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▶ 0:12:33awesome the subcommittee will come to order um I want to welcome everybody today to our work and Welfare subcommittee titled times running out Prosecuting fraudsters for stealing billions in unemployment benefits from American workers I want to um welcome our Witnesses here today uh and thank you for traveling to be a part of this hearing and um I want to also welcome new members to the subcommittee a few of them are here I want to welcome um Rudy yakam from
▶ 0:13:03Indiana who's a new member of ways and means and the subcommittee and Aaron beam from Florida as a new member here too and welcome back our our old uh members and uh he's not new to ways and means but new to the subcommittee Randy finstra from Iowa Randy welcome uh to the subcommittee on work and Welfare um as the returning uh 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 U my district that I cover is the 16th congressional district which
▶ 0:13:33covers 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 frauders and other criminal organizations accountable by extending the statute of limitation for cares act related unemployment insurance fraud which will expire on March 27th of 2025 without congressional action the way Means Committee has conducted considerable oversight since the UI program's
▶ 0:14:04weaknesses 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the government Witnesses from the GAO and the pandemic response accountability committee who testified to problems with outdated State systems and weak online security that made the program vulnerable to fraud subsequently in May of 2023 the house passed the protect taxpayers and victims of unemployment fraud act the bill would have extended the statute
▶ 0:14:34of limitations for an additional 5 years and incentivized states to go after fraud and recover funds it also included programs uh 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 was lost to fraud
▶ 0:15:04during the pandemic that 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 uh 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 28 of this year doj has more than 1,600 criminal matters that remain
▶ 0:15:34open and uncharged without an extension of the statute of limitation these instances uh of of suspected pandemic UI fraud will go unpunished first and foremost we need to provide law enforcement with the tools and resources to hold frauders accountable while pursuing reforms that can stop this type of UI fraud from happening again Congress must act to extend the statue of limitations I hope that in the coming weeks we can work together in a bipartisan fashion to pass legislation
▶ 0:16:04to 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
▶ 0:16:35here announcing 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 um cases like this are deeply concerning to me and concern and confirm our worst fears regarding the attacks on our institutions by hostile Nations such as the CCP communist Chinese party I strongly believe we have a responsibility to bring accountability
▶ 0:17:05back to Washington and find out what we can do to bring restitution for taxpayers in the face of such staggering amounts of fraud there's a lot more work to be done to hold these criminals accountable through the criminal justice system recoup the billions of dollars on behalf of American taxpayers so again I want to thank our our Witnesses for being here today uh for traveling their valuable time and their Insight that we'll hear from uh a little bit later here um with that uh it's now my pleasure uh to recognize a gentleman
▶ 0:17:35from Illinois our ranking member Danny 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 our UI program during the pandemic unequivocally
▶ 0:18:06and without a doubt we provided $2 billion in the American Rescue plan act to strengthen program Integrity access and equity and 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
▶ 0:18:37by 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 specifically asked our committee to extend the statute of limitations for UI fraud Inspector General Larry Turner served with distinction
▶ 0:19:07in both the Trump and Biden administrations and led the inspector General's office to 1400 successful pandemic UI fraud prosecutions and over $1 billion in court audit restitution and payment Mr Turner was recently fired by President Trump along with nearly all of the nonpartisan General
▶ 0:19:37after firing these IGS charged with Prosecuting fraud and making sure agencies followed the law the Trump Administration illegally blocked States from accessing Essential Health Child Care child welfare and other funded authorized and appropriated by Congress and illegally blocked nonprofit organizations from
▶ 0:20:08accessing 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 hacker
▶ 0:20:38unfettered access to the extremely confidential data regarding payments to workers businesses seniors and entities around the world via the systems for the treasury Department centers for Medicaid Medicare Labor Department department and NIH these systems include Private Financial information for seniors receiving Social
▶ 0:21:08Security or Medicare workers receiving tax refunds Private health information about you and your loved ones and the privileged information of Mr musk's competitors this hearing is about preventing fraud yet this Administration appears to be gifting Mr musk the unlimited ability to defraud individual Americans to
▶ 0:21:39access their most Private Financial and health information for any purpose will Mr mus illegally stop your Social Security tax Medicare Medicaid a disability payment will he claw back your tax refund or Social Security payment if he thinks you didn't deserve it will he use
▶ 0:22:09his unchecked power to sell your social security numbers or bank account information to the highest bidder or delayed government contract payments or grants to his competitors or people he dislikes as 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 recession
▶ 0:22:39I 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
▶ 0:23:09I look forward to hearing from Shelby meberg 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 concerned that any new inspector Generals in this current Lawless environment would not appropriately Target true
▶ 0:23:39criminal 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 you'll back the
▶ 0:24:10balance of my time uh thank you Mr Davis for your opening statement uh we'll now turn to our Witnesses here today and I I will introduce them here in a second again uh thank you for being here today and look forward to your testimony and our questions and answers from the committee members um I will um introduced from left to my left to right our first witness is Haywood uh talve who is the Chief Executive Officer of Lexus Nexus Special Services Incorporated in mlan Virginia next we'll hear
▶ 0:24:40from Miss Anna Hugh who is the director of the Missouri Department of Labor and Industrial relations in Jefferson City Missouri thirdly we'll hear from Jeffrey um fii who is the CEO and founder of Russell Allen Partners in Cincinnati Ohio and lastly we'll hear from Shelby mayberg who is an un Employment Insurance worker with the Washington Federation of state employees welcome to you all uh we'll begin with you Mr Talco you're recognized for five minutes to deliver your opening statement chairman
▶ 0:25:10Smith chairman Le Hood 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 train transnational criminals likely stole $1 trillion across all Assistance programs meant to help needy Americans the money was used to traffic drugs traffic
▶ 0:25:40children 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 one 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'd like to suggest three proven
▶ 0:26:11solutions that can sign 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
▶ 0:26:41trillions meant for Americans we finally we must finally understand that pain and Chase does not work in fact of the 250 billion stolen from taxpayers from the unemployment insurance program during the pandemic less than5 billion dollar 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
▶ 0:27:11to 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 the 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
▶ 0:27:41at the door it's 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 buking the very people they're supposed to be serving today the threat is growing exponentially AI powered fraud networks generate fake identities that pass dated n verification standards from 2017 Bots file thousands of applications
▶ 0:28:11in seconds deep fake technology generates quote unquote real people that bypass security safeguards criminals are evolving in real time 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 in this scale
▶ 0:28:41is not inevitable it's the result of Legacy systems outdated in 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 fund should go to those in need I'm 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% compared to 20%
▶ 0:29:11in 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
▶ 0:29:4227th We are failing the single mother who relies on food assistance the unemployed worker who genuinely needs support and and 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 Le Hood ranking member Davis and members of the committee for the opportunity to testify today thank you Mr talve we'll now turn to miss Hugh you are now recognized for
