Joint Report — COVID-19: Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
Summary
A joint report of the U.S. Department of Labor Office of Inspector General and the U.S. Small Business Administration Office of Inspector General, dated December 5, 2024, titled COVID-19: Data Sharing Project Finds Billions Paid to Same Likely Fraudsters Under Both the Unemployment Insurance and Economic Injury Disaster Loan Programs (DOL OIG Report No. 19-25-001-03-315; SBA OIG Report No. 25-06). The OIGs found that data sharing and matching between ETA and SBA could mitigate the risk of fraudulent payments. DOL OIG identified more than $1.3 billion in potentially fraudulent UI and EIDL payments made to the same likely fraudsters, and SBA OIG identified over $2.25 billion in potentially fraudulent EIDLs disbursed. The report makes five recommendations.
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“Joint Report — COVID-19: Data Sharing Project Finds Billions Paid to Same Likely Fraudsters.”
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JOINT
REPORT
U.S. Department of Labor, Office of Inspector General
U.S. Small Business Administration, Office of Inspector General
COVID-19: Data Sharing Project Finds
Billions Paid to Same Likely Fraudsters
Under Both the Unemployment
Insurance and Economic Injury Disaster
Loan Programs
Joint Report to:
U.S. Department of Labor, Employment and Training Administration
U.S. Small Business Administration, Office of Capital Access
December 5, 2024
DOL OIG Report No. 19-25-001-03-315
SBA OIG Report No. 25-06
U.S. Department of Labor
Office of Inspector General
Mission Statement
To serve the American people, DOL, and Congress
by providing independent and objective oversight
of Departmental programs through audits and
investigations and by combatting the influence of
labor racketeering in the workplace.
U.S. Small Business Administration
Office of Inspector General
Mission Statement
To provide independent, objective, and timely
oversight to improve the integrity, accountability,
and performance of SBA and its programs for the
benefit of the American people.
For information on how to report fraud, abuse, or mismanagement, please see
the last page of this document.
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DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Offices of Inspector General respective pandemic-related data to
U.S. Department of Labor perform data matching analyses.
U.S. Small Business Administration
WHAT WE FOUND
We found data sharing and matching
between ETA and SBA could mitigate the risk
of fraudulent UI benefit payments and SBA
disbursements. Both OIGs found data
matching worked as a tool to identify potential
Joint Report fraud. DOL OIG identified more than
$1.3 billion in potentially fraudulent UI and
COVID-19: Data Sharing Project Finds EIDL payments made to the same likely
Billions Paid to Same Likely Fraudsters fraudsters. Matching to a larger dataset, SBA
under Both the Unemployment Insurance OIG identified over $2.25 billion in potentially
and Economic Injury Disaster Loan fraudulent EIDLs disbursed, including nearly
Programs $1.4 billion in EIDL disbursements not
previously identified by SBA OIG or SBA.
OVERVIEW . . .
People may be both employed and operating
a small business, so they may be eligible to
WHY WE CONDUCTED THE JOINT PROJECT
receive assistance from both programs.
The unemployment insurance (UI) and
However, during the pandemic, no data
Economic Injury Disaster Loan (EIDL)
sharing mechanism on potential fraud for UI
programs provide eligible people and
and COVID EIDLs existed between ETA and
businesses with needed relief in the face of
SBA. If data sharing and matching had
crises. However, both programs are at risk of
existed, the agencies could have conducted a
ineligible individuals attempting to obtain
higher level of review by matching applicants
benefits. In 2020, soon after Congress
across both programs to mitigate fraudulent
expanded both programs in response to the
payments. The implications of fraud impacting
adverse economic effects caused by the
more than one agency extends beyond
Coronavirus Disease 2019 (COVID-19)
significant monetary losses, potentially
pandemic, both DOL OIG and SBA OIG
impacting expeditious, efficient deployment
respectively began reporting on heightened
of assistance and decreasing public trust.
risks of fraud and found similar fraud
indicators.
WHAT WE RECOMMENDED
We made five recommendations: four to
Given the similarities in potential fraud
indicators in both programs, DOL and SBA facilitate improved fraud controls via
collaboration and one (for SBA) to reevaluate
OIGs conducted a joint project to answer the
eligibility. Specifically, we recommended DOL
following question:
and SBA collaborate to evaluate their
authorities on data sharing and to develop
Could data sharing between the
Employment and Training Administration further fraud prevention resources. ETA
stated agreement with one of two
(ETA) and SBA mitigate the risk of
fraudulent UI benefit payments and SBA recommendations. DOL OIG will monitor
ETA’s corrective action plans to resolve the
disaster program disbursements?
recommendations. SBA agreed with the
three recommendations, and SBA OIG
To answer this question, the two OIGs
assesses its planned actions will resolve
entered into a data use agreement to share
those recommendations.
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DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Contents
Background ..................................................................................................................... 1
Objective and Methodology ............................................................................................. 3
Results ............................................................................................................................ 3
Data Matching Finds Same Likely Fraudsters Paid Under Both the UI and
EIDL Programs ....................................................................................................... 4
Best Practices for Data Sharing within the Federal Government .......................... 6
Conclusion ...................................................................................................................... 7
Recommendations .......................................................................................................... 7
Analysis of Agency Responses ....................................................................................... 8
DOL OIG Analysis of Agency Response.................................................................... 8
SBA OIG Analysis of Agency Response .................................................................. 12
Tables
Table 1: DOL OIG Data Matching Results ...................................................................... 5
Table 2: SBA OIG Data Matching Results....................................................................... 5
Appendices
Appendix A: Scope and Methodology ..........................................................................A-1
Appendix B: Prior Relevant Coverage ..........................................................................B-1
Appendix C: U.S. Department of Labor Response ...................................................... C-1
Appendix D: U.S. Small Business Administration Response....................................... D-1
Appendix E: Acknowledgments ....................................................................................E-1
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U.S. Department of Labor U.S. Small Business Administration
Office of Inspector General Office of Inspector General
200 Constitution Ave, NW 409 Third St, SW
Washington, DC 20210 Washington, DC 20416
DOL and SBA Inspectors General Joint Report
José Javier Rodriguez
Assistant Secretary
for Employment and Training
U.S. Department of Labor
Isabella Casillas Guzman
Administrator
U.S. Small Business Administration
The Office of Inspector General (OIG) for the U.S. Department of Labor (DOL) and the
OIG for the U.S. Small Business Administration (SBA) are issuing this joint report to
bring to your attention billions of dollars paid because of potential fraud by the same
likely fraudsters under both DOL’s unemployment insurance (UI) program and SBA’s
COVID-19 Economic Injury and Disaster Loan (EIDL) 1 programs. The two OIGs
identified this issue through a data use agreement and subsequent data sharing
and matching project, highlighting an opportunity for the Employment and Training
Administration (ETA) and SBA to collaborate on data matching 2 to mitigate fraud under
both programs.
BACKGROUND
In March 2020, in response to the adverse economic effects caused by the COVID-19
pandemic, Congress expanded eligibility for both the UI and EIDL programs as part of
the Coronavirus Aid, Relief, and Economic Security Act.
