Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease — Hearing (March 9, 2023)

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Transcript of the hearing Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease, before the Subcommittee on Government Operations and the Federal Workforce of the Committee on Oversight and Accountability, House of Representatives, on March 9, 2023 (Serial No. 118–10). Hon. Pete Sessions, Chairman of the Subcommittee, presided. Witnesses were Mr. Larry D. Turner, Inspector General, U.S. Department of Labor; Mr. Richard Delmar, Acting Inspector General, U.S. Department of the Treasury; and Mr. Sheldon Shoemaker, Deputy Inspector General of the Small Business Administration. The index lists the Final Report of the Select Subcommittee on the Coronavirus Crisis, submitted by Rep. Mfume, and questions for the record to each witness.

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“Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease — Hearing (March 9, 2023).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-118hhrg51631-waste-fraud-and-abuse-go-viral-inspectors-general-on-c1b3412535/, SHA-256 7e2dd1cfcaf704dbbc42b9b4e0716c856514a6b23ca6934df8a4b99a4706ad45.

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WASTE, FRAUD, AND ABUSE GO VIRAL:
INSPECTORS GENERAL ON CURING
THE DISEASE

HEARING
BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS
AND THE FEDERAL WORKFORCE
OF THE

COMMITTEE ON OVERSIGHT
AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION

MARCH 9, 2023

Serial No. 118–10

Printed for the use of the Committee on Oversight and Accountability

(
Available on: govinfo.gov
oversight.house.gov or
docs.house.gov

U.S. GOVERNMENT PUBLISHING OFFICE
51–631 PDF WASHINGTON : 2023
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
JIM JORDAN, Ohio JAMIE RASKIN, Maryland, Ranking Minority
MIKE TURNER, Ohio Member
PAUL GOSAR, Arizona ELEANOR HOLMES NORTON, District of
VIRGINIA FOXX, North Carolina Columbia
GLENN GROTHMAN, Wisconsin STEPHEN F. LYNCH, Massachusetts
GARY PALMER, Alabama GERALD E. CONNOLLY, Virginia
CLAY HIGGINS, Louisiana RAJA KRISHNAMOORTHI, Illinois
PETE SESSIONS, Texas RO KHANNA, California
ANDY BIGGS, Arizona KWEISI MFUME, Maryland
NANCY MACE, South Carolina ALEXANDRIA OCASIO-CORTEZ, New York
JAKE LATURNER, Kansas KATIE PORTER, California
PAT FALLON, Texas CORI BUSH, Missouri
BYRON DONALDS, Florida SHONTEL BROWN, Ohio
KELLY ARMSTRONG, North Dakota JIMMY GOMEZ, California
SCOTT PERRY, Pennsylvania MELANIE STANSBURY, New Mexico
WILLIAM TIMMONS, South Carolina ROBERT GARCIA, California
TIM BURCHETT, Tennessee MAXWELL FROST, Florida
MARJORIE TAYLOR GREENE, Georgia BECCA BALINT, Vermont
LISA MCCLAIN, Michigan SUMMER LEE, Pennsylvania
LAUREN BOEBERT, Colorado GREG CASAR, Texas
RUSSELL FRY, South Carolina JASMINE CROCKETT, Texas
ANNA PAULINA LUNA, Florida DAN GOLDMAN, New York
CHUCK EDWARDS, North Carolina JARED MOSKOWITZ, Florida
NICK LANGWORTHY, New York
ERIC BURLISON, Missouri

MARK MARIN, Staff Director
JESSICA DONLON, Deputy Staff Director and General Counsel
BILL WOMACK, Senior Advisor
RYAN GIACHETTI, Counsel
MALLORY COGAR, Deputy Director of Operations and Chief Clerk
CONTACT NUMBER: 202-225-5074
JULIE TAGEN, Minority Staff Director
CONTACT NUMBER: 202-225-5051

