, I would say
approximately 10 percent, or $25 billion, was insiders.
Ms. VAN DUYNE. Wow.
Mr. TALCOVE. And what the insiders were doing was, they
were, in some cases, selling their access to some of these same
criminal groups that you mentioned, from China, Russia,
Nigeria, and Romania, they were selling their access to gangs,
or--which I think is worse--is, they were stealing from the
very people that they were trying to serve.
And you have to have oversight, and you have to have
auditing in those programs. And it wasn't just in Delaware. I
mean, I think it happened in 20-plus States.
The other point that I would make is, unfortunately, it is
still happening today, and it is just not in the unemployment
insurance program. It is in the SNAP program, it is in
virtually all the programs across the country.
Now, last point, 99.9 percent of those workers, they are
really good people. They show up every day and they do the
right thing. It is a very small percent, but they give
everybody a bad name.
Ms. VAN DUYNE. And I appreciate that. I am also with Aaron
Bean on the Small Business Committee, and this is my fifth year
on that committee. And we have talked to small businesses who
during this time have seen, you know, benefits that they should
have received, not delivered, because that was given out to
fraudsters and criminals, and the complete lack, during the
last administration, of holding these people accountable or
providing oversight.
Ms. Hui, in your written testimony, you quoted a national
study published in August of 2020, by the University of
Chicago, entitled ``U.S. Unemployment Insurance Replacement
Rates During the Pandemic.''
You say that the median percentage of salary replacement
unemployment during the pandemic was 145 percent. It was more
than 200 percent for workers in the bottom 20 percent of the
U.S. income spectrum and more than 300 percent for workers in
the bottom 10 percent.
This compares to the typical pre-CARES Act salary
replacement rate of only 40 to 50 percent of lost income.
In plain English, we are paying a lot of money to stay home
rather than to go to work, and the disaster effects of this
policy are still being felt today.
And according to the U.S. Chamber of Commerce, workforce
population remains below pre-pandemic levels, and we are
missing 1.7 million Americans from the workforce, compared to
February of 2020.
Can you please speak on the disastrous effects of paying
people unemployment benefits that were double or triple their
salary before the COVID-19 pandemic and why this must never
happen again during any type of economic downtown in the
future?
Ms. HUI. Certainly, you know, the American people are so
generous in making sure that their fellow Americans get support
during these times of emergencies, right? And so I think one of
the things that we saw that was a major motivation for this
type of fraud was the federal pandemic unemployment
compensation plus-up.
So most states have a regular weekly benefit amount. In
Missouri, the maximum benefit that you can get is $320 a week,
and, again, that is based on what your income was and what your
credits are into the trust fund from the employers that have
paid in.
Now, when you then add $600 on top of that, you are
definitely putting a huge multiplier on it, right? And during
the 2008/2009 crisis, that plus-up actually was $25.
So you would have your weekly benefit at the state level
and then a $25 plus-up. But in 2020 we raised it to $600.
And we needed a flat number. There were a lot of states
that had legacy systems, and they could replace that $25 number
with another flat number. But they couldn't prorate it.
So that was one thing, but the choice of $600 absolutely
was, like, the spark that really generated the attention of
fraudsters to get in. You just had to have some successful hits
to--in each state, you could have multiple states that you file
in, just a few weeks, and you can get, you know, quite a few
thousands of dollars. So, again----
Ms. VAN DUYNE. My time is expired. I appreciate your
answer.
Ms. HUI. No problem.
Ms. VAN DUYNE. I need to yield back, but thank you all very
much for your testimony.
Mr. LaHOOD. Thank you, Ms. Van Duyne.
I now recognize Mr. Gomez of California.
Mr. GOMEZ. Thank you, Mr. Chairman. Congratulations on
being the new chairman of this committee.
Let me be clear. Democrats and Republicans both say that
there is no place for fraud. Democrats, it is because it
undermines people's faith that government is actually doing the
job that they are supposed to do. And I think that is a big
deal.
And also, I appreciate the gentleman from Florida
mentioning that there was fraud in a Republican-run State, and
it is not just the Democratic states have the problem.