Administered jointly by the federal and state governments, the UI program is overseen
by ETA and is the first economic line of defense against the collective impact of
unemployment. It acts as a safety net for individuals who lose their jobs through no
1 The COVID-19 EIDL program includes COVID-19 EIDLs, Emergency EIDL Grants (also referred to as
“advances” by SBA), Targeted EIDL Advances, and Supplemental Targeted Advances. In this joint report,
we refer to these different disbursement types as COVID-19 EIDLs.
2 Data matching is the comparison of different datasets to identify similarities in the records each dataset
contains. Matches can be made using one or more data elements, such as name, address, email,
bank account number, et cetera, for verifying or establishing the eligibility of applicants.
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Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
fault of their own. The UI program requires states to make benefit payments in a timely
manner, providing needed assistance to unemployed workers while ensuring claimants
meet eligibility requirements. The expansion of UI eligibility in response to the pandemic
included the creation of new programs; however, these programs were highly
susceptible to fraud.
Of more than $888 billion in total federal and state pandemic-related UI benefits, 3
DOL OIG has identified more than $46.9 billion in potentially fraudulent UI benefits paid
in six specific high-risk areas. 4 Two of the six high-risk areas identified as having the
largest amount of potentially fraudulent payments were for claims with Social Security
numbers (SSN): (1) filed in multiple states and (2) using suspicious emails. Further, in
2023, the Government Accountability Office (GAO) estimated the pandemic-related
fraud rate for the UI program at 11 to 15 percent for the period April 2020 to
May 2023 and estimated up to $135 billion was lost to fraud. 5
The EIDL program, overseen by SBA’s Office of Capital Access (OCA), provides loans
of up to $2 million to help small businesses, agricultural enterprises, and nonprofit
organizations that suffered substantial economic injury due to a declared disaster to pay
for expenses that could have been met had the disaster not occurred. The loans are
intended to help meet working capital needs such as fixed debt payments and operating
expenses such as payroll. 6 The Coronavirus Aid, Relief, and Economic Security Act and
subsequent legislation expanded EIDL eligibility and added two additional programs,
creating the COVID-19 EIDL program. Of the over $400 billion in disbursed COVID-19
EIDL funds, SBA OIG estimated $136 billion in COVID-19 EIDLs were disbursed to
potential fraudsters. 7
Starting in 2020, both OIGs respectively reported 8 on the high risk of fraud in pandemic
programs, including from identity theft and self-certification. 9 In February 2021,
DOL OIG began reporting on specific indicators of potential fraud identified through
data analytics, including suspicious email accounts and claims filed across multiple
states, that were linked to billions of dollars in UI benefit payments. Similarly, in
3 DOL OIG, Semiannual Report to Congress, Vol. 90 (November 2023)
4 To date, DOL OIG has issued four alert memoranda on the topic of potential UI fraud identified in
high-risk areas, identifying a cumulative total of $46.9 billion in potential fraud. Those reports are available
at the following hyperlinks: February 2021, June 2021, September 2022, and September 2023.
5 GAO, Unemployment Insurance: Estimated Amount of Fraud during Pandemic Likely Between
$100 Billion and $135 Billion, Report No. GAO-23-106696 (September 2023),
https://www.gao.gov/assets/gao-23-106696.pdf
6 SBA stopped accepting COVID-19 EIDL applications in January 2022 and is no longer accepting
requests for loan increases or reconsiderations.
7 SBA OIG, Report No. 23-09 (June 2023)
8 Full citations for related DOL OIG and SBA OIG reports can be found in Appendix B.
9 DOL OIG, Report No. 19-20-001-03-315 (April 2020) and SBA OIG, Report No. 20-16 (July 2020)
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July 2020, 10 SBA OIG began reporting on potential fraud indicators and, in June 2023,
issued the Fraud Landscape white paper highlighting the various fraud schemes
identified through data analytics. 11
OBJECTIVE AND METHODOLOGY
Given the similarities in potential fraud indicators in both programs, DOL and SBA OIGs
conducted a joint project to answer the following question:
Could data sharing between ETA and SBA mitigate the risk of fraudulent
UI benefit payments and SBA disaster program disbursements?
To answer this question, the two OIGs shared pandemic-related data then separately
analyzed and matched two datasets from the respective pandemic programs:
1. a DOL OIG dataset containing information on UI benefits paid for claims with
SSNs filed in multiple states and used to file UI claims with suspicious email
accounts; and
2. an SBA OIG dataset containing information on COVID-19 EIDLs with SBA
hold codes, which are designations SBA can place in the EIDL system to identify
fraudulent loans or suspected fraudulent loans.
Additionally, SBA OIG prepared a third dataset containing all COVID-19 EIDLs (rather
than only those with hold codes) disbursed after the dates DOL OIG had issued its first
three alert memoranda (February 2021, June 2021, and September 2022). Further, the
two OIGs conducted interviews with ETA’s National Office and SBA’s OCA to gain
insights into the data exchange efforts with other federal agencies when implementing
their respective pandemic programs. See Appendix A for more details.
RESULTS
We found data sharing and matching between ETA and SBA could mitigate the risk of
fraudulent UI benefit payments and SBA disbursements. Both OIGs found data
matching worked as a tool to identify potential fraud. DOL OIG data matched the two
shared datasets and found more than $1.3 billion in potentially fraudulent UI and EIDL
payments were made to the same likely fraudsters. Then, SBA OIG matched the DOL
OIG dataset with the third dataset it had created and found a total of over $2.25 billion in
10 To date, SBA OIG has issued six reports on potential COVID-19 EIDL fraud. Those reports are
available at the following hyperlinks: Report No. 20-16, July 28, 2020; Report No. 21-02,
October 28, 2020; Report No. 21-15, May 6, 2021; Report No. 22-06, November 30, 2021;
Report No. 22-17, September 12, 2022; and Report No. 22-22, September 29, 2022.
11 SBA OIG, Report No. 23-09 (June 2023)
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Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
potentially fraudulent EIDL disbursements. Of that $2.25 billion, SBA OIG found nearly
$1.4 billion that neither it nor SBA had previously identified as potential fraud (newly
identified potential fraud).
As both OIGs have individually reported, the unprecedented infusion of federal funds
into the UI and disaster assistance programs incentivized individuals and organized
criminal groups with a high-value target to exploit. In addition, program weaknesses
and the sheer volume of applications during the COVID-19 pandemic allowed criminals
to defraud the programs. Because people may be both employed and separately
operating a small business—and therefore potentially eligible for relief under both
the UI and EIDL programs—receiving benefits under one of these two programs
does not necessarily mean that involvement in the other program is potentially
fraudulent.
The data sharing and matching performed by DOL OIG and SBA OIG demonstrates
a best practice for a collaborative method to mitigate fraud. During the COVID-19
pandemic, no data sharing mechanism existed between ETA and SBA. If a data sharing
mechanism had been in place, the agencies could have conducted a higher level of
review by matching applicants across both programs to mitigate fraudulent payments
through additional verification controls. The implications of the same likely fraudsters
impacting more than one agency extends beyond significant monetary losses.
Unmitigated fraudulent activity may affect expeditious, efficient deployment of
assistance to eligible recipients and also decrease public trust in the government’s
ability to safeguard taxpayer funds while effectively administering assistance.