SUBCOMMITTEE ON GOVERNMENT OPERATIONS AND THE FEDERAL WORKFORCE
PETE SESSIONS, Texas, Chairman
GARY PALMER, Alabama KWEISI MFUME, Maryland Ranking Minority
CLAY HIGGINS, Louisiana Member
ANDY BIGGS, Arizona ELEANOR HOLMES NORTON, District of
BYRON DONALDS, Florida Columbia
WILLIAM TIMMONS, South Carolina MAXWELL FROST, Florida
TIM BURCHETT, Tennessee GREG CASAR, Texas
MARJORIE TAYLOR GREENE, Georgia GERALD E. CONNOLLY, Virginia
LAUREN BOEBERT, Colorado MELANIE STANSBURY, New Mexico
RUSSELL FRY, South Carolina ROBERT GARCIA, California
CHUCK EDWARDS, North Carolina BECCA BALINT, Vermont
ERIC BURLISON, Missouri SUMMER LEE, Pennsylvania
JASMINE CROCKETT, Texas

(II)
C O N T E N T S

Page
Hearing held on March 9, 2023 .............................................................................. 1

WITNESSES

Mr. Larry D. Turner, Inspector General, U.S. Department of Labor
Oral Statement ........................................................................................................ 5
Mr. Richard Delmar, Acting Inspector General, U.S. Department of the
Treasury
Oral Statement ........................................................................................................ 7
Mr. Sheldon Shoemaker, Deputy Inspector General, U.S. Small Business Ad-
ministration
Oral Statement ........................................................................................................ 8

Written opening statements and statements for the witnesses are available
on the U.S. House of Representatives Document Repository at:
docs.house.gov.

INDEX OF DOCUMENTS

* Final Report of the Select Subcommittee on the Coronavirus Crisis, De-
cember 2022; submitted by Rep. Mfume.
* Statement for the Record; submitted by Rep. Connolly.
* Questions for the Record: to Mr. Delmar; submitted by Rep. Sessions.
* Questions for the Record: to Mr. Delmar; submitted by Rep. Mfume.
* Questions for the Record: to Mr. Delmar; submitted by Rep. Connolly.
* Questions for the Record: to Mr. Turner; submitted by Rep. Sessions.
* Questions for the Record: to Mr. Turner; submitted by Rep. Mfume.
* Questions for the Record: to Mr. Turner; submitted by Rep. Connolly.
* Questions for the Record: to Mr. Shoemaker; submitted by Rep. Sessions.
* Questions for the Record: to Mr. Shoemaker; submitted by Rep. Mfume.
* Questions for the Record: to Mr. Shoemaker; submitted by Rep. Connolly.
* Questions for the Record: to Mr. Shoemaker; submitted by Rep. Garcia.

Documents are available at: docs.house.gov.

(III)
WASTE, FRAUD, AND ABUSE GO VIRAL:
INSPECTORS GENERAL ON CURING
THE DISEASE

Thursday, March 9, 2023

HOUSE OF REPRESENTATIVES
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
SUBCOMMITTEE ON GOVERNMENT OPERATIONS AND THE FEDERAL
WORKFORCE
Washington, D.C.

The Committee met, pursuant to notice, at 2:02 p.m., in room
2154, Rayburn Office Building, Hon. Pete Sessions (Chairman of
the Subcommittee) presiding.
Present: Representatives Sessions, Comer, Palmer, Higgins,
Biggs, Donalds, Timmons, Greene, Boebert, Edwards, Burlison,
Mfume, Norton, Connolly, Stansbury, Garcia, Frost, Balint, and
Casar.
Mr. SESSIONS. The Subcommittee on Government Operations and
the Federal Workforce will come to order.
I want to thank each of you for being here. It is now 2 on March
the 9th. And with agreement—we are the minority and the major-
ity—we are delighted to have the hearing today, which we are
going to make sure that we get closer to working for a more effi-
cient government on behalf of the taxpayer.
Without objection, the Chair may declare recess at any time.
I recognize myself for the purpose of making an opening state-
ment.
I would like to welcome each of you to the first hearing of the
newly configured Government Operations and Federal Workforce
Subcommittee. I would like to offer welcome to the Ranking Mem-
ber of the Committee, my friend, Mr. Mfume. Mr. Mfume, I look
forward to working with you. And as we have agreed, even though
this is all brand new, we are going to work together, but you
should expect me to approach you about the items that I think are
important, and I want to hear from you about those items which
you believe we should, with joint agreement, undertake together.
Today, we will continue the work of this Committee that began
last month to examine what is called waste, fraud, and abuse in
the COVID relief programs. Already the Committee’s work has
made an impact in the form of the Biden Administration’s long
overdue anti-fraud plan, which was formally released in the wake
of the full Committee hearing last month. We have yet to see the
details of the plan, but this Administration has made certain that
(1)
2