▶ 0:30:13minutes chairman Le Hood ranking member Davis and distinguished committee members my name is Anna Hugh and I'm the director of the Missouri Department of Labor and Industrial relations and have served me 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'm proud that Missouri is consistently among the nation's leaders in preventing improper UI
▶ 0:30:43payments providing benefits to the rightful recipients and along with state agency partners providing high quality re-employment services to assist unemployed to missourians but first let me explain the basics of regular unemployment insurance imagine you're 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 could lead to lower premiums the UI program operates similarly
▶ 0:31:14employers 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
▶ 0:31:45that 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 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 shift the landscape fraud evolved to Encompass large scale identity
▶ 0:32:15theft with criminals stealing personally identifiable information pii to file fraudulent claims this shift was uh driven by the massive influx of money into the system and the rush distribut it making traditional safeguards less effective in Missouri we're 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
▶ 0:32:45Missouri 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 Su success to the Integrity of Missouri's UI system and to the value of every tax dollar with the right systems tool and partnership stopping UI fraud is not impossible but extending the statute of limitations for Caris act related UI fraud and overpayment
▶ 0:33:16recovery is crucial the current deadline is March 27 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 HR 1163 the protecting taxpayers and victims of unemployment fraud act
▶ 0:33:46we 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 off often penalizes efficient states its heavy Reliance on workload as a means to distribute funds can serve as a deterrent for states to pursue transformative efficiencies this disincentivizes efficiency and perpetuates systemic problems the current funding model plays catchup to actual program
▶ 0:34:16needs especially during economic downturns it is also a disincentive to long-term investment as the short-term nature of some funding sources discourages the state from making critical investments in technology and cyber security that incur ongoing costs for licensing maintenance and support in 2023 Missouri businesses paid approximately $130 million in federal unemployment tax act Fooda taxes to the US Treasury yet Missouri only $38.5
▶ 0:34:47million in UI program administrative funding from do this chronic underfunding forced us to lobby for State funds from the Missouri legislature to sh up funding for our UI program and create a long-term modernization plan for every state UI administrator in the US this situation unsustainable in line with naso's 2025 legislative priorities dedicated technology funding should be a separate consistent stream for monitorization including cyber security
▶ 0:35:17Ai and data analytics finally adequate funding Investments and monitorization remain relevant and secure and we must make sure that ongoing maintenance and support are there the pandemic underscored the need for a 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
▶ 0:35:48the Integrity of the of the system and the trust of the American people thank you I'm 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 thank you Miss Hugh we'll now turn to Mr fii you're recognized for five minutes thank you uh chairman L Hood ranking member Davis and the members of the subcommittee I want to thank you for the opportunity to present my name is Jeff ficky and I'm the CEO of Russell Allen Partners
▶ 0:36:19located in Cincinnati Ohio my entire career is focused on Technology Innovation and operations payments I'll give you a little about background about that because it uh it covers government and financial services in the 90s I was a a founding member of a payments company that supported um government service organizations um several federally funded State operated programs including unemployment after that company was sold I moved to the financial services industry working for Fifth
▶ 0:36:49Third Bank I led Central operations which transferred approximately 14 trillion a year in funds using AC wire card um and um and check um 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 um before I present about the opportunities I see exist between these agencies and financial services I want to discuss my role in a pandemic in the unemployment um
▶ 0:37:19at 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 um cyber crime attacks that result in Ohio reporting about 1.8 billion in fraudulent over payments 1.4 billion was for Pua and about 400 million were about um traditional unemployment I do understand that today the um the covid era pandemic unemployment
▶ 0:37:50um support is is due to expire um I would encourage that to be extended I want to start by explaining my involvement in Ohio um 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 partnership um the volume of claims were skyrocketing the unadjudicated claims and backlog was growing out of control and citizens inquiries to the
▶ 0:38:20to the to the agency were overwhelming Governor dwine made the decision to engage the private sector he worked directly with the Ohio Business Roundtable a group of about 100 Ohio's largest public sector CEOs to engage their membership for expertise um the Ohio business run tabl is run by um former US Congressman T Pat tberry um Governor dwine recognized that the private sector had experienced in these crisis situations
▶ 0:38:50my 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 in from places like Fifth Third Bank Western Southern Key Bank Nationwide Insurance and others um as I had testified multiple times that I had to testify had the opportunity to testify multiple times
▶ 0:39:21in front of the state's legislative subcommittees governor dwine and and odjfs is director Matt Dam Shredder gave three clear objectives at that phase first goal was to stop the fraudulent claims from from being submitted in early 20121 the state was receiving over a million claims a month for new unemployment claims um and um and Pua claims with advice from the private sector and odjfs team we were able to deploy a new fraud stack um and that happened within
▶ 0:39:51the first 60 days of our engagement the results were overwhelming um new fraud claims new unemployment claims dropped in two months to less than 25,000 a month that was a 97% reduction in fraud with a new set of Technologies was deployed Lexus Nexus 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
▶ 0:40:22was to there was approaching 5 million unadjudicated claims related issues we actually took a new approach to actually engage um the um 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 ustad who's now a US senator for Ohio Pete um the P3
▶ 0:40:52team engaged subject matter experts from the private sector and big Tech to help help seg segment those within 90 days of the project starting Ohio had all fraud-free claims for Ohio citizens had been adjudicated and a proper payments were being sent the third goal was to answer questions from enormous volume of of citizens many Ohioans were victims of cyber crime While others who needed benefits were not being processed because of the backlog
▶ 0:41:22during this period the service centers were overwhelmed citizens experienced difficulties getting through and sometimes had up to a six sixh hour hold time you can see in the chart that's displayed here that um we returned all those to commercially acceptable standards with call times um call handle times increased and call times um hold times less than three minutes the governor's reasoning for seeking this advice and collaboration Ohio's sector
▶ 0:41:53proved 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 in the last segment I want to talk about is is what I feel is a partnership that can exist between government and financial services collaboration um the um one of the key initiatives launched at the direction of dor director Dam Shredder
▶ 0:42:23was to understand 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 and Pua program Solutions required claims adjudication that um um as well as collections of of payment history the programs checks on are focused on claimant's payments are sent to the Mr FY I'm just going to interrupt you there for a second you're a little bit
▶ 0:42:53over we we're going to ask you to um just pause yeah if you don't mind and we'll take the rest of your statement um for the record uh if you don't mind doing that sure okay I just want to talk about just future recommendations and I'll I'll I'll I'll pause um first of all the the banks and the agencies are both accountable to to multiple regulatory organizations um aligning them so that we can actually get data sharing between the banks and the agencies is a is a very clear opportunity secondly
▶ 0:43:23the digital payment networks in this in in this space have actually introduced new threats New Opportunities and um and for example PayPal returned almost $70 million at the state of Ohio on on money that they held not all um fraud net not all mobile payment networks had that kind of of diligence the third opportunity is that um that the dis um and and excuse me fourth the banks the banks also are a point where they can follow a sheet