Data Matching Finds Same Likely Fraudsters Paid Under Both the UI and EIDL
Programs
As of September 2023, DOL OIG’s auditors, investigators, and data scientists had
collaboratively identified $46.9 billion in potential UI fraud paid in six specific high-risk
areas. For this joint project, DOL OIG performed data matching between the two
datasets. DOL OIG found:
• 3,850 EIDLs associated with suspicious emails were used to receive over
$163 million in UI benefit payments and over $224 million in EIDL disbursements,
totaling over $387 million; and
• 11,901 multistate claimants obtained over $409 million in UI benefit payments
and over $523 million in EIDL disbursements, totaling over $933 million.
In total, DOL OIG found that the same claims that received over $573 million in
potentially fraudulent UI benefit payments also received over $747 million in potentially
fraudulent EIDL disbursements, resulting in significant potential fraud amounting to
more than $1.3 billion (see Table 1).
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Table 1: DOL OIG Data Matching Results
How Many
EIDLs Potential
Matched UI Fraud, UI Potential Potential
Fraud Benefit Fraud, EIDL Fraud,
UI Fraud Indicator Indicator? Payments Disbursements Totals
Suspicious emails 3,850 $163,652,583 $224,330,400 $387,982,983
Multistate claimants 11,901 $409,933,026 $523,168,586 $933,101,612
Totals 15,751 $573,585,609 $747,498,986 $1,321,084,595
Source: EIDL dataset received on July 14, 2023, and matched to UI dataset on August 9, 2023
SBA OIG took a slightly different approach to its data matching. It created a third
dataset containing the COVID-19 EIDLs disbursed after DOL OIG had issued its
February 2021, June 2021, and September 2022 alert memoranda. It then matched that
third dataset with the DOL OIG dataset to identify if data sharing would have mitigated
potential fraud from occurring. SBA OIG found:
• 1,124 EIDLs that SBA had already flagged with hold codes, totaling nearly
$178 million; 12
• 6,164 EIDLs that were identified as part of SBA OIG’s Fraud Landscape white
paper, totaling nearly $690 million; and
• 10,971 in newly identified potentially fraudulent EIDLs, totaling nearly $1.4 billion.
In total, SBA OIG found that the information from the same individuals who received
over $2.25 billion in COVID-19 EIDL disbursements matched DOL OIG-identified
potential fraudsters (see Table 2).
Table 2: SBA OIG Data Matching Results
EIDLs with
Potentially Potentially
Fraudulent Fraudulent EIDL
Identified Fraud Disbursements Disbursements
Suspected/confirmed fraud hold codes 1,124 $177,932,998
Captured within the Fraud Landscape white
$689,899,605
paper 6,164
Newly identified potential fraud 10,971 $1,382,855,478
Totals 18,259 $2,250,688,081
Source: SBA OIG analysis of UI data received on July 14, 2023, and EIDL data as of August 9, 2023
12 The $178 million identified here is a subset of the $747 million identified by DOL OIG’s comparative
analysis.
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Best Practices for Data Sharing within the Federal Government
While agencies are not mandated to share data or conduct data matching, examples
exist of how these tools can help mitigate fraud. In a 2023 fraud alert, the Pandemic
Response Accountability Committee (PRAC), utilizing SBA and Social Security
Administration program data, identified $5.4 billion in disbursed potentially fraudulent
pandemic relief funds linked to questionable SSNs. 13 Also, in 2023, a GAO report called
on federal agencies to improve fraud risk management efforts. 14 The report identified
the use of data analytics as one of five key areas for improvement to manage fraud risk,
namely data matching as a tool to enable agencies to identify, prevent, and respond to
fraud.
Both reports demonstrate data matching as a tool to identify fraud, waste, abuse,
and mismanagement. This is in large part due to data sharing improving identity
verification by: (1) providing more complete applicant data, (2) enhancing existing
controls by addressing potentially incomplete or missing information, and (3) helping
in the development of new controls to identify risks that might have otherwise gone
unnoticed without the additional shared data. Importantly, best practices for data
sharing require sharing program-critical data elements such as bank account
numbers, phone numbers, physical addresses, email addresses, and Internet
Protocol addresses.
The authority 15 under which DOL OIG and SBA OIG conducted this effort is different
than what would be required for ETA and SBA to share data. The Privacy Act of 1974,
as amended by the Computer Matching and Privacy Protection Act of 1988, provides
that agencies may enter into data sharing agreements to perform data matching to
establish or verify eligibility for a federal benefit program. However, the agencies need
to comply with the Privacy Act’s requirements16 to enter into a written data sharing
agreement prior to engaging in any data matching. Critical to this process is determining
what data may be shared per the routine uses of data authorized by the current System
of Records Notice (SORN). If need be, the agencies may modify their current SORNs to
allow for the exchange of program-critical data elements needed to match applicants
across both programs to identify potential fraudsters for a higher level of review to
mitigate fraudulent payments.
13 PRAC, Fraud Alert: PRAC Identifies $5.4 Billion in Potentially Fraudulent Pandemic Loans Obtained
Using over 69,000 Questionable Social Security Numbers, Report No. PRAC-2023-02 (January 2023),
https://www.oversight.gov/reports/other/fraud-alert-prac-identifies-54-billion-potentially-fraudulent-
pandemic-loans-obtained
14 GAO, Report to Congressional Committees: Fraud Risk, Management, Key Areas for Federal Agencies
and Congressional Action, Report No. GAO-23-106567 (April 2023), https://www.gao.gov/assets/gao-23-
106567.pdf
15 Authority of Inspector General, 5 U.S.C. § 406(j)(2)
16 Privacy Act of 1974, 5 U.S.C. § 552a(a)(8); (o)
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In addition, both DOL and SBA have experience with sharing and matching data. For
example, DOL partners with the U.S. Department of Health and Human Services so that
state workforce agencies (SWA)17 can compare information on individuals receiving UI
benefits with data from the National Directory of New Hires. Similarly, an information
exchange agreement between DOL and the Social Security Administration enables
SWAs to compare data on individuals receiving Social Security benefits with those
applying for or receiving UI benefits. SBA’s experience with sharing and matching
data includes its collaboration with the U.S Department of the Treasury, comparing
applicants for small business loans with the Do Not Pay list. 18 SBA also collaborates
with the Federal Emergency Management Agency (FEMA) to ensure individuals who
receive disaster program loans do not receive duplicate benefits under FEMA’s
Individuals and Households Program, 19 in turn allowing FEMA to perform the same
check.
Sharing program-critical data can provide valuable information for various agency
purposes, including achieving specific program goals, identifying patterns of unusual
activity, and making correlations and informed decisions. Additionally, data sharing can
help government agencies prioritize efforts, identify improvements, promote best
practices, and aid public trust in government operations.
CONCLUSION
This collaborative effort—made possible by a data use agreement—allowed DOL OIG
to identify $1.3 billion paid to the same potential fraudsters under both the UI and
EIDL programs. Additionally, matching to a larger dataset, SBA OIG identified over
$2.25 billion in potentially fraudulent EIDLs disbursed, including nearly $1.4 billion in
newly identified, potentially fraudulent COVID-19 EIDL disbursements that may not
have been otherwise identified. These findings highlight a significant opportunity for
ETA and SBA to use data analytics to collaboratively develop additional controls for
detecting and mitigating fraud. Through the sharing and matching of key data, ETA and
SBA could detect potentially fraudulent activities before disbursing federal funds to
ineligible individuals, thus more effectively safeguarding taxpayer dollars and ensuring
program integrity.