And also, one of the biggest ways that fraud happens is
through weak security measures that leave people's personal
information vulnerable.
Mr. Meyenburg, what kind of training do State worker agency
employees receive to ensure they are protecting personal
information?
Mr. MEYENBURG. Yes. It is at least 6 to 8 weeks' worth of
training with a heavy emphasis on protecting identity
information and all personally identifiable information.
Mr. GOMEZ. Social Security numbers, birthdays----
Mr. MEYENBURG. Yes.
Mr. GOMEZ [continuing]. Accounts, anything that can say
this person is associated with this--or this information is
associated with that individual?
Mr. MEYENBURG. Absolutely.
Mr. GOMEZ. Yeah. And that is--you know, I want a bureaucrat
to be just a pain in the ass. I want them to, like, Oh, u don't
have the proper information? You know, reject it.
Oh, you want to access this information? You need this
form. You need this clearance. You need this kind of training.
You don't? Too bad. You can't have it.
But something that is going on now at the Federal level is
when it comes to Secretary Bessent and President Trump. I don't
think Secretary or President--or President Trump made sure Elon
Musk got that kind of training, or any training for that matter
before all of our personal data was turned over to him.
I want my friends on the other side of the aisle to see
this as a big, big issue, because if there is nothing there
being a check, this is becoming the largest fraud and scam of
our government when it comes to personal information in our
history.
This is at a time when people are struggling with
skyrocketing rent, when grocery prices are through the roof,
and when childcare costs are out of control.
What are Donald Trump and Secretary Bessent doing? They
gave Elon Musk, an unelected, unconfirmed, untrained, special,
quote/unquote, special government employee, and the rest of his
tech bros, access to every Americans' sensitive and personal
financial information.
They have access to our bank accounts, to your bank
accounts. If you filed taxes electronically, you paid your
taxes, you received payments, they have access to all your
accounts. You know, we need to do something to address that.
And it doesn't matter where this--like, they have access to
everybody's information, if you live in Indiana, Illinois,
Ohio, California, and that is risking a massive personal data
leak that can lead to identity theft on an unprecedented scale.
I had my identity stolen so I know how painful it is to
have to prove who you are and to get your money back and to
make sure that you are not going into debt.
Improper disclosure of taxpayer information is considered a
felony under section 6103, punishable up to 5 years in prison,
as well as $5,000 fine, and that is just for one instance of
improper tax disclosure.
What is the punishment for every single American? That is
the scale of this potential fraud and breach of information.
Is Secretary Bessent's careless disregard for most
sensitive personal information worthy of Articles of
Impeachment? I don't know yet because they refuse to hand over
any information of what occurred in the last several days.
But this is a serious, unprecedented situation. Secretary
Bessent needs to come before this committee and answer
questions on violating the people's trust but also when it
comes to their personal information.
We can't stand for it. Fraud is fraud, no matter who does
it. Is it a public employee? Is it a criminal enterprise? Or
even if it is the Secretary of the Treasury himself, we need to
stop it, and we need the answers now.
With that, I yield back.
Mr. LaHOOD. Thank you, Mr. Gomez.
I now recognize the gentleman from northwest Iowa, Mr.
Feenstra.
Mr. FEENSTRA. Thank you, Chairman, and I want to thank the
witnesses for being here. I enjoyed reading your testimony and
also listening to it.
I just want to remind everybody that all bureaucrats are
not elected. This is just common sense.
We are here to create solutions. We are here to understand
the problems and then create solutions, and, Mr. Ficke, that is
what I want to talk about.
I was impressed by reading your testimony. I know you are
not a law enforcement officer, but you have 30 years of
experience in the financial services industry. And generally
unemployment insurance is prosecuted using federal banking
laws, including mail fraud, wire fraud, conspiracy, aggravated
identity--identity theft, money laundering.
So considering your time in financial services and working
with the State of Ohio, are these banking offenses the right
charges for individuals with unemployment insurance fraud? What
is your thoughts there?
Mr. FICKE. Well, first of all, thank you for your question.
You know, in my previous testimony, I have actually stated a
few times that I think it is very important to look at
collaboration of data and information between--between what is
available in the private sector and what is available in the
benefits applications and submissions and those types of things
that are going with it.