▶ 0:43:53law 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's going to um to actually play out in that in in the long run and um and issues that still need to be determined um I understand the statute of limitations I do encourage it to be passed along with House Bill 1163 um we've spoken at multiple um naswa and wwc conferences on it um look forward to to
▶ 0:44:24answering your questions thank you again thank you very much um lastly we'll recognize Mr mayberg um you're you recognized for your opening statement okay good afternoon chairman Le Hood ranking member Davis and members of the subcommittee my name is Shelby meinberg I'm an employment service worker in the state of Washington in this role I also help uh UI claimants file their benefits I'm a proud member of asme council 28 and the Washington Federation of state employees local 443
▶ 0:44:54I help washingtonians file for unemployment insurance and safe 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% in March to over 15% 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
▶ 0:45:25staff 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 case loads were enormous in the spring of 22 I was laid off for 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
▶ 0:45:55system and was hired in J or in July of 22 my Evolution from non-permanent to permanent staffers showed me the value of being a highly skilled employment service worker who understands the complexities of the UI Ser uh 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
▶ 0:46:25make sense of the sometimes s 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 understand or a 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
▶ 0:46:55are unbiased and high quality UI workers cannot have any other interest at play other than serving the jobless worker and maintaining the Integrity of the UI program there are ways to prepare for future surges and unemployment without undermining Merit Staffing one solution is for states to cross Trin existing Merit staff for other programs to process UI claims I'm a cross-trained employment service worker what we call a UI ambassador
▶ 0:47:27if 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 uh and keep our system and communities moving forward as 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
▶ 0:47:58we 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 of skilled merit-based UI staff I'd like to thank the chair ranking member and members of the subcommittee for the opportunity to testify today thank you Mr meberg for your testimony here today we'll now move to U questions from the committee members uh to our panelist today again grateful for
▶ 0:48:28your contributions here today to this important topic um I'll now recognize myself um for for my questioning I'm going to start with you Mr talve um for you for years this committee has been raising uh the alarm 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 um statement I referred to a case in Pennsylvania involving defendant caught laundering money
▶ 0:48:58back to China these cases are complex they're nuanced involve federal crimes but they also raise serious National Security concerns uh Mr Telco can you explain the current state of UI fraud and how international criminal organizations are continuing to be associated with fraudulent activity yeah thank you Dar thank you very much for the question and it's interesting in that I was just out in California in LA this week and
▶ 0:49:28the 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're now stealing from the disaster unemployment insurance the disaster SNAP program so what these criminal groups do in uh particular China Russia Nigeria Romania is they use stolen information um some of it they collected directly for example China when they had the OPM breach years ago
▶ 0:49:58they 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 uh incredibly frustrating having followed fraud since hurricane Kina in 2006 it's the same groups doing the same thing and if you just apply data and analytics
▶ 0:50:29just as uh Mr ficki was showing on those charts you can stop it but we continue to allow these groups to steal um they use the money for horrible things child trafficking they use it for drugs in our communities they use it for terrorism so I I'd like to tell you that things are better today but just watching what's going on in California seeing what happened in North Carolina same groups same game Playbook stealing
▶ 0:50:59scale thank you for that um just to follow up you know in terms of criminal prosecutions that have been successful and are there any that come to mind that have had somewhat of a deterrent effect on continuing uh criminal activity yeah so I would I would give uh Washington State Credit uh during the pandemic uh they were the first group to get hit by a Nigerian fraud organization and they actually did capture the ring leader
▶ 0:51:30in 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 right remember uh my estimate $ 250 billion was stolen five billion recovered if it does go out state and local law enforcement can't do it you need the Secret Service and you need
▶ 0:52:00the FBI because these are complicated multifaceted criminal Enterprises yeah uh thank you for that I'm going to turn now to miss Hugh in your um in your um you talked related to the Missouri Department of Labor they currently have a UI program that's effective in preventing improper payments and providing highquality Reemployment Services last Congress uh ranking member Davis and I worked on a bill called the bridge to workers act that was passed into law
▶ 0:52:30to provide the flexibility States need to strengthen those connections to employment can you talk about the work with Reemployment Services and how uh you see that growing and developing into a core part of unemployment programming in the future certainly thank you for the opportunity to answer your question and thank you uh chairman Le hood and ranking member Davis for actually getting the bridge for workers Act passed um it's really a fored state it's a great de flexibility to approach uh individuals that have potentially more
▶ 0:53:00challenges uh to actually getting back to work Missouri was one of the few states that actually kept our Reemployment um and Eligibility Assessment program recea or Ria going during the pandemic and by having this expansion of flexibility to uh allow for states to better address what their uh local Workforce needs are and um basically providing targeted uh professional Workforce Development Services to individuals originally it was for for folks who are most likely to exhaust their benefits
▶ 0:53:31but now uh again it allows states to really be able to better fit what their local state needs are um this program in particular has the uh built-in component that when we require somebody to report for these uh required Workforce Services if they um are uh utilizing unemployment benefits their benefits are not um 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
▶ 0:54:01to stress the uh Reemployment 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's really about making sure that um workers have uh the services and support needed to get back to sustainable employment thank you for that Miss Hugh uh Mr Vicki in your testimony you described how you were recruited by governor dwine in Ohio to help write the ship recovering over 400 million in fraudulent benefits held by Banks and automated payment networks
▶ 0:54:32I'm particularly interested uh in that success story because according to a report issued by the Illinois auditor general 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 un uh UI program and recoup the funds and then maybe before you answer that we we've heard the expression pay Chase can you explain for the members of the committee what that means and what that
▶ 0:55:05of I might defer that to um well maybe answer my question on how you did Ohio and then I'll have Mr Talco answer the absolutely thank you for the question I think it's really important to understand how much manual effort and um Personnel effort went into actually discovering These funds I mean at the very early phases of our our opportunities recover funds we partnered with very well with the leadership of Ohio Jobs and Family Services and literally ask a simple question is there still money out in the networks to be able to do this
▶ 0:55:35I think it's really important fundamentally to understand that in the UI claims environment for approval and adjudication there's a lot of work done to identify an individual um in the banking industry when payments flow through especially since 91 um post that period there's regulation that's is also um 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 it identity and
▶ 0:56:05the banking system can look at activity within a bank within a specific bank account at a very simplistic level it's looking at multiple unemployment claims from multiple States going into the same out accounts unusual spending happening within those financial service institution accounts large overseas transactions that actually are are pulling money out of a consolidation to pull them overseas that's a that effort has resulted in um the US banking industry setting up multiple um
▶ 0:56:36um Advanced analytics programs case workers and processes to actually prevent that from happening the difficult work we had in that is that we we were 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's the bank of the claimant who is actually getting the information and the in our case that required us to go