RECOMMENDATIONS
To facilitate improved fraud controls, we recommend the following for each agency.
17 SWA refers to the body that administers the UI program within a state, district, or territory.
18 The Do Not Pay list is a service that agencies can use at no cost to check many data sources at one
time to verify a recipient's eligibility for payment.
19 FEMA’s Individuals and Households Program provides financial and direct services to eligible
individuals and households affected by a disaster who have uninsured or under-insured necessary
expenses and serious needs.
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For ETA, DOL OIG recommends the Assistant Secretary for Employment and Training
to:
1. Evaluate its authority to share data and develop fraud prevention resources and
controls with other federal entities, including SBA, that include data sharing
mechanisms to detect and mitigate fraud.
2. Collaborate with SBA to conduct a joint study to assess and identify the UI claim
data elements that should be shared for data matching with disaster program
data elements for the purpose of detecting potentially fraudulent activities under
both the UI and SBA disaster assistance programs.
For SBA, SBA OIG recommends the Administrator direct the Associate Administrator for
OCA to:
1. Evaluate its authority to share data and develop fraud prevention resources and
controls with other federal entities, including DOL, that include data sharing
mechanisms to detect and mitigate fraud.
2. Collaborate with DOL to conduct a joint study to assess and identify disaster
program data elements that should be shared for data matching with UI claim
data elements for the purpose of detecting potentially fraudulent activities under
both the UI and SBA disaster assistance programs.
3. Reevaluate eligibility for the 10,971 potentially fraudulent EIDLs and recover
funds from ineligible recipients.
ANALYSIS OF AGENCY RESPONSES
The full agency responses are contained in Appendices C and D, respectively.
DOL OIG Analysis of Agency Response
In its September 26, 2024, response to a draft of this report, ETA responded directly to
our two recommendations to facilitate improved fraud controls via collaboration. ETA
stated it agreed with Recommendation 1 and disagreed with Recommendation 2.
The agency also included information on five areas of its program and operations,
such as its access to the states’ UI claims data and the challenges posed by limited
resources. Regarding those five areas, we addressed agency comments on two areas
within our response to the recommendations and separately synopsized agency
comments in two other areas and provided our corresponding responses. In relation to
the fifth and last area of additional agency comment, we appreciate that ETA is aligning
its risk management efforts with the GAO’s Fraud Risk Framework.
We reviewed ETA’s response in full and did not make any changes to our report. Our
synopsis of agency comments and our corresponding analyses follow.
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Recommendation 1
Evaluate its authority to share data and develop fraud prevention resources and
controls with other federal entities, including SBA, that include data sharing
mechanisms to detect and mitigate fraud.
Status: Unresolved
ETA stated it agreed with the recommendation and has already taken such action
through the development of a fraud risk profile. Based on this action, ETA stated it:
(1) identified and implemented data sharing mechanisms with other federal entities,
most recently including the Social Security Administration and the U.S. Department of
the Treasury, to mitigate the highest residual risks within the UI program; (2) discussed
the recommendation with SBA; and (3) determined additional action is not warranted
at this time, given other priorities for the UI program and the level of complexity and
effort required to share data. ETA asserted SBA would have to enter into data
sharing agreements with the individual SWAs, an assertion we address under
Recommendation 2. ETA also noted it continues to streamline access to important
payment integrity data sources through NASWA’s Integrity Data Hub and that all
53 SWAs have entered into data sharing agreements with the data hub.
We commend ETA for the actions it has taken to detect and mitigate fraud within the UI
program, including evaluating risk. However, during our collaborative efforts with SBA
OIG, a data use agreement and subsequent data sharing and analysis facilitated our
identification of $1.3 billion in pandemic-related UI and EIDL payments made to the
same likely fraudsters. We therefore strongly encourage ETA to leverage its authority to
establish data sharing mechanisms in collaboration with SBA. By implementing these
mechanisms with SBA, ETA could not only strengthen its fraud controls but also
achieve proactive and tangible benefits, such as preventing significant losses of
program funds to fraud.
DOL OIG does not agree the actions ETA described meet the full intent of the
recommendation. As such, this recommendation remains unresolved and we will
reassess the status upon receipt of ETA’s corrective action plan.
Recommendation 2
Collaborate with SBA to conduct a joint study to assess and identify the UI claim data
elements that should be shared for data matching with disaster program data elements
for the purpose of detecting potentially fraudulent activities under both the UI and SBA
disaster assistance programs.
Status: Unresolved
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ETA disagreed with the recommendation, stating it has limited resources and must
prioritize its areas of focus. The agency also stated: (1) the report did not demonstrate
how investing in the study would improve fraud prevention and detection efforts in a
cost-effective manner beyond its existing practices and resources and (2) ongoing data
sharing would require data sharing agreements between SBA and 53 SWAs. ETA
asked that, instead of the recommendation for a proposed study, the OIG help it
navigate a government-wide resolution that provides for interagency collaboration. It
specified that such help would be both appreciated and more cost effective. ETA also
proposed an alternative approach: it committed to meeting with SBA to further explore
the possibility of using SBA data to improve UI program integrity.
DOL OIG does not agree the actions described meet the intent of our recommendation.
We commend ETA's willingness to engage with SBA to explore collaboration. We also
understand conducting a study might be uneconomical for ETA. We are also open
to alternative, less costly suggestions. The report demonstrates investment in
collaboration between ETA and SBA could specifically identify key data elements
to help detect potentially fraudulent activities within both programs. When subject
matter experts discuss data and other information, patterns tend to become clear and
emerging trends can be identified. For example, as noted in our report, DOL OIG and
SBA OIG uncovered $1.3 billion in newly identified potential fraud through a similar
process. Identifying key data elements would assist the agencies in preparing to combat
fraud during future national disasters. Both agencies possess in-depth knowledge of
their respective programs and can work together to identify overlapping areas that may
be vulnerable to fraud.
Also, regarding ETA’s statement on data sharing agreements between SBA and the
SWAs, we remind ETA of the need for corrective action on a recommendation issued in
our September 2023 alert memorandum. 20 We recommended the Principal Deputy
Assistant Secretary of Employment and Training obtain direct access to UI claims
data from all SWAs. ETA access to UI claims data through such a centralized
system could be the foundation to facilitate data sharing efforts with SBA. Ultimately,
whether this collaboration is formalized through a data sharing agreement of ETA and
SBA’s own design or facilitated via the U.S. Department of the Treasury’s Do Not Pay
system, the OIG looks forward to ETA and SBA exploring alternatives to improve
collaboration.
DOL OIG does not agree the actions ETA described meet the full intent of the
recommendation. As such, this recommendation remains unresolved and we will
reassess the status upon receipt of ETA’s corrective action plan.
20 DOL OIG, Report No. 19-23-012-03-315 (September 25, 2023) – Recommendation 1
– 10 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
Other Management Comments
UI Data Owned by SWAs and Disclosure Governed Under State Laws
ETA noted UI data is owned by SWAs and its disclosure is governed under state laws.
The agency stated it generally does not have access to individual-level SWA UI data.
