Congressional Testimony — Reclaiming Forgotten Fraudulent Pandemic UI Funds Frozen by Banks (2026-03-05)

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Testimony before the U.S. House of Representatives 
Committee on Ways and Means,  
Subcommittee on Work and Welfare 
Hearing Title: 
"Reclaiming 'Forgotten' Fraudulent Pandemic Unemployment Funds 
Frozen by Banks" 
Testimony of Anthony P. D’Esposito 
Inspector General 
Office of Inspector General 
U.S. Department of Labor  
March 5, 2026
U.S. Department of Labor 
Office of Inspector General 
Congressional Testimony 

U.S. Department of Labor – Office of Inspector General 
Congressional Testimony 
1 
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Good morning, Chairman LaHood, Ranking Member Davis, and distinguished Members 
of the Committee. Thank you for the opportunity to testify on the work of the 
U.S. Department of Labor (Department or DOL), Office of Inspector General (OIG) to  
combat waste, fraud, and abuse in the unemployment insurance (UI) program. 
For more than 20 years, including during the pandemic, the OIG has reported on 
systemic weaknesses in the Department’s ability to measure, report, and reduce UI 
program-related improper payments, including fraud. These long-standing issues 
became particularly evident during the pandemic when $888 billion in total federal and 
state UI benefits for the millions of eligible workers impacted by COVID-19.1 In the 
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resulting perfect storm, federal law enforcement saw a historic surge in fraud 
perpetrated against the UI system nationwide as a result of a vulnerable system 
combined with motivated fraudsters, including international criminal organizations. The 
OIG estimated at least $76 billion was lost to fraudsters located both here at home and 
abroad.2 Further, in September 2023, the Government Accountability Office estimated 
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that the total amount of fraud across all UI programs (including the new emergency 
programs) during the COVID-19 pandemic was likely between $100 billion and       
$135 billion of the total UI benefits paid out during the pandemic.3  
In response to this historic fraud, the OIG initiated more than 200,000 investigative 
matters to bring perpetrators to justice. We also: (1) spearheaded the creation of a  
first-ever National Unemployment Insurance Task Force, (2) became integral members 
of the U.S. Department of Justice’s (DOJ) COVID-19 Fraud Enforcement Task Force, 
(3) helped stand up and committed resources to six DOJ Pandemic Fraud Strike Forces
across the nation, (4) participated in national initiatives to stamp out money mules,
(5) participated in a violent offender pilot program to explore the intersection of benefits
fraud and domestic street gangs, and (6) have fostered unprecedented relationships
with domestic and international partners. These efforts and more paid dividends in the
areas of: lead generation and case coordination, intelligence sharing, public alerting,
and national and regional law enforcement messaging. As a result of this work and our
field investigations, the OIG’s pandemic UI-related criminal investigations have resulted
in more than: 2,300 individuals charged; 1,800 convictions; 55,000 months of
incarceration; and $2.2 billion in monetary results.
Additionally, the OIG conducted targeted audits, resulting in reports with 
recommendations to mitigate program vulnerabilities. Our pandemic UI-related audits 
1 “The Greatest Theft of American Tax Dollars: Unchecked Unemployment Fraud,” Hearing, Statement 
for the Record of Larry D. Turner, Inspector General, U.S. Department of Labor, House Committee on 
Ways and Means (February 8, 2023), available at: https://www.oig.dol.gov/public/testimony/02082023.pdf 
2 “Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease,” Hearing, Statement for 
the Record of Larry D. Turner, Inspector General, U.S. Department of Labor, House Committee on 
Oversight and Accountability, Subcommittee on Government Operations and the Federal Workforce 
(March 9, 2023), available at: https://www.oig.dol.gov/public/testimony/03092023.pdf 
3 GAO, Unemployment Insurance: Estimated Amount of Fraud During Pandemic Likely Between 
$100 Billion and $135 Billion, GAO-23-106696 (September 12, 2023), available at 
https://www.gao.gov/products/gao-23-106696 