▶ 0:57:07beyond the individual um head of ACH or operations leaders and get to the newly established or recently established groups within the banks that actually allowed those those fraud measures to be kept in place we were able to find the money we were able to confirm it we actually coordinated activi to compare data between fraudulent potential fraudulent claims at the state with fraudulent account activity identify what was was remaining what ended up happening in that case
▶ 0:57:37is that we actually then had to have legal agreements um sometimes referred as um hold harmless agreements limitations of liability that actually had to be executed post this whole process happening many banks cooperated um I would give credit to odjfs because director damer made it a clear IA they 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 thank you for that um maybe quickly Mr
▶ 0:58:07Telco uh you've used the expression pay and Chase uh tell uh members of our audience and the committee members what that means I believe it's 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 um sometimes what they do is they rather just pay it really quickly and then try to get the money back later and as you noted
▶ 0:58:37in your opening statement only 5 billion of the 250 billion uh has been returned the second point I want to make on that I would encourage each of 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 form forms and it really does create a whole set of backlogs for those that are administering the programs those those forms are complicated thank you for that um we now I'll now recognize the ranking member Mr Davis
▶ 0:59:07for his questions thank you Mr chairman and uh thanks to all of Witnesses Mr mberg let me ask you given that Elon Musk and hackers with no security training our policy expertise now have unlimited access to financial and Health Data for workers and businesses I wanted to talk a little bit about
▶ 0:59:38how we're supposed to data as a Frontline you our worker you collect confidential identity and banking information what kind of training do you have to keep that that data safe and private so during initial UI worker training um there's a heavy emphasis on how to properly conduct
▶ 1:00:08identity information verification um throughout the entire process six to eight weeks you're constantly having to do that process um there's role playing scenarios that covers a lot of topics uh and during all of those you do have to conduct the correct identification verification um there's several reasons why a UI claimant's identity would be flagged for further review um if I clearly spot
▶ 1:00:39fake information or do uh Mis documented information I have to send that up for review um if a claimant's personal information does not match what's on the state's driver's license system that one's also flagged for review by the fraud team um we work together to Safeguard the UI benefits from fraud and we also ensure that we're using our training and experience to help claimants who have challenges accessing benefits because they're not tech-savvy um this is why the role of a UI Ambassador
▶ 1:01:09who can see through those challenges to help a work worker in need is so critical why is this information safer when we limit access to public employees like yourself it's safer because we have no ulterior motive we are there to help the people of Washington state in my ex in my case um we don't have to worry about those
▶ 1:01:39expectations of a quota system or anything like that we meet the people where they're at and we help them where they're at let me just reemphasize that my Democratic colleagues and I are strongly committed to good service service by workers like yourself and especially people who have no need to access their earned unemployment
▶ 1:02:10benefits we're committed to preventing fraud and safeguarding the UI trust fund so I'm grateful to you and your colleagues and especially to ask me counsel 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
▶ 1:02:40for doing it alterior motives I don't believe so uh I believe we can accomplish both goals at the same time in fact this is built into our process um before we talk to UI claiming about their benefits we verify their identity every single time we talk with an individual no exceptions um after identification we can then provide excellent customer service whether that be filing an initial claim or reviewing an active claim let me again just thank
▶ 1:03:11you 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 uh thank you Mr chairman and I you back thank you Mr Davis will now U recognize uh one of our new members Rudy yakam of Indiana thank you Mr chairman and thank you to our Witnesses for being here today unemployment
▶ 1:03:41insurance improper payments and fraud ran rampant during the covid-19 pandemic the government accountability officer GAO estimates that pandemic unemployment fraud total billion that's about about 15% of total UI benefits paid during the pandemic but the Department of Labor's Inspector General says that number is at least billion even worse outside experts estimate that the total
▶ 1:04:12could 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 at nearly 37% during the first 6 months of the pandemic no business could survive allowing for over onethird of payments that are made to be fraudulent we should expect more
▶ 1:04:42of 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's 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 hooers in my district don't want their taxpayer dollars going to subsidize California or any other state with such lack payment controls unless the state implements reforms upgrades
▶ 1:05:12systems and demonstrates a commitment to chasing down fraudsters despite these ipping fraud numbers we've only recovered about5 billion dollar of it or less than 4% 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 ring rings and hold the accountable one of our most important responsibilities
▶ 1:05:42as 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 IR responsible Mr chairman I ask that this email from the doj pertaining to uncharged UI fund uh matters be entered into the record without
▶ 1:06:13objection thank you Mr talve as of January 28th 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 157,000 open UI fraud complaints assigned to its hotline office are you surprised about the sheer number of unemployment insurance fraud
▶ 1:06:44cases uh our federal law enforcement agencies are investigating thank you so much for the question I 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 um unfortunately because they paid some of the highest benefits in the country and their then commissioner Julie Sue had some of the least
▶ 1:07:14amount of safeguards in place I'm actually surprised that there are that many open cases because I truly believe a lot of the fraud took place in IND 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 St stolen pii that went into these eligibility determination systems that knew how to manipulate them better
▶ 1:07:44than constituents and to this day um you and we were talking about it before you had individuals that got a notice from the state of California the state of Ohio saying I got you know you got your benefits and those people threw those notes away because they never got benefits so I'm not surprised by that but I also want to note that it's not just unemployment insurance it's the snap program it's the um uh uh other programs
▶ 1:08:15including um rental assistance anywhere where the government is providing a check these criminal groups are now working at scale thank you and briefly Mr telkov do you believe that there's 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 yes I think there is thank you and Mr chairman I yield back thank you Mr yakum recognize Miss Chu California well first let me say that
▶ 1:08:45I can't believe that rep 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 nonpartisan Senate confirmed
▶ 1:09:16professional his leadership investigating UI fraud had already resulted in over 2,000 individuals charged more than 1,400 convictions and $1.1 billion dollar 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
▶ 1:09:46that despite the office's successes insufficient funding from Congress was limiting their investigative capacity and causing lost opportunities to hold 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
▶ 1:10:17to push back against President Trump's illegal firing of our nation's top UI fraud investigator and get Mr Turner and other independent nonpartisan 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
▶ 1:10:48employees and yet the Trump administration's undermining of the federal Workforce goes far beyond on inspector generals it's part of a systematic attempt to politicize the Civil Service and make Services worse for everyday Americans who rely on safety net programs like unemployment insurance those attacks on our civil service include mass emails to almost all federal employees asking them to resign and
▶ 1:11:19then 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
▶ 1:11:49civil servants for 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 combating waste and fraud in all
▶ 1:12:19of the Department of Labor's programs including UI the Trump administration's actions put us at risk of losing this expertise and it's jeopardizing our ability to continue successfully going after this fraud I'm 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