ETA also expressed concerns regarding the lack of a SORN that could be modified to
facilitate the exchange of individual-level SWA UI claims data for data matching
purposes. ETA stated each of the 53 SWAs would need to establish individual
state-level data sharing agreements with SBA to enable data matching.
DOL OIG is aware that SWAs own UI data. However, the OIG has previously expressed
in more than one report to ETA that its authority under the Social Security Act and
20 C.F.R. Part 603 allows ETA to access and collect SWA UI data. Additionally, the OIG
identified a SORN that ETA published on the DOL website, which is currently under
development and is designed specifically to allow for the ease of data matching. This
draft SORN includes a section titled, “Authority for Maintenance of the System,” which
references federal laws that allow ETA to collect individual state-level UI data. 21 These
laws grant ETA the authority to access UI data. Furthermore, one of the procedures
outlined in the SORN allows for the disclosure of UI claims data to another federal
agency or entity when DOL determines the information is necessary to address a
suspected or confirmed breach or to prevent, minimize, or remedy the risk of harm to
individuals, the agency’s operations, a recipient agency’s operations, the federal
government, or national security resulting from a suspected or confirmed breach.
DOL OIG sees potential fraud as potential harm, given the risk of impact to individuals’
livelihoods that fraud poses.
Expiration of Pandemic Programs
ETA noted the OIG’s analysis was based on an expired pandemic program, using data
from an SBA program that ended in January 2022. ETA also reiterated its commitment
to improving eligibility determination and reducing improper payments through data
sharing initiatives. However, it stated it will not allocate limited resources to pursuing a
data sharing partnership based on analysis from an expired program.
While DOL OIG and SBA OIG used pandemic UI data for this report, ongoing issues
within the UI program persist. DOL OIG work has demonstrated criminals continue to
focus on the program since the pandemic, adapting their tactics to exploit systemic
weaknesses. UI and disaster loan programs have been enacted to combat other
disasters throughout the country, and the OIG expects this will continue to be
necessary. Although the COVID-19 pandemic-related programs have expired, ongoing
cooperation with SBA would be instrumental in preventing fraudulent payments in future
crises of a similar scale or the next pandemic.
21 Specifically, this includes Title III of the Social Security Act (42 U.S.C. 501-503) and 20 C.F.R. Part 603.
– 11 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
SBA OIG Analysis of Agency Response
The following section summarizes the status of our recommendations and the actions
necessary to close them.
Recommendation 1
Evaluate its authority to share data and develop fraud prevention resources and
controls with other federal entities, including DOL, that include data sharing
mechanisms to detect and mitigate fraud.
Status: Resolved
Management agreed with the recommendation, stating that they will approach this not
with DOL directly but as a collaborative, “whole of government” approach. SBA will
collaborate with appropriate centralized federal entities to evaluate authorities to share
data and will conduct a joint study with centralized entities to assess and identify
program data elements that should be shared for the purpose of detecting potentially
fraudulent activities. SBA discussed this approach with DOL and determined that it
would be more beneficial to address this recommendation on a broader scale.
SBA plans to implement this recommendation by September 25, 2026.
The recommendation will be closed upon completion of the joint study resulting in a
determination of what data elements should be shared.
Recommendation 2
Collaborate with DOL to conduct a joint study to assess and identify disaster program
data elements that should be shared for data matching with UI claim data elements for
the purpose of detecting potentially fraudulent activities under both the UI and SBA
disaster assistance programs.
Status: Resolved
Management agreed with the recommendation, stating that they will approach this
not with DOL directly but as a collaborative, “whole of government” approach with
appropriate centralized federal entities to evaluate authorities to share data and
develop centralized fraud prevention resources and controls that include data sharing
mechanisms to detect and mitigate fraud occurring in federal programs across the
entire federal space. SBA discussed this approach with DOL and determined that it
would be more beneficial to address this recommendation on a broader scale.
SBA plans to implement this recommendation by September 24, 2027.
– 12 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
The recommendation will be closed upon implementation of data sharing mechanisms
to detect and mitigate fraud.
Recommendation 3
Reevaluate eligibility for the 10,971 potentially fraudulent EIDLs and recover funds from
ineligible recipients.
Status: Resolved
Management agreed with the recommendation, stating that, once OIG provides SBA the
additional DOL criteria regarding the identified population, SBA will perform a high-level
review of a sample of the identified loans.
SBA plans to implement this recommendation by September 26, 2025.
The recommendation will be closed upon completion of eligibility reviews for an
agreed upon size of sample loans for potential fraud and possible recovery of funds.
Both OIGs appreciate the cooperation and courtesies ETA and OCA extended to us
during this audit. Staff from both OIGs who contributed to this report are listed in
Appendix E.
Larry D. Turner
Inspector General
U.S. Department of Labor
Hannibal “Mike” Ware
Inspector General
U.S. Small Business Administration
– 13 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
For any agency questions, please contact the following staff directly:
DOL OIG
Michael Kostrzewa, Audit Director
(972) 850-4003
Carolyn R. Hantz, Assistant Inspector General for Audit
(202) 693-5170
SBA OIG
John Provan, Director of Disaster Assistance Programs Group
(817) 688-9780
Andrea Deadwyler, Assistant Inspector General for Audits
(202) 205-6586
– 14 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Appendix A: Scope and Methodology
The OIGs for DOL and for SBA engaged in a joint project to determine if data sharing
between ETA and SBA could mitigate the risk of fraudulent UI benefit payments and
SBA disaster assistance program disbursements.
We reviewed federal laws, regulations, policies, procedures, and internal
memorandums pertaining to DOL’s UI program and SBA’s COVID-19 EIDL program.
We also met with officials from ETA and OCA to discuss consideration be given to data
sharing and the extent to which they work with other agencies.
DOL OIG conducted a comparative analysis to determine whether key data elements
linked to potentially fraudulent UI benefit payments matched the corresponding data
elements related to potentially fraudulent EIDL disbursements. Specifically, DOL OIG
compared its dataset (the dataset of UI claims field with SSNs associated with
multistate claims and with suspicious email accounts) with the corresponding dataset
associated with COVID-19 EIDL disbursements that SBA OIG had identified and
flagged with hold codes.
SBA OIG created a third dataset of all COVID-19 EIDLs disbursed after DOL OIG had
issued its first three alert memoranda. SBA OIG then performed a comparative analysis
between that third dataset and DOL OIG’s dataset. SBA OIG matched recipients based
on common identifier fields such as suspicious email accounts, SSNs, addresses, and
phone numbers. SBA OIG analyzed whether data sharing would have benefited SBA.
SBA OIG also compared the dates of the alert memoranda issued by DOL OIG to the
disbursement dates of COVID-19 EIDLs to identify potential fraud.
This report was prepared in alignment with OIG quality control standards and the
Council of the Inspectors General on Integrity and Efficiency’s Quality Standards for
Inspection and Evaluation, which requires that we plan and perform the review to obtain
sufficient and appropriate evidence to provide a reasonable basis for our conclusions
and observations based on our objective. We believe the evidence obtained provides a
reasonable basis for our conclusions and observations based on our objectives.