they will brief us on this issue because it is important to them, it
is important to us, and it is important to the American people.
So here we are, trying to work together, calling for bipartisan
legislation, but we must do this, and it really sits right now on the
feet of the Administration to make sure we all work together. We
are not going to blame anyone. We want to run to fix, not fight.
But hearing the experts last month, this Committee heard that
Federal and state agencies were not prepared for this massive un-
dertaking, which included a lot of money, of funds, and created an
unprecedented demand and accelerated timeframes to deal with a
pandemic. But the reality is fraud and improper payments in Fed-
eral programs have been growing, and these are not new problems.
They are problems that must be addressed, and I have a sneaking
suspicion we are going to find out we may be in the same cir-
cumstance again. So, it is up to all of us to work together to find
better answers.
Another reality is that the amount of fraud and improper pay-
ments in the COVID relief program is so large that it is larger
than the GDP of many other countries. So, we need to look past
the past and determine the underlying problems, but we need to
focus on the present, what is being done, and the future, what
needs to be done. We need to determine what we need to do in
terms of additional legislation. If it is required, we want to ap-
proach it as best we can together. And the statute of limitations
on fraud cases likely to be extended, we will ask your opinion on
that.
As our work continues, we need to examine why existing Federal
capacities and capabilities, like the Treasury’s Do Not Pay system,
apparently did not serve as the most failsafe system during the
pandemic. We need to examine efforts to protect against identity
theft, a main factor in COVID fraud. This will lead us to GSA’s
Login.gov, intended to be a one-stop shop to verify the identity of
those seeking Federal benefits. We need to hear from the private
sector, both in terms of what technologies exist to protect against
fraud, but also to make sure that we are bringing to bear those
things which allow government quickly and ably to prepare itself
for crisis. So, there is a lot that needs to be done as part of this:
adopting a recurrent oversight model for the Subcommittee to track
agency progress.
I want to thank today’s witnesses. Mr. Turner, thank you for tak-
ing time to be with us today, Inspector General from the Depart-
ment of Labor; Mr. Delmar, Acting Inspector General at the De-
partment of Treasury; and Mr. Shoemaker, Deputy Inspector Gen-
eral at the SBA, Small Business Administration. So, Mr. Shoe-
maker, I understand you got this promotion six months ago, so con-
gratulations. We are delighted that you are here. I also understand
that you are appearing in place of Mr. Ware, the Inspector General,
since he is at a memorial service for his grandmother. I hope that
you would convey to him that your presence today is appreciated
and that we wish him the best in this time of need for his family
matters.
With that, I would now like to recognize the Ranking Member,
my friend, Mr. Mfume, for any opening statement that he would
3