U.S. Department of Labor – Office of Inspector General 
Congressional Testimony 
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made over 100 UI program recommendations with more than $75 billion in monetary 
results. Among these audits is a 2025 report that revealed that waiver authority was 
misused, resulting in more than $240 million in improperly waived overpayments, 
including fraud that the federal government will never recover. 
Access to Coronavirus Aid, Relief, and Economic Security (CARES) Act UI program 
data and associated financial data from financial institutions has been vital to pandemic 
UI-related oversight.  
Most recently, my office issued two alert memoranda (January 20263F4 and February 
20264F5) to DOL’s Employment and Training Administration (ETA) advising ETA of a 
potential future loss of approximately $912 million in taxpayer dollars the OIG identified 
through data analytics and work with financial institutions. During the COVID-19 
pandemic, certain financial institutions contracted with state workforce agencies (SWA) 
to disburse UI benefits on prepaid debit cards. As reported in the recent alert 
memoranda, a substantial amount of these funds remain unspent, with a significant 
amount of the funds remaining on these debit cards linked to potential fraud. 
In August 2025, the OIG issued subpoenas on several financial institutions that served 
as the largest UI prepaid debit card vendors for SWAs for pandemic-related UI claims. 
We requested the information to identify potentially fraudulently obtained  
pandemic-related funds that either: (a) remaining on prepaid debit cards or (b) had 
already been surrendered to state unclaimed property administrators. Using our data 
analytics capacity, OIG investigators and data scientists analyzed more than 6.5 million 
prepaid debit cards and identified more than $1 billion in affected funds.  
Of that amount, the OIG found potentially fraudulently obtained funds totaling about: 
(1) $720 million still being held on the prepaid debit cards and (2) $192 million that was
surrendered to state unclaimed property administrators. Combined, the OIG identified
approximately $912 million in potentially fraudulently obtained funds at serious,
time-sensitive risk of loss.
The OIG has alerted ETA that, absent swift action, U.S. taxpayers risk losing hundreds 
of millions of dollars. An opportunity exists for ETA to quickly issue guidance to SWAs to 
commence engagement with ETA and relevant financial institutions to assess these 
findings. This will allow SWAs to detect improper payments and recover potentially 
4 “Alert Memorandum: The Employment and Training Administration Needs to Ensure State Workforce  
Agencies Take Action to Recover Significant Unemployment Insurance Holdings Still Held by Financial 
Institution 1’s Prepaid Card Program” (January 30, 2026), available at 
https://www.oig.dol.gov/public/Press%20Releases/PUBLIC%20ALERT%20MEMO_Financial%20Institutio
n%201.pdf  
5 “Alert Memorandum: The Employment and Training Administration Needs to Ensure State Workforce 
Agencies Take Action to Recover Significant Unemployment Insurance Holdings Still Held by Financial 
Institution 2’s Prepaid Card Program” (February 10, 2026), available at 
https://www.oig.dol.gov/public/Press%20Releases/PUBLIC%20ALERT%20MEMO_Financial%20Institutio
n%202.pdf  

U.S. Department of Labor – Office of Inspector General 
 
 
Congressional Testimony 
 
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fraudulently obtained UI funds held by financial institutions or various state unclaimed 
property administrators. In doing so, taxpayers may be able to recover these funds. 
 
While the recovery of these funds would be a significant step in the right direction, there 
is still much to do to combat UI fraud and return fraudulently obtained funds to the U.S. 
Treasury. For the OIG to continue its vital work in this area, we specifically request:  
(1) additional resources and tools, (2) extension of the statute of limitations (SOL), and 
(3) legislative authority in asset forfeiture.  
 
The OIG needs additional resources to continue our oversight work, such as continued 
identification of potentially fraudulently-obtained funds remaining on prepaid debit cards. 
Over the past 5 fiscal years, on average, every dollar invested in the OIG resulted in a 
return on investment of around $164 to the federal government and American 
taxpayers. Additional funding would allow the OIG to deploy more investigative and 
audit resources to address the ongoing fraud and to help DOL address systemic issues 
ahead of the next crisis, such as a disaster requiring significant federal funding.  
The statute of limitations (SOL) for many of the OIG’s pandemic-related UI fraud 
investigations have begun expiring. Unless Congress acts quickly, the opportunity to 
extend the SOL associated with pandemic-related UI fraud will soon be lost entirely. 
Even with the OIG’s tireless efforts, a failure to extend the current SOL associated with 
UI fraud means federal law enforcement will have to stop short of fully investigating and 
prosecuting some of the most egregious cases of pandemic UI fraud. With an extension 
of the SOL, and appropriate resources, the OIG could continue to vigorously pursue 
those who defrauded pandemic UI programs, particularly by means of large-scale 
identity theft schemes. 
Additionally, granting the OIG statutory authority for asset forfeiture would enable 
investigators to recover illicit proceeds from UI fraud and other financial crimes. When 
done effectively, asset forfeiture can deprive bad actors of criminal proceeds, break the 
financial backbone of organized criminal syndicates, and recover property that may be 
used to compensate victims. This critical legal authority may also deter future criminal 
activity. 
Mr. Chairman, the OIG remains committed to serving the American people, DOL, and 
Congress to combat UI fraud through investigations and audits. As Inspector General, I 
will direct our team to continue leveraging strong partnerships across federal, state, and 
local law-enforcement agencies and take a coordinated, enforcement-driven approach 
to safeguarding public funds and ensuring that criminals are held accountable.  
Thank you for the opportunity to testify at today’s hearing. I would also like to take a 
moment to thank the dedicated OIG staff, who selflessly support the agency and our 
vital oversight mission. I would be pleased to answer any questions you or the other 
members of the Committee may have.

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