– A-1 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Appendix B: Prior Relevant Coverage
Since March 2020, both DOL OIG and SBA OIG have issued several reports of
significant relevance to this report. Those reports include the following:
DOL OIG
Semiannual Report to Congress (issued each spring and fall), Vols. 83-90 (2020-2023),
https://www.oig.dol.gov/semiannual.htm
U.S. Department of Labor Top Management Challenges (issued each fall), 2020-2023,
https://www.oig.dol.gov/topchallenges.htm
Alert Memorandum: ETA Needs to Incorporate Data Analytics Capability to Improve
Oversight of the Unemployment Insurance Program,
Report No. 19-23-012-03-315 (September 25, 2023),
https://www.oig.dol.gov/public/reports/oa/2023/19-23-012-03-315.pdf
Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in
High-Risk Areas Increased to $45.6 Billion,
Report No. 19-22-005-03-315 (September 21, 2022),
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf
Alert Memorandum: The Employment and Training Administration Needs to Issue
Guidance to Ensure State Workforce Agencies Provide Requested Unemployment
Insurance Data to the Office of Inspector General,
Report No. 19-21-005-03-315 (June 16, 2021),
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf
Alert Memorandum: The Employment and Training Administration (ETA) Needs to
Ensure State Workforce Agencies (SWA) Implement Effective Unemployment Insurance
Program Fraud Controls for High-Risk Areas,
Report No. 19-21-002-03-315, (February 22, 2021),
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf
Advisory Report: CARES Act: Initial Areas of Concern Regarding Implementation of
Unemployment Insurance Provisions,
Report No. 19-20-001-03-315, (April 21, 2020),
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf
– B-1 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Data Sharing Project Finds Billions Paid to Same Likely Fraudsters
SBA OIG
COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape,
Report No. 23-09 (June 27, 2023),
https://www.sba.gov/document/report-23-09-covid-19-pandemic-eidl-ppp-loan-fraud-
landscape
Follow-up Inspection of SBA’s Internal Controls to Prevent COVID-19 EIDLs to Ineligible
Applicants,
Report No. 22-22 (September 19, 2022),
https://www.sba.gov/document/report-22-22-follow-inspection-sbas-internal-controls-
prevent-covid-19-eidls-ineligible-applicants
COVID-19 Economic Injury Disaster Loan Applications Submitted from Foreign IP
Addresses,
Report No. 22-17 (September 12, 2022),
https://www.sba.gov/document/report-22-17-covid-19-economic-injury-disaster-loan-
applications-submitted-foreign-ip-addresses
COVID-19 EIDL Program Recipients on the Department of Treasury's Do Not Pay List,
Report No. 22-06 (November 30, 2021),
https://www.sba.gov/document/report-22-06-covid-19-eidl-program-recipients-
department-treasurys-do-not-pay-list
SBA’s Handling of Identity Theft in the COVID-19 Economic Injury Disaster Loan
Program,
Report No. 21-15 (May 6, 2021),
https://www.sba.gov/document/report-21-15-sbas-handling-identity-theft-covid-19-
economic-injury-disaster-loan-program
Inspection of Small Business Administration’s Initial Disaster Assistance Response to
the Coronavirus Pandemic,
Report No. 21-02 (October 28, 2020),
https://www.sba.gov/document/report-21-02-inspection-small-business-administrations-
initial-disaster-assistance-response-coronavirus-pandemic
Management Alert: Serious Concerns of Potential Fraud in Economic Injury Disaster
Loan Program Pertaining to the Response to COVID-19,
Report No. 20-16 (July 28, 2020),
https://www.sba.gov/document/report-20-16-serious-concerns-potential-fraud-eidl-
program-pertaining-response-covid-19
– B-2 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Appendix C:
U.S. Department of Labor Response
U.S. Department of Labor
Response to Draft Report
The agency’s response to our draft report follows.
– C-1 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
U.S. Department of Labor Assistant Secretary for
Employment and Training
Washington, D.C. 20210
September 26, 2024
MEMORANDUM FOR: CAROLYN R. HANTZ
Assistant Inspector General for Audit
FROM: JOSÉ JAVIER RODRÍGUEZ
SUBJECT: Response to Draft Joint Report – COVID-19: Data
Sharing Project Finds Billions Paid to Same Likely
Fraudsters Under Both the Unemployment Insurance and
Economic Injury Disaster Loan Programs, Report No.
19-24-XXX-03-315
The U.S. Department of Labor's (Department) Employment and Training Administration (ETA)
appreciates the opportunity to respond to the above-referenced draft joint report from the
Department’s Office of Inspector General (OIG) and the U.S. Small Business Administration
(SBA) OIG. Below are some points the Department would like to share related to the themes
discussed in the draft joint report, followed by the Department’s responses to the OIG’s
recommendations.
ETA is actively demonstrating its commitment to align existing risk management efforts with
the Government Accountability Office’s (GAO) Fraud Risk Framework. The Department
takes its oversight of federally funded programs very seriously. Strengthening Unemployment
Insurance (UI) program integrity, by reducing improper payments and mitigating fraud risks,
remains a top priority for the Department. In recent years, the Department implemented
recommendations made by the GAO to help improve UI fraud risk management, which includes
aligning existing risk management efforts with the leading practices in GAO’s Fraud Risk
Framework 1.0F
GAO’s recommendations spurred the Department to develop a UI Fraud Risk Profile,
supplementing and enhancing its robust payment integrity efforts, and further strengthening an
organizational culture that views the creation, evaluation, monitoring, and evolution of risk
mitigation strategies as an ongoing process. ETA also announced the release of a new UI Fraud
Risk Management webpage for state workforce agencies (SWA) to access information on the
Department’s UI fraud risk management activities and to update states on new fraud risk
mitigation strategies and initiatives. 2 GAO’s leading practices are now well embedded in the
1F
daily UI program integrity work. The Department also agrees wholeheartedly with GAO that
data analytics activities are a critical component of an overall antifraud strategy.
1
GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP, issued July 2015,
https://www.gao.gov/assets/gao-15-593sp.pdf.
2
See Training and Employment Notice (TEN) No. 32-23, Unemployment Insurance (UI) Fraud Risk Management
Resources, issued June 27, 2024, https://www.dol.gov/agencies/eta/advisories/ten-32-23.
UI data is owned by SWAs and its disclosure is governed under state laws. The OIG notes in
their draft report that UI is “administered jointly by the federal and state governments.” To
clarify, the UI program is a federal-state partnership program based upon federal law and
administered by state workforce agencies (SWA) under state law. UI data is owned by SWAs
and its access and use are governed by state laws that conform with certain requirements set forth
in federal regulation. 3 The Department generally does not have access to individual-level SWA
2F
UI data and the draft joint report suggests that ETA modify its current System of Record Notices
(SORN) to accommodate the envisioned data exchange. However, as ETA indicated in
discussions with the OIG, ETA does not have a SORN that could be modified to allow for the
exchange of this data, nor does ETA have the authority to perform the suggested data matching.
Each of the 53 SWAs that operate UI programs would need to enter into individual, state-level
data sharing agreements with the SBA to conduct the type of data sharing suggested in the draft
joint report.
ETA is actively demonstrating its commitment to strengthen data sharing with federal
agencies. As part of the UI antifraud strategy, the Department is committed to pursuing access
to necessary external data sources, including data sharing with other federal agencies and third
parties that can provide support to SWAs in identifying potential fraud and improper payments,
and helping with accurate determinations of UI eligibility.