▶ 1:12:50and that in some cases actually caused waste and fraud in the by giving employers incorrect information resulting in overpayments or by exposing workers sensitive information to fraud Rings now Mr meberg you testified about the risks of Outsourcing during the pandemic can you expand on that and why investing in an experienced and robust government Workforce leads to better outcomes than Outsourcing to contractors yes I believe it comes down to two different
▶ 1:13:20things it's it's 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're uh utilized in a proper way and could you have more waste and fraud uh happening with the contractors potentially I would say potentially yes thank you I Y back thank you uh pursuant
▶ 1:13:50to committee practice we'll now move to two to one questioning I'll recognize a new member of the subcommittee and Ways and Means Max Miller of Ohio thank you chairman chairman Le hood and ranking member Davis and excuse my voice uh thank you for the opportunity to hold this important hearing we must make every effort to equip and Empower Americans to re-enter the workforce and unlock the full potential of our nation's economy to achieve that it's imperative that we Safeguard the Integrity of our employment safety net since coming to Congress I've
▶ 1:14:20been 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 as you have heard from a lot of our colleagues on the side of the aisle to learn the unprecedented fraud that occurred during the pandemic which the GAO has estimated which we've heard a lot today anywhere between 100 billion to 135 billion and possibly more just in Northeast Ohio alone where
▶ 1:14:50I'm from the United States Attorney for the Northern District of the state sent 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 relief 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
▶ 1:15:21individuals have been prosecuted with 47 billion 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 to stop unemployment insurance fraud before it starts and get resources to eligible workers in
▶ 1:15:51a timely and accurate fashion and I believe that's what everyone would like regardless of political affiliation Mr ficki as you testified the state of Ohio is 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 roundt members expertise that you had mentioned earlier with a goal to stop fraudulent claims reduce the backlog and re-engineer the customer experience
▶ 1:16:22I understand the Project's results exceeded expect expectations how can such public and private Partnerships be effective in reducing fraud safeguarding valuable public resources and allowing funds to be targeted to those who are truly in need thank you for the question um you know in Ohio's case I think that that some of the key factors involved is collaboration across agencies across the state and federal resources especially when it comes to um as an
▶ 1:16:52example the prosecution of those cases if you look at the at the amount of work that oio Department of Jobs and Family Services did they focused a lot on Advanced analytics taking advantage of of uh of Big Data technology programs to really segment off the 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
▶ 1:17:22that the the the claims that were sub aded that were actually had significant amount of fraud indicators on them were all processed and they were all um ultimately looked at and and and freed in the 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 um to the uh the law enforcement sides to actually enable the actual um prosecution with good data and with things that are going with it
▶ 1:17:52I think it's very important and it's a core part of my testimony is the collaboration between the financial services industry and the and the um and the unemployment agencies there is lots of of uh of really important analytics work that's been done in in both of those worlds that actually required the and and can provide a collaborative effort to go between those um the work that nasle has done around the Integrity Center I think is very important and um lieutenant
▶ 1:18:23governor husted's focus on it 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 um um unemployment Assistance programs that went with it so collaboration Advanced analytics and um really working with um some of the key private sector organizations to enable that I think is critical thank you thank you Mr fi and I just want to thank you again for all the work you do
▶ 1:18:53uh in my home state in our home state it it is very much needed and just thank you again from an Ohio one to another ohioan Mr chairman I yeld back thank you Mr Miller now recognize Mr Beam of Northern Florida welcome thank you very much uh Mr chairman good afternoon to you and good afternoon work and Welfare committee family uh I'm one of the new guys it's an honor to be here I was sent to Congress uh I believe one of the reasons that Northeast Florida sent me to Congress was uh I want to go after spending I think we have an out of- contr control
▶ 1:19:23government that just spends far more money than it has and so I'm a man on a mission a man on a mission to fight fraud abuse waste and to get spending under control so uh Mr chairman I want to thank you for uh your draft selection and allowing me to serve uh ranking member Davis it's an honor to be with you as uh as well uh my first question well first of all Mr Talco I I appreciate you uh you've actually mentioned anywhere government's giving away
▶ 1:19:53checks you will find fraud and indeed we did that I come from the small business committee where where we did the pppp program and the idle Loan program and uh we have uh reports that 23% over one in5 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
▶ 1:20:24our money we actually had uh an administrator come before us uh with the Biden Administration and says you know it may be too much maybe we just need to let it all go I say no the American people says no and so uh 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 uh we heard from frauders that use Barbie dolls to take a picture we had a program uh uh a fintech that administered
▶ 1:20:54the program that would take a picture of you uh just to make sure you're an individual person and the program frauders could take a Barbie doll and stick it in front of a webcam and uh the program said approved you're approved for a loan so we and we called it swindler Barbie a new Barbie's in town swindler Barbie Ken got in on it too by the way uh of people stealing money so the first question goes to you chairman where are we on uh the statue of limit
▶ 1:21:25how can we uh make sure that we don't let it go that we want our money back and we're going after fraudsters where does that stand who's running it who's in the lead what's going on um well thanks for the question Congressman beam so as was alluded to by the witnesses and and a number of us today we're coming up on the March 26 date where the statute of limitations will expire so we have legislation that's 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 uh element of this
▶ 1:21:55and make sure that we get that money recouped for taxpayers amen amen we're on schedule we're on flight it's a it's a very tricky thing so U you and Mr Davis last year did a program uh that's called the Reemployment Services and Eligibility Assessment the uh Rea which really was to help prevent fraud and designate support to those who need it does anybody know about that uh Mr toov are you aware of that is did that program work did it work with the intent of delivering help to people
▶ 1:22:26that needed it but not the fraudsters good program unfortunately I'm not aware of that program Miss yui yeah so that program really allows for uh local Workforce boards and other professionals who are working um with individuals who are currently getting unemployment benefits to really did it prevent fraud or help fraud did it help or I think it does help with fraud because you actually have to show up in person or virtually to actually do an appointment about uh Workforce Development so there is that verification and engagement
▶ 1:22:56and we feel that those more personalized service will result in better uh Workforce outcomes more sustained employment for those individuals so there is that individual touch to that so if someone is getting that benefit they're also then required to either report in person or do the virtual visit and um it's it's given some benefits Mr Talco I know we got time it's everything's in a hurry here we got a got a boogie uh 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've got enough enough with the stealing
▶ 1:23:26of our money enough with the fraud waste and abuse uh I think American taxpayers are celebrating some of the early winds uh that we've discovered Fraud and Abuse where should we start where should this committee start to say enough with the waste Fraud and Abuse it's three things it's front-end identity verification it's no more self-reported information and it's managing the backend of beneficiaries three small hurdles it doesn't sound like it's that hard is it shouldn't be that is it my private sector does it every day their fraud
▶ 1:23:56rate is 3% the public sector is 20% thank you thank you very much Witnesses thank you so much Mr chairman I yield back thank you uh now recognize Miss Moore of Wisconsin thank you so much Mr chairman and I want to thank our ranking member and all of our Witnesses for being here today uh 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