choose to make. The gentleman is now recognized for the purpose
of making an opening statement.
Mr. MFUME. Well, thank you very, very much, Mr. Chair. I want
to thank you for convening this meeting. I agree with what you
said earlier that our purpose here is to find out what went wrong
and how to make sure it doesn’t go wrong again. And I want to add
my thanks again to the three of you, as the Chairman just men-
tioned, individually and collectively, for what you do. And I know
I keep saying it is a hard job, but it is a hard job because when
it is done right, it really requires a great deal of going beyond the
job descript and working to find ways to make us better as a Na-
tion. So, thank you again, Mr. Sessions. I am looking forward to
working with you. This is our inaugural meeting of this Committee
that has been established in the 118th Congress, and I am hoping
that we can move forward in many ways on bipartisan issues to
come up with solutions because at the end of the day, that is why
we were all sent here.
Today, the Oversight Subcommittee on Government Operations
and the Federal Workforce convenes. As I just said, it is the first
hearing of the 118th Congress. As Ranking Member of the Sub-
committee and as a Member who represents a large population of
Federal workers, I look forward to supporting our Nation’s hard
working civil servants. And the American people, in my opinion,
deserve a Federal Government that delivers responsible, credible,
and effective policies and programs. Though we may differ some-
times in terms of our strategies and our programs, I believe that
the Chair and I are seriously committed to serving the constitu-
encies to the best of our abilities. And Chairman Sessions, again,
I am looking forward to the many days and weeks ahead as we try
to do that together.
Today, we hold the second hearing of this Congress focused on
the subject of evaluating improper payments and fraud in pan-
demic programs. I want to remind my fellow Members that millions
of Americans, regardless of their political affiliation or their geog-
raphy, felt the effects of the global pandemic when individuals and
families and communities desperately needed a lifeline. Congress
acted swiftly to provide expanded unemployment benefits to work-
ers. We directed administrative funding to states that were strug-
gling to process skyrocketing unemployment insurance claims, and
these expanded benefits over time helped millions of Americans to
make ends meet. And my office alone worked with hundreds of con-
stituents throughout the Greater Baltimore area to ensure that
they receive these crucial dollars, these real dollars that were
meant for real people.
The pandemic triggered, as we all know, economic uncertainty,
particularly the disastrous things that have happened to our small
business community, so much so that by April 2020, an estimated
45 percent of those businesses across the country unfortunately
were forced to shut their doors. Thankfully, Congress’s Paycheck
Protection Program authorized the Small Business Administration
to distribute a record $800 billion to help affected businesses across
the country continue to pay their employees. Unfortunately, what
we have seen previously failed to implement the safeguards that
4

we in the Congress explicitly designed by statute, which exacer-
bated, in my opinion, the pandemic fraud.
On the other hand, Congress and the Biden Administration took
decisive action to identify improper payments and to combat fraud.
For example, congressional Democrats passed the American Rescue
Plan, which included additional funding for Federal offices and of-
fices of inspectors general to be able to do what all of you are
doing, that is to combat fraud. We established the COVID–19
Fraud Enforcement Task Force, as you are aware. And in the pre-
vious Congress, while I served as vice chair of the Small Business
Committee, we held substantial hearings on COVID–19 pandemic
relief programs. We participated in numerous bipartisan briefings
with the SBA. I co-sponsored and we all moved to pass H.R. 7352,
the PPP and Bank Fraud Enforcement Harmonization Act of 2022,
which, again, was a bipartisan bill to extend the statute of limita-
tions and to be able to go after the bad guys that continued to com-
mit PPP fraud. These are real solutions that helped the agencies
to crack down on fraud and to make sure that our Federal dollars
were being used and being sent to where they were intended to go.
In March 2020, the Subcommittee on Government Operations,
led by my friend, Mr. Connolly of Virginia, held a hearing to ex-
plore how the Federal Government should, in fact, use data shar-
ing, proactive analytics, and customer experience to research and
to prevent improper payments and fraud before they occur.
Throughout the pandemic, many of us have fought hard on be-
half of Americans all over the country. I would remind everyone
that it was under Chairman Jim Clyburn’s leadership that the
Subcommittee on the Coronavirus Crisis held seven hearings fo-
cused on combating fraud in relief programs and recovered mil-
lions, at least $109 million, and they are still recovering money
that was improperly used and payments that went out improperly.
Among the many accomplishments, that committee helped us to be
able to do what we ought to do when things go awry, and that is
to try to find a way to save taxpayers’ dollars before they continue
to become victims of fraud. And I would like to enter, Mr. Chair-
man, into the record the final report of that subcommittee.
Mr. SESSIONS. Without objection, it will be entered in the record.
Mr. MFUME. Thank you, sir, which details the major successes of
that Democratic effort to prevent fraudsters from exploiting weak-
nesses in the program.
I would like to just close by saying I want to really be clear.
Fraudsters must be identified, prosecuted, and sent to jail. This is
theft, grand theft with a great deal of premeditation, and to be able
to find a way to recover funds and to protect the innocent, I think
is the very least we can do. And the innocent, in this instance, is
the United States of America, which responded, as it should, to the
great need that had come about as a result of the pandemic.
So, I look forward to today’s hearing. Gentlemen, I would just
say this to you also. Aside from the fact that I think you have a
very hard job, we are looking to you to find out what you found out
and to tell us how we can legislatively and in a bipartisan manner
put in place the things that we need, based on your investigations,
to stop a lot of what is still going on, but more importantly, to pre-
5