These efforts include streamlining SWAs access to additional data sources through the National
Association of State Workforce Agencies’ (NASWA) UI Integrity Data Hub (IDH), which is a
key payment integrity tool to aid states in detecting and preventing UI fraud. Recently, the
Department announced a new data sharing partnership between the U.S. Department of
Treasury’s (Treasury) Bureau of the Fiscal Service (Fiscal Service) and NASWA to provide
SWAs with access to Do Not Pay data sources and services through the IDH. 4 Additionally, the
3F
Department worked with the Social Security Administration (SSA) to establish a data sharing
agreement to provide SWAs with streamlined access to SSA’s Prisoner Update Processing
System data through NASWA’s UI Interstate Connection Network. 5 Furthermore, the
4F
Department maintains a data sharing agreement with the U.S. Department of Health and Human
Services’ Office of Child Support Services to provide states with access to the National
Directory of New Hires data. 6 All these data sharing partnerships provide SWAs with access to
5F
important data sources to help reduce fraud and/or confirm UI program eligibility. Each of these
3
See 20 C.F.R. Part 603.
4
See TEN No. 28-23, Announcement of a New Data Sharing Partnership Between the U.S. Department of
Treasury’s (Treasury) Bureau of the Fiscal Service (Fiscal Service) and the National Association of State Workforce
Agencies’ (NASWA) Unemployment Insurance (UI) Integrity Center to provide State UI Agencies Access to Do Not
Pay Working System (DNP) Data Sources and Services through the UI Integrity Data Hub (IDH), issued May 2,
2024, https://www.dol.gov/agencies/eta/advisories/ten-28-23.
5
See Unemployment Insurance Program Letter (UIPL) No. 01-22, Announcing the Availability of an Incarceration
Data Exchange and Instructions to Access the Data Exchange between the Unemployment Insurance (UI) Interstate
Connection Network (ICON) and the Social Security Administration (SSA) Prisoner Update Processing System
(PUPS), issued October 29, 2021, https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-
letter-no-01-22.
6
See TEN No. 05-20, National Directory of New Hires (NDNH), State Directory of New Hires (SDNH), and Other
Improper Payment Prevention and Detection Resources, Tools, and Services Available to States, issued September
24, 2020, https://www.dol.gov/agencies/eta/advisories/training-and-employment-notice-no-05-20.
2
data sharing partnerships support risk mitigation efforts to address the highest UI risks identified
in the Department’s UI Fraud Risk Profile.
The draft joint report suggests that data sharing between ETA and SBA could mitigate the risk of
fraudulent UI payments and SBA disbursements, based on the data matching conducted by the
OIG. Additionally, the draft joint report asserts that if data sharing and matching had existed, the
agencies could have conducted a higher-level review by matching applicants across both
programs to mitigate fraudulent payments. However, while the Department is committed to
seeking data sharing opportunities to address the highest UI program risks, ETA disagrees with
the OIGs’ assessment regarding this data sharing partnership.
The OIG’s analysis was based on an expired pandemic program. The OIG’s analytics were
based on cross-matching with data from an SBA program the OIGs jointly acknowledge ended in
January 2022. The Department reiterates its commitment to identifying and pursuing data
sharing initiatives that could support more accurate eligibility determination and reduce improper
payments but will not allocate limited resources to pursing a data sharing partnership based on
analysis from an expired program.
ETA has limited resources and must prioritize its areas of focus. ETA has limited resources
and relies on several factors, such as the priority level of the residual risk identified in the
Department’s recently developed UI Fraud Risk Profile, insight from its oversight bodies such as
GAO and the OIG, and other evidence to make decisions on how these resources are allocated.
This includes analyzing the highest residual risks to the UI program after evaluating the impact
of existing antifraud controls.
The draft joint report identifies “$1.3 billion in potentially fraudulent UI and Economic Injury
Disaster Loan (EIDL) payments made to the same likely fraudsters.” This assessment is based
on individuals with Social Security Numbers from two groups: (1) those who filed in multiple
states and (2) those using suspicious emails. However, the draft joint report fails to acknowledge
that: (1) workers may be eligible to file in multiple states under certain conditions and (2)
suspicious email addresses may be a flag, but the OIG does not define what they consider
“suspicious” in this audit. Both issues are potential flags of suspicion, but, not conditions certain
of fraud. The Supreme Court has found that payment must be made “when due” and may not be
held merely on a program official or auditor’s suspicions. Additionally, the draft joint report
acknowledges that people may be potentially eligible for relief under both the UI and EIDL
programs and receiving benefits under one of these two programs does not necessarily mean that
involvement in the other program is potentially fraudulent.
ETA has already identified these two groups as fraud risks to the UI program and developed
and/or strengthened existing mitigation strategies to address both risks. SWAs currently review
claims for suspicious emails and multistate filings through different fraud detection tools,
including the IDH. The IDH was specifically designed to cross-match suspicious data elements
being used across UI claims, including, but not limited to suspicious email addresses.
Additionally, the IDH has a multi-state cross-matching (MSCM) functionality to flag UI claims
filed in multiple states. Matching UI data with SBA data would not help SWAs proactively
identify UI claims filed across multiple states.
3
The Department has and continues to strongly encourage states to actively participate in the IDH
on a regular basis, and IDH participation has increased significantly since the onset of the
pandemic. For example, in March of 2020, only 34 states had an IDH Participation Agreement
(PA), 21 states were using the Suspicious Actor Repository (SAR), which provides information
on suspicious UI claims data elements, including suspicious email addresses, and three states
were using the MSCM, which was quite new at the time, having only been live in the IDH
production environment since November 2019 – about five months. ETA continues to support
ongoing enhancements to the IDH by funding additional fraud prevention capabilities such as an
identity verification (IDV) and risk scoring solution, which became available to states in July
2020, as well as a Bank Account Verification (BAV) service, which became available to states in
February 2022. Currently, all 53 states have a signed IDH PA, 51 states are using the SAR, 51
states are using the MSCM, 46 states are using the IDV solution, and 43 states are using the
BAV service. Furthermore, in the Department’s Fiscal Year 2025 President’s Budget and the UI
Transformation Plan 7, requiring the use of IDH is identified as a proposed legislative reform.
6F
Without additional funding from Congress, ETA must continue to prioritize its areas of focus.
The draft joint report has not demonstrated additional value for ETA to further pursue the
exchange of these data elements with SBA.
Responses to the Recommendations
Please find below each of the recommendations contained in the draft joint report, followed by
ETA’s proposed corrective actions to address the recommendations.
Recommendation 1: Evaluate its authority to share data and develop fraud prevention
resources and controls with other federal entities, including SBA, that include data sharing
mechanisms to detect and mitigate fraud.
ETA Response: ETA agrees with this recommendation and asserts that it has already taken such
action through the development of a UI Fraud Risk Profile that aligns with GAO’s Fraud Risk
Framework. Through the efforts of strengthening UI fraud risk management activities, building
the UI Fraud Risk Profile, and analyzing the results, the Department has designed a risk response
to identified risks. As noted by GAO in their Framework for Managing Fraud Risks in Federal
Programs, effective managers of fraud risks use the program’s fraud risk profile to help decide
how to allocate resources to respond to residual fraud risks, which may include actions to accept,
reduce, share, or avoid the risk. Specifically, managers may allocate resources to prevent or
detect fraud risks that exceed their risk tolerance, but they may decide not to allocate resources to
further reduce unlikely, low-impact risks that fall within their risk tolerance.