▶ 1:24:27uh and I appreciate your appearance here today um I uh I want to welcome particularly Mr T uh tall to the Ways and Means Committee are you a member is he a member of the Ways and Means Committee now a witness um I'm talking about my new colleague here Mr Bean Mr Bean hey there hi hi welcome to the Ways and Means Committee well your enthusiasm of course is very welcome and I'm learning now about the
▶ 1:24:57Doge caucus um and your efforts to reduce waste Feud uh uh uh uh uh and and um abuse and fraud um so um I I guess what I'm concerned about Mr tlov is if we are indeed going to combat fraud and waste um how does firing
▶ 1:25:28the U Inspector General of the Department of Labor contributing to this I mean when we're this is a person who successfully prosecuted 1,400 cases and of course everybody on the committee would like to see uh fraud reduced so how can we expect to do that without An Inspector General on board yeah if you go back to and uh hopefully you read my opening statement I think the biggest challenge we have is we don't want to
▶ 1:25:58pay and Chase what we want to do is we want to prevent this at the front end okay want to you okay thank you for that I don't have a lot of time so uh your notion is that this Doge caucus of Mr musk the billionaire going in is an effective strategy for start you for the we don't know exactly what he's doing and I checked with the speaker of house he also has no idea what they're doing so what
▶ 1:26:28information do you have to provide with the subcommittee to demonstrate that this is indeed a better strategy than having an inspector General on the back end what what what are they doing that is making them more effective I I have nothing to do with the Doge I I don't know what they're doing so you don't know what they're doing okay uh but somehow you feel like uh that the the Inspector General is not a good strategy okay Mr Talco um you also
▶ 1:26:58recommended eliminating broad paste categorical eligibility you know just like a i an infant born in one pound 2 ounces for example is categorically eligible for Medicaid because they're disabled uh their mother might also be eligible for Wick or for SNAP wh why do you think disconnecting and making it inconvenient for them would be helpful particularly since uh our
▶ 1:27:28having disconnected these benefits uh has cost 2.3 billion dollar in administrative expenses over five years so during the pandemic I saw over a trillion dollars of taxpayer money gets stolen and unfortunately by not having by having broad blaz broad-based eligibility determination in place the criminals were stealing at scale and they were impacting legitimate individuals that live in Wisconsin
▶ 1:27:59that live in Illinois it created a huge opportunity for them to exploit the system so you just punish the eligible people like the 99% who are eligible having them run all over the place you got your one pound 2 O baby and you got to go to Five offices to get your benefit so that you can okay I get it um Mr mayberg uh we given we we're talking about accountability a lot can you explain to me how
▶ 1:28:29an unelected unaccountable billionaire who's 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 uh what how is this appropriate I honestly have no idea I'm not even allowed to stick a thumb drive into my own computer to copy any data over so I don't know why
▶ 1:28:59they would have access to that Mr chairman my time is winding down but I do appreciate your uh hearing from me um Mr ranking member I thank you for your leadership as well and I thank the witnesses and I yield back thank you Miss Moore now recognize Nathaniel Moran a new member of the Ways and Means Committee new member of the subcommittee from East Texas you're welcome thank you Mr chairman look forward to being part of the uh subcommittee and the full Ways and Means Committee this next
▶ 1:29:30session I've got a number of questions based on the testimony that's given here been given here today I wanted to and I prepared to talk about foreign adversaries and their role in uh in the um in the unemployment insurance fraud issue but but let me start with this Mr Talco I think you said this earlier your quote was it's the same groups running the same Playbook stealing it scale and you even gave some examples of after certain disasters and you said we need to use data and analytics to effectively
▶ 1:30:00uh prevent some of this I want you to go back though because your three recommendations were apply ID verification at the front end and self-certification and continuously authenticate beneficiaries and I love that because it really is front-end oriented uh but be more specific when you talk about applying ID verification I mean how how owners would this be or what kind of verification are we talking about to be able to make sure that before the the money goes out because I agree with you and I'll come back around to this in a second once it goes
▶ 1:30:30out 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 simple ID verification on the front end it happens every single day every single one of you goes through that identity verification process when you go um 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's happening right think about it
▶ 1:31:00um you're at the gas station you put your credit card in and all of a sudden you get a text in your phone and it says Congressman are you really in Washington DC 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 800 uh uh 63-2 I think it was created in 2017 it's complicated it's hard nobody in the private sector uses
▶ 1:31:31it so the technology is out there every single day and we all use it it's just different in government yeah and you're making the exact point that I was hoping would be brought out here is that it's easy it is not that difficult in fact today I got one of those texts from my bank asking me if a particular charge it's an $85 charge was in fact me using that charge all I had to do is respond yes and we're good to go so I think there is an easy easier way a more effective way for us to stop the fraud on the
▶ 1:32:01front end and certainly it's going to benefit us on the back end because we've got a number of those cases that are out there that we need to prosecute but I'm a little bit concerned I'll just tell you about the return on investment the cost benefit analysis of doing that what are the size of the claims and I'll give this to all all three of the witnesses Miss Hugh Mr ficki and and Mr talve what what's the average size of the claim that we're dealing with when once we extend this uh statute limitations if we're able to do that and what's the cost for actually moving forward to prosecute
▶ 1:32:31those claims all right so what I would say is I wouldn't look at the average size of the claims I would look at the criminal groups um some of the groups uh the China group ap41 scattered Canary you're talking literally hundreds of millions of dollars but you need sophisticated law enforcement at the federal level uh agencies like the Secret Service who have been um outstanding in this area so it is worth it but you have to get to these large fraud Rings
▶ 1:33:01primarily located overseas yeah I've 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's the same groups moving about but using the same uh Technologies and the same methodology Miss Hugh you were talking about the stealing of personal identification information on the front end which gives them the gateway to to to steal and to create fraud how are they doing that what how are they obtaining the personal identification
▶ 1:33:31information of American citizens they just buy it off the dark web I mean with all these different data breaches that had happened it's 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's something not quite right right and the partners ship both between government agencies and private sector um whether it's a vendor like uh Mr teles or Association
▶ 1:34:01like Mr ficky it's really important that all the Partnerships across the board work together and 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's not a oneandone situation like this if you don't accept that update on your operating system it's a paper weight an expensive paper weight right so we have to adopt that mentality when when it comes to protecting taxpayer dollars that are invested whether it's a UI trust fund or any other beneficiary fund we want to make sure the eligible people
▶ 1:34:31are getting the benefits yeah I agree Mr chairman I see my time is over I didn't even get to my foreign adversary questions I'm part of the China select committee I'll tell you it's really concerning to me that China is at the Forefront of this of stealing our personal information and then being part of uh obtaining these dollars from American taxpayers using it against us as a national security issue in my opinion Mr chairman I yield back thank you Mr Moran recognize Mr Evans of Pennsylvania thank you Mr chairman and
▶ 1:35:01ranking member Davis today I want to discuss improving our unemployment insurance for the betterment unemployment insurance is critical benefit for American workers during the pandemic unemployment insurance was a Lifeline for Pennsylvan and 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
▶ 1:35:32I specifically want to discuss the important work that Merit based staff do in the UI system the best way that we can fight and prevent unemployment insurance fraud is through hiring well-trained merit-based staff we know that certain States during the pandemic hired untrained cont contractors and staff roles which only led directly to do more fraud and errors in the system is interesting