vent the things that are incubating now that we—and you have
identified and we know are huge problems.
So, with that, Mr. Chair, I want to thank you again, and I yield
back the balance of my time.
Mr. SESSIONS. I thank the gentleman, the Ranking Member, my
friend, but also for his comments which we agree on. And so, we
will shake hands here with an opportunity to begin that way, and
we will work on this. I want to thank also the distinguished gen-
tleman, the Chairman of the Committee, Mr. Comer, for him tak-
ing time to be with us today, also my colleagues that have joined
us, and my colleagues and your colleagues that are on this side.
We will go through witness introductions here very quickly. The
gentleman, Mr. Larry Turner, serves as Inspector General of the
Department of Labor. He leads the organization in detecting and
deterring waste, fraud, and abuse in the Department of Labor pro-
grams. This includes investigating fraudulent unemployment insur-
ance claims and improper payments that resulted from COVID–19
pandemic programs. Our next witness will be the gentleman, Rich-
ard Delmar, serves as the Acting Inspector General of the Treasury
Department. In this role, he conducts oversight of Treasury pro-
grams and operations, including the Coronavirus Relief Fund and
the Coronavirus State and Local Fiscal Recovery Funds. He also
supported the operation of the Pandemic Response Accountability
Committee to bring together the IG’s affected in all the areas. Last,
Sheldon Shoemaker is the Deputy Inspector General at the U.S.
Small Business Administration Office of Inspector General. He
serves as a principal adviser to the IG and assists with conducting
oversight of the SBA’s programs and operations, including the Pay-
check Protection Program and the Economic Injury Disaster Loan
program.
Gentlemen, I would ask pursuant to Committee Rule 9(g), the
witnesses would please stand and raise their right hands to be
sworn, and the gentlemen will affirm at the end, if you would
choose.
Do you solemnly swear or affirm that the testimony that you are
about to give is the truth, the whole truth and nothing but the
truth, so help you God?
[A chorus of ayes.]
Mr. SESSIONS. Let the record reflect that all three witnesses,
thank you very much, answered the question in the affirmative,
and thank you very much.
We are now going to begin those opening statements. Mr. Tur-
ner, you will be first. Mr. Delmar, you will be second. Mr. Shoe-
maker, you will be third.
The gentleman, Mr. Turner, is recognized.

STATEMENT OF LARRY D. TURNER, INSPECTOR GENERAL, U.S.
DEPARTMENT OF LABOR
Mr. TURNER. Good afternoon, Chairman Sessions, Ranking Mem-
ber Mfume, and distinguished Members of the Committee. Thank
you for the opportunity to testify today. Although the OIG oversees
all DOL programs, my testimony focuses on our oversight of the
Unemployment Insurance Program. The views expressed here are
6