I think the prosecution of those criminals is extremely
important. We have talked about the number of cases. I think it
is really important to focus on the magnitude of individual
cases and looking at the impact that those can have on the
overall collection and recovery of those funds.
Mr. FEENSTRA. Do you think we should figure out better
ways, though? Instead of using the, you know, the financial
services industry, is there a better way to prosecute these
claims under something different than banking regulations?
Mr. FICKE. Well, I think in my experience, especially with
the Attorney General's offices and the collaboration that
happened in Ohio, a lot of it was driven and supported by the
amount of information-sharing that happened between.
And as Mr. Talcove has pointed out a few times, this is not
limited to unemployment insurance. This goes across SNAP and
multiple other programs.
I think it is important, when we looked at the guidelines
from a private supporter of our State, when we looked at the
guidelines, what we were able to do, it was our role, as the
agency's role to actually identify----
Mr. FEENSTRA. Yep.
Mr. FICKE [continuing]. That a case had to be prosecuted
but then to turn that over to the appropriate organizations at
that time.
Mr. FEENSTRA. So you are in the State of Ohio. I was in the
State of Iowa. I was a state senator, head chair of Ways and
Means at that point. And really the states are the ones that
handle all the unemployment insurance issues, and here is the
situation.
Obviously, through COVID we gave a lot of dollars and stuff
like that. How can us, as the states, what can the federal
government do to help the states with fraud issues?
And then I think moving forward and saying, all right, what
happens if we have a situation like this again? How can we be
proactive in trying to find solutions to mitigate some of these
issues?
Mr. FICKE. Well, thank you for the question. I think the
first thing that comes to mind for me is sustainability. There
have been very strong measures put in place during the crisis.
The support to actually encourage and enable the states to
actually keep those in place, I think, are going to be a really
important part in the overall success.
Another one is--and I say this a few times--is
collaboration, not only from a data perspective but best
practices that have taken place in multiple private sector
organizations.
Mr. FEENSTRA. And using each state. So Ohio might have a
great way of doing it. I mean, we should be collaborative
across State lines, figuring out what are the best practices.
Mr. FICKE. Yeah. A very good example of that is the reality
that one false account in a financial institution could be used
across multiple states----
Mr. FEENSTRA. Yeah.
Mr. FICKE [continuing]. And today the individual state has
a harder time recognizing some of those trends.
Mr. FEENSTRA. Mr. Talcove, can you talk about that a little
bit, making sure that, moving forward, our state systems are
prepared for these unemployment spikes, and, you know, this
stealing of billions of dollars, and what the States can do
collaboratively with the federal government?
Mr. TALCOVE. Yeah. So I mean, I want to make the first
point. I was out in California this week, L.A., and the same
criminal groups----
Mr. FEENSTRA. I heard that, yes.
Mr. TALCOVE [continuing]. That stole from the unemployment
insurance----
Mr. FEENSTRA. Are doing the same thing with fire.
Mr. TALCOVE [continuing]. Are now stealing from the
disaster unemployment----
Mr. FEENSTRA. So that should be a clue to us, right?
Mr. TALCOVE. Right. We haven't fixed it----
Mr. FEENSTRA. Yes.
Mr. TALCOVE [continuing]. Right? And it really starts with
those three things that I talked about, right? It is the front-
end identity verification----
Mr. FEENSTRA. Yep.
Mr. TALCOVE [continuing]. It is no self-reporting, and it
is managing that back-end population. And it is frustrating
because there are people in California who need those benefits
that are going to wake up one day----
Mr. FEENSTRA. And not have them, yep.
Mr. TALCOVE [continuing]. And they are going to see that
someone put a loan against their house because they got an SBA
loan for a half a million dollars.
Mr. FEENSTRA. Great point. My time is up, but thank you. We
are in this together. As states and as the federal government,
we are in this together to try to figure out solutions.
Thank you, Chairman. I yield back.
Mr. LaHOOD. Thank you, Mr. Feenstra.
I recognize Mr. Horsford of Nevada.