▶ 1:36:02that the must Administration is trying to do the same thing right now inside certain federal agencies replacing employees with their own uncontable outside contractors right now the last thing we need is someone unqualified scooping our constituents private data including system Mr Mayor I'd like to ask you a question
▶ 1:36:33in your testimony you highlighted the importance of merit-based Staffing in the UI system as opposed to states do Outsourcing workers to untrained contractors yes uh I believe that Merit staff UI workers are key and ideal for helping prevent fraud because because there is no like third- party system it is to you know state workers performing the work of the state and making sure that it
▶ 1:37:03stays within the state it's not a third party by any means can you speak more about experience under Merit based systems and the advance it has in preventing fraud yes uh when you say are a trainer uh 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
▶ 1:37:34timelier fashion um this allows you to conduct the training at a faster level but still maintain that high level of of training that's required in order to do the position can you please explain the level of job training that state worker agencies employees go through to provide the highly qualified service in the UI system and how this training differs from non-md Staffing
▶ 1:38:05training I will say during the pandemic I received a minimal amount of uh training um it was enough to allow me to process claims uh now with with regular Merit based staff uh they receive at a minimum of six eight weeks of training so that way they're sufficient when they hit the floor and talk with claimants on phones I want to one thank the chairman and thank the ranking member for the condu
▶ 1:38:35lead us here thank you appreciate it um Mr Evans now turn to miss vany uh who's a new member of our subcommittee welcome Miss vany and you're recognized thank you very much Mr chairman it's egregious and actually disheartening that in the wake of a global pandemic that disrupted the lives of 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 would seek to take advantage of good faith
▶ 1:39:05efforts to help those negatively impacted by a once in a liftime tragedy the GAO estimates that pandemic unemployment fraud may be as much as $135 billion do with some estimates even higher and I think it's 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 and administration of the UI program as a whole Mr telkov government officials state employees and contractors
▶ 1:39:35routinely participate in Insider UI fraud in 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 is embezzling money directly from the state's Unemployment uh trust fund can you please speak about your experiencing your experience regarding Insider UI fraud and is it being
▶ 1:40:06taken seriously by government officials yeah I would say of the $250 billion that was stolen from unemployment insurance I would say approximately 10% or $25 billion was insiders wow and what the Insiders were was they were in some cases selling their access to some of these same criminal groups that you mentioned from China Russia Nigeria in Romania they were selling their access to gangs or
▶ 1:40:36which 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 and the other point that I would make is unfortunately it's still happening today and it's just not in the unemployment insurance program it's in the snap program it's in virtually all the programs across the country
▶ 1:41:07now uh last Point 99.9% of those workers they're really good people they show up every day and they do the right thing it's a very small percent but they give everybody a bad name and I appreciate that I'm also with Aaron being on the small business committee and I've been this is my fifth year on that committee we've talked to small businesses who during this time have seen um you know benefits that they should have received not because that was given out to fraudsters and and in criminals and the complete lack during the last administration of holding these people accountable or providing
▶ 1:41:37oversight um Miss in your written testimony you quote a national study published in August of 2020 by the University of Chicago entitled us unemployment insurance replacement rids during the pandemic he stated that the median percentage of salary placed by unemployment during the pandemic was 145% it was more more than 200% for workers in the bottom 20% of the US income spectrum and more than 300% for workers in the bottom 10% this Compares with the typical pre- carees act salary replacement rate of only 40 to 50% of lost income in plain English
▶ 1:42:08uh we are paying people 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 US Chamber of Commerce Workforce population remains below pre-pandemic uh levels and we are Miss in 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 may
▶ 1:42:38must never happen again during any type of economic downturn in the future certainly you know the American people are so generous in making sure that um their fellow Americans get um support during these times of emergencies right and so I think one of the things that um we saw that was a major um motivation for this type of fraud was the uh 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
▶ 1:43:08a week um and again that's based on what your income was and what your credits are into the uh 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 uh multip multiplier on it right and so it then um and and at during uh the 2008 uh 2009 crisis that plus up actually was $25 so you would have your weekly benefit at the state level and then a $25 plus
▶ 1:43:39up but in 2020 we raised it to $600 and it 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 prate it so um so that was one thing but the choice of $600 absolutely was like the spark that really generated the attention of frauders to get in you just had to have some successful hits to it in each state you could have multiple states that you file in just a few
▶ 1:44:09weeks and you can get you know quite a few thousands of dollars so my time has expired I appreciate your answer I need to yield back but thank you all very much for your testimony thank you Mr vany now recognize Mr Gomez of California let me be clear Democrats and Republicans both say that there's no place for fraud you know be
▶ 1:44:39Democrats um it's because it it undermines people's faith that government is actually doing the job that they're supposed to do and I think that's a big deal and also I appreciate the gentleman from Florida mentioning that there was fla fraud in a republican Run State and it's not just the Democratic states that have the problem um and also um one of the biggest ways that fraud happens is through weak security measures that leave people's personal information vulnerable Mr uh
▶ 1:45:10murg what kind of um training do state worker agency employees receive to ensure that protect uh to ensure they are protecting personal information yes it's at least six to eight weeks worth of training with a heavy emphasis on protecting identity information and all personally identifiable information soal security numbers uh birthdays yes um accounts anything that can say this person is associated with this or this information is associated with that absolutely
▶ 1:45:41and that's you know I want a bureaucrat to be uh just a pain in the ass I want them to like oh you don't have the proper information you know rejected 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 and I um but something that's going on now at the federal level is when it comes to secretary bessent and president Trump I don't think secretary president or president Trump made sure
▶ 1:46:11Elon Musk got that kind of training or any training that for that matter before all of our personal data was turned over to him how can um I want my friends on the other side of the aisle to see this as a big big issue because if there's 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
▶ 1:46:41through the roof and when child care costs are out of control what are Donald Trump and secretary bessin doing they give Elon Musk an unelected un confirmed untrained special quote unquote special government employee and the rest of his Tech Bros access to the to every American sensitive and personal financial information they have access to our bank accounts to your bank
▶ 1:47:11accounts if you file taxes you uh electronically you paid your taxes youve receive payments they have access to all your accounts you know we need to do uh 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 that lead to identity theft on an unprecedented scale
▶ 1:47:42I had my identity stolen so I know what how painful it is to have to prove who you are and to get your money back and to make sure that you're not going into debt improper disclosure of taxpayer information is considered a felony under 6103 punishable up to 5 years in prison as well as $5,000 fine and that's just for one instance of improper tax disclosure what's the punishment for every single American
▶ 1:48:13that's the the scale of this potential fraud and breach of information as secretary bessent 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 that of of what occurred in the last several days but this is a serious unprecedented situation secretary bessent needs to come before this committee