To mitigate the highest residual risks to the UI program, the Department has identified and
implemented data sharing mechanisms with other federal entities - most recently including SSA
and Treasury. The Department continues to streamline access to important payment integrity
data sources through the UI IDH since all 53 states have entered into agreements to share
7
See Unemployment Insurance Transformation Plan, Building Resilience: A plan for transforming unemployment
insurance, issued April 2024, https://oui.doleta.gov/unemploy/transformation_plan.asp.
4
individual claims-level data with the IDH for the purposes of ensuring the accuracy of payments
and preventing fraud and improper payments.
The Department has discussed this concept with SBA and determined that additional action is
not warranted at this time, given other priorities for the UI program (such as expanding
additional data sharing opportunities with Treasury) and the level of complexity and effort with
existing authorities to share data, insofar as it would require SBA to enter into data sharing
agreements with each individual state.
Recommendation 2: Collaborate with SBA to conduct a joint study to assess and identify
the UI claim data elements that should be shared for data matching with disaster program
data elements for the purpose of detecting potentially fraudulent activities under both the
UI and disaster assistance programs.
ETA Response: ETA disagrees with this recommendation, given that ETA has limited resources
and must prioritize its areas of focus. This draft joint report has not demonstrated how investing
in an additional study specific to the UI and EIDL programs will improve fraud prevention and
detection efforts in the UI program cost-effectively beyond existing practices and resources.
Additionally, ongoing data sharing between the UI program and SBA will require SBA to enter
into data sharing agreements with each of the 53 SWAs administering UI programs.
Instead of requesting ETA to invest in an additional study of two programs with eligibility
criteria that are not mutually exclusive, ETA asks the OIG for help in navigating a government-
wide resolution that provides for interagency collaboration. This type of data matching may be
helpful to law enforcement when prosecuting cases involving fraud across multiple programs.
The OIG’s leadership on a broad-based interagency effort would be appreciated and be more
cost-effective than a limited scope study based on expired programs.
As an alternative approach, ETA is committed to meeting with SBA to further explore the
possibility of using SBA data to support UI program integrity. This activity will include
determining if there is an appropriate return on investment for both the UI program and SBA
and/or engaging with our partners in Treasury’s Fiscal Service to assess the possibility of
streamlining SWAs’ access to SBA data sources through the Do Not Pay system. ETA, working
in collaboration with the Department’s Chief Evaluation Office and the Department’s Office of
the Chief Financial Officer, is responsible for this recommendation.
5
Appendix D:
U.S. Small Business Administration Response
U.S. Small Business Administration
Response to Draft Report
The agency’s response to our draft report follows.
– D-1 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
U.S. SMALL BUSINESS ADMINISTRATION
WASHINGTON, DC 20416
To: Hannibal “Mike” Ware
Inspector General
U.S. Small Business Administration
From: Jihoon Kim, Director, Office of Financial Program Operations,
JI KIM
Digitally signed by JI KIM
Date: 2024.09.23 16:17:42
Office of Capital Access -04'00'
Date: September 23, 2024
Subject: Response to OIG Draft Report – COVID-19: Data Sharing Project Finds Billions
Paid to Same Likely Fraudsters Under Both the Unemployment Insurance and
Economic Injury Disaster Loan Programs (Project 23801)
Thank you for providing the Office of Capital Access (OCA) the opportunity to respond to
OIG’s Draft Report entitled, “COVID-19: Data Sharing Project Finds Billions Paid to Same
Likely Fraudsters Under Both the Unemployment Insurance and Economic Injury Disaster Loan
Programs.” The OIG’s audit objective for this draft report was to determine if “data sharing
between ETA and SBA mitigate the risk of fraudulent UI benefit payments and SBA disaster
program disbursements.”
We appreciate the role the Office of Inspector General (OIG) plays in working with management
in ensuring that our programs are effectively managed, and for the feedback provided in this
draft report. We offer the following response to the recommendations:
Recommendation 1: Evaluate its authority to share data and develop fraud prevention resources
and controls with other federal entities, including DOL, that include data sharing mechanisms
to detect and mitigate fraud.
SBA Response:
SBA agrees with this recommendation, however, will approach this not with DOL directly but as
a collaborative, “whole of government” approach. SBA will collaborate with appropriate
centralized federal entities to evaluate authorities to share data and will conduct a joint study
with centralized entities to assess and identify program data elements that should be shared for
the purpose of detecting potentially fraudulent activities. SBA has discussed this approach with
DOL and determined that it would be more beneficial to address this recommendation on a
broader scale.
Recommendation 2: Collaborate with DOL to conduct a joint study to assess and identify the
UI claim data elements that should be shared for data matching with disaster program data
elements for the purpose of detecting potentially fraudulent activities under both the UI and
disaster assistance programs.
SBA Response:
SBA agrees with this recommendation, however, will approach this not with DOL directly but as
a collaborative, “whole of government” approach with appropriate centralized federal entities to
evaluate authorities to share data and develop centralized fraud prevention resources and controls
that include data sharing mechanisms to detect and mitigate fraud occurring in federal programs
across the entire federal space. SBA has discussed this approach with DOL and determined that
it would be more beneficial to address this recommendation on a broader scale.
Recommendation 3: Reevaluate eligibility for the 10,971 potentially fraudulent EIDLs and
recover funds from ineligible recipients.
SBA Response:
SBA agrees. Once OIG provides SBA the additional DOL criteria regarding the identified
population, SBA will perform a high-level review of a sample of the identified loans.
Appendix E: Acknowledgments
Staff who contributed to this report follow.
DOL OIG
Michael Kostrzewa Audit Director
Lawrence Alli Audit Manager
Charmane Miller Auditor-in-Charge
Reed Rubey Senior Auditor
Daphne Jones Senior Auditor
Le Nguyen Assistant Counsel
Jon Heinz Assistant Counsel
Dennis Asante Data Scientist
Dr. LaKeisha L. Jones Statistician
Carla Orvis Hunt Writer-Editor
SBA OIG
John Provan Audit Director
Marvin Houle Audit Manager
Mona D’Amore Auditor-in-Charge
Courtney Schlieter Assistant Counsel
Sam Bronson Data Analyst Team Lead
Christopher McGraw Statistician
Sharon Leffel Writer-Editor
– E-1 –
DOL OIG Report No. 19-25-001-03-315 SBA OIG Report No. 25-06
Make a Difference
To report fraud, waste, or mismanagement, contact the U.S. Department of Labor’s
Office of Inspector General:
Online: https://www.oig.dol.gov/hotline.htm
Telephone: (800) 347-3756
Fax: (202) 693-7020
or write to us at:
Office of Inspector General, U.S. Department of Labor,
200 Constitution Avenue NW, Room S-5506,
Washington DC 20210
To report fraud, waste, or mismanagement, contact the U.S. Small Business
Administration’s Office of Inspector General:
Online: https://www.sba.gov/oig/hotline
Telephone: (800) 767-0385
or write to us at:
Office of Inspector General, U.S. Small Business Administration,
409 Third Street, SW (5th Floor),
Washington DC 20416
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