Mr. HORSFORD. Thank you, Chairman LaHood and to Ranking
Member Davis for holding this hearing and for the courtesy of
allowing Members to wave on.
I would also like to just talk about the importance, as we
are, about rooting out waste, fraud, and abuse, and protecting
American taxpayers, but also, we really need to provide some
answers to our constituents based on the immediate issue that
they are facing.
The largest illegal data breach is happening right now in
U.S. history, at this administration's direction, and we still
don't know who is in charge or what they are up to, where this
information is being used or how widespread it is.
So, I really wish that this was the focus of today's
hearing since this is what the majority of my constituents are
calling me about today.
I would also like to talk about what we are doing to
prevent Elon Musk, and the hackers who are involved with
potentially slowing down people's tax refunds, their Federal
payments, and their hard-earned benefits. That is what people
want to know.
Less than a year ago, Chairman Smith introduced legislation
meant to increase the maximum penalty for the unauthorized
disclosure of returns and return information, and I agree with
Chairman Smith when he stated that Congress must not tolerate
the theft and leak of taxpayer information.
So why aren't we doing something about it, since we have
the largest illegal data breach in U.S. history taking place
right now under this administration's watch?
Now, turning back to the issue of this hearing, I actually
introduced, back in August of 2022, the GUARD Act, the
Guaranteeing Unemployment Assistance and Reducing Deception
Act.
My bill enables aggressive action to recover pandemic
unemployment benefits that were paid to criminal cartels by
supporting prosecution of ring leaders and helping victims of
fraud.
The bill would also seek to provide workers who were
victims of identity theft with help to quickly resolve any
remaining issues.
My district has no shortage of identity theft cases. That
is why I am concerned with this illegal data breach that is
happening right now.
But between 2020 and 2023, we saw a 63 percent increase in
the Metro Las Vegas area alone of identity theft cases. I know
this issue because my constituents know this issue.
So, I was pleased to see that we would be addressing a
recommendation by the Department of Labor Inspector General to
extend the statute of limitations for pandemic unemployment
insurance fraud.
Unfortunately, last week, President Trump fired that IG,
the one who made the recommendation that we are all discussing
in this hearing, the one who makes this hearing relevant.
So, now the IG is gone, the majority is holding this
hearing anyway with two contractors, but not one single public
employee who investigates and prosecutes fraud.
My constituents want to know what we are doing about these
issues, Mr. Chairman. So I suggest that as a committee, we
focus on those priorities and to make sure that they are being
addressed.
If I could go to the witness, the minority witness, to
understand, would providing measures like the Guaranteeing
Unemployment Assistance and Reducing Deception Act, the GUARD
Act, help address protecting the victims of fraud from identity
theft?
Mr. MEYENBURG. I don't know all of the details that go in
with the GUARD Act, but I do think that there is--there is
always more we can do to protect not only ourselves, our loved
ones, our neighbors, our families, all of that. So I do believe
there is more that we can do, absolutely.
Mr. HORSFORD. Do you agree that having an Inspector General
who oversees protecting taxpayers is an important function?
Mr. MEYENBURG. Absolutely.
Mr. HORSFORD. And that person being fired is preventing
that protection being in place at this time?
Mr. MEYENBURG. Absolutely.
Mr. HORSFORD. So, Mr. Chairman, why aren't we addressing
that today?
I yield back.
Mr. LaHOOD. Thank you, Mr. Horsford, for your questions.
That concludes our questions from committee members here
today. Let me just, again, acknowledge your statements today,
your testimony today, answering our questions.
We appreciate your expertise, your experiences, your
suggestions, very, very helpful here today, and to lay the
context for what we need to do between now and March 27th,
which is to extend the statute of limitations on this, for
taxpayers and for this particular program.
And so I look forward to working collaboratively, look
forward to working in a bipartisan way with my colleagues to
get that done on behalf of the taxpayers of the United States.
So with that, I will advise members that they have two
weeks to submit written questions to be answered later in
writing. Those questions and your answers will be made part of
the formal record.
With that, the committee stands adjourned. Thank you.
[Whereupon, at 3:48 p.m., the subcommittee was adjourned.]
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