▶ 1:48:43and answer uh questions and violating the people's trust but also when it comes to their personal information we can't stand for it fraud is fraud no M no matter who does it is it a a Public Employee is it a criminal Enterprise or even if it's the Secretary of the Treasury himself we need to stop it and we need the answers now with that I yield back thank you Mr Gomez now recognize the gentleman from Northwest Iowa Mr finstra thank you chairman and I want to thank the witnesses for being
▶ 1:49:13here uh I enjoyed reading your testimony and also listening to it I just want to remind everybody that all bureaucrats are non- elected that's this just common sense um we're here to create Solutions we're we're we're here to understand the problems and then create Solutions and Mr Fick that's what I want to talk about I was impressed uh by reading your testimony I I know you're not a law enforcement officer but you have 30 years of experience in the financial services industry and generally
▶ 1:49:44unemployment insurance is prosecuted using Federal banking laws including male 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 well first of all thanks for your thank you for the question um you know that I in my previous testimony I've actually um stated
▶ 1:50:14a few times that I think it's very important to look at collaboration of data and information between um between what's available in the private sector and what's available and um in the in the the benefits applications and submissions and those types of those types of things are going with it I think the prosecution of those of those criminals is extremely important and we've talked about the number of cases I think it's really important to focus on the the magnitude of individual cases and looking at the impact that those can have on
▶ 1:50:44um on the overall collection and and recovery of those funds yeah do you think we should figure out better ways though instead of using you know the financial service industry is there a better way to prosecute these crimes under something different than banking regulatory issue regulations well I think in in my experience especially with the attorney general's offices and the collaboration that happened in Ohio a lot of it was was driven and supported by the amount of information sharing that happened between
▶ 1:51:14and and as Mr Talco pointed out a few times that this is not limited unemployment insurance this goes across um goes across snap and multiple other programs I think it's it's important when we looked at the guidelines from a private supporter of of our state y when we looked at the guidelines what we were able to do it was our it was our role as the agency's role to actually identify y that a case had to be prosecuted but then to turn that over to the appropriate appropriate organizations
▶ 1:51:45so you're you in the state of Ohio I was in the state of Iowa I was a state senator head of chair of ways and means at that point and really the states are the ones that handle all the unemployment insurance issues and and here's a situation obviously through Co that 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 uh with fraud issues and then I think I'm moving forward and saying all right what happens if we have a situation like this again how can we be
▶ 1:52:15proactive and trying to find solutions to mitigate some of these issues well thank you for the question I think my first thing comes to mind for me is sustainability um there's been good there have been very strong measures put in place during the crisis um the support to actually encourage and enable the states to actually keep those in place I think are going to be a a really important part in the in the in the overall success the other one is is um and I've said this a few times is collaboration not only from a data
▶ 1:52:45perspective but best practices that have taken place in in multiple private sector organ and using I mean 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's best what are the best practices yeah a very good example of that is the uh is the reality that one false accountant a financial institution could use across multiple States yep and and today an individual state has a harder time recognizing some of those Mr toov can
▶ 1:53:15you talk about that a little bit uh making sure that moving forward our state systems are prepared uh for these unemployment spikes and and you know how and these stealing of billions of dollars and what the states can do collaboratively with the federal government yeah so I mean I want to make the first point I was out in California this week uh La yep and the same criminal groups that stole from the unemployment insur the same with fire are now stealing from the disaster that should be a clue to us right
▶ 1:53:45we we we haven't fixed it yes right and it really starts with those three things that I talked about right it's the front an identity verification yep it's no self-reporting and it's managing that backend population and it's frustrating because there's people in California who need those benefits that are going to wake up one day and they're going to see that someone put a loan against their house because they got an SBA loan for a half a million dollars great point my my time is up but thank you
▶ 1:54:16um we're in this together uh as States and federal government we are together in this and try to figure out Solutions thank you chairman I you bet back thank you Mr fer I recognize Mr Horford of Nevada thank you chairman L hood and to ranking member Davis uh for holding this hearing and for the courtesy of allowing members to wave on um I I'd also like to uh just talk about the importance as we are about rooting out waste Fraud and Abuse and
▶ 1:54:46protecting American uh taxpayers but also we we really need to provide some answers to our constituents based on the immediate issue that they're facing uh they're the largest illegal data breach is happening right now in US history at this administration's Direction and we still don't know who's in charge or what they're up to where this information is being used or how wide
▶ 1:55:16spread it is so I really wish that this was the focus of today's um hearing since this is what the majority of my constituents are calling me about uh today I'd also like to talk about what we're doing to prevent Elon Musk and the hackers uh who are involved with potentially slowing down people's tax refunds their Federal payments and their hard-earned benefits that is what
▶ 1:55:46uh 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 um and I agree with chairman Smith um when he stated that Congress must not tolerate the theft and leak of information so why aren't we doing something about it since we have the largest illegal
▶ 1:56:17data breach in US history taking place right now under this administration's watch now turning back to the issue of this hearing um I actually introduced back in August of 2022 the guard act the guaranteeing unemployment assistance and red reducing deception act my bill enables aggressive action to recover pandemic unemployment benefits that were paid to criminal cartels by supporting
▶ 1:56:48prosecution 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's why I'm concerned with this illegal data breach that's happening right now but between 2020 and 2023 we saw a 63% increase in the Metro Las Vegas
▶ 1:57:18area 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 dep Department of Labor Inspector General to extend the statute of limitations for pandemic unemployment insurance fraud unfortunately last week president Trump fired that AG the one who made the recommendation that we're all discussing in this hearing
▶ 1:57:48the one who makes this hearing 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're doing about these issues Mr chairman so I suggest that as a committee we focus on those priorities and to make
▶ 1:58:18sure that they're being addressed um if I could go to the witness the minority witness to understand wood providing um measures like the guaranteeing unemployment assistance and reducing deception act the guard Act help address uh protecting the victims of fraud from identity theft I don't know all of the details that go in with the guard act but uh I do think that
▶ 1:58:49there is there there's there's always more we can do to protect not only ourselves our loved ones our our our neighbors our families all of that uh so I do believe there's more that we can do absolutely do you agree that having an inspector General who oversees uh protecting taxpayers is an important function absolutely and that person being fired is preventing
▶ 1:59:19that protection being place at this time absolutely so Mr chairman why aren't we addressing that today I yield back thank you Mr Horford um for your questions uh that concludes our questions uh from committee members here today uh let me just again uh acknowledge um your statements today your testimony today answering our questions we appreciate your expertise your experiences your suggestions
▶ 1:59:50very very helpful here today uh and to lay the context for what we need to do between now and March 27th which is to extend the statue of limitations on this for taxpayers uh and for uh this particular program and so I look forward to working collaboratively look forward to working in a bipartisan way uh with my colleagues to get that done on behalf of the taxpayers of the United States so um with that I'll advise members that they have two weeks to submit written questions uh to be answered later in
▶ 2:00:20writing those questions and your answers will be made part of the formal record with that the committee stands adjourned thank you