based on the independent work of the OIG and are not intended
to reflect DOL’s positions.
Mr. Chairman, the OIG remains committed to assisting DOL and
Congress in improving the efficiency and integrity of the UI Pro-
gram. Strengthening the program to prevent and detect fraud is
key to ensuring that unemployed workers quickly receive needed
benefits while safeguarding taxpayer dollars. For many years, the
OIG has highlighted significant concerns with DOL and states’
ability to deploy UI benefits expeditiously and efficiently while en-
suring integrity and adequate oversight. The pandemic com-
pounded these challenges, creating a perfect storm. As the OIG re-
ported, states were not prepared to process the historic volume of
claims, resulting in significant delays. Initial reliance on claimant
self-certification rendered the PUA Program susceptible to fraud,
and the unprecedented infusion of Federal funds gave fraudsters a
high value target to exploit.
That, combined with ease of identity theft and system weak-
nesses previously identified by the OIG, allowed criminals to de-
fraud the program. DOL recently reported an annual improper pay-
ment rate estimate of 21.52 percent for Fiscal Year 2022. When ap-
plied to the approximately $888 billion in UI benefits paid during
the pandemic, at least $191 billion could have been paid improp-
erly, with a significant portion attributable to fraud.
Following the passage of the CARES Act, fraud against the UI
Program exploded. Since April 1, 2010, the OIG opened more than
198,000 UI investigative matters. This represents 1,000 times in-
crease in the volume of our UI work. The OIG took immediate ac-
tion to respond to this crisis. After passage of the CARES Act, we
issued an advisory report identifying initial areas of concern for
DOL and the states. Since then, we released several additional re-
ports. We also hired additional investigators, strengthened our
data analytics program, and worked with DOJ to create a national
UI fraud Task Force. We leveraged CIGI and PRAC resources, im-
plemented outreach and education with the states, and collaborate
with PRAC, DOJ and the Secret Service to recover fraudulent
funds. We also engaged with international law enforcement part-
ners to pursue transnational organized criminal groups.
The OIG efforts resulted in more than 700 search warrants exe-
cuted and 1,200 individuals charged with UI fraud. These charges
resulted in more than 500 convictions, 11,000 months of incarcer-
ation, and now $105 million of investigative results. We also identi-
fied $45.6 billion in potentially fraudulent UI benefits paid to four
high-risk areas.
In response to our recommendations, DOL instituted efforts to
improve the UI Program. However, several OIG recommendations
remain unimplemented regarding OIG’s access to UI data: state
staffing and IT modernization, guidance and assistance to the
states, and controls for improper payments.
Mr. Chairman, I want to take a minute to highlight three chal-
lenges impacting our work. First is data access. For years, the OIG
requested access to data to proactively monitor the UI Program.
Given the magnitude of the issues at the start of the pandemic, we
took the unprecedented step of issuing IG subpoenas to all state
work force agencies. The data allowed us to identify billions in po-
7

tential fraud. However, the subpoena process took months and de-
layed our ability to detect fraud.
Second, the statute of limitations associated with pandemic UI
fraud will start to expire in early 2025. UI crimes often include
complex schemes and require significant resources and time to in-
vestigate. Last year, we recommended that Congress extend the
statute of limitations. Third, our work is being impacted by re-
source limitations. The OIG received $38.5 million to oversee close
to $1 trillion in expanded programs. Unfortunately, it will be fully
expended by April 2024. Combined with a lower-than-expected Fis-
cal Year 2023 appropriation, our funding is insufficient to maintain
the level of oversight we deployed during the pandemic. However,
the President’s recent proposal to provide OIG with $100 million
would allow us to continue fighting pandemic-related fraud beyond
2024.
Mr. Chairman, thank you for the opportunity to testify about our
work overseeing the UI Program. I want to thank the dedicated
OIG employees, who continue to work tirelessly in support of our
oversight mission. I look forward to answering any questions that
you or any Members of the Committee may have. Thank you.
Mr. SESSIONS. Mr. Turner, thank you very much. We are going
to take you up on the activities that you talked about, and that will
be done together. Mr. Delmar, you are recognized.
STATEMENT OF RICHARD DELMAR, ACTING INSPECTOR
GENERAL, U.S. DEPARTMENT OF THE TREASURY
Mr. DELMAR. Thank you, Mr. Chairman, Ranking Member
Mfume, and Members of the Subcommittee. I am Rich Delmar, the
Acting Inspector General of the Treasury Department. Thanks for
inviting me to discuss our office’s oversight work to address waste-
ful spending in pandemic recovery programs.
Among the three acts that we are talking about here, Treasury’s
responsibilities and workloads have expanded greatly since 2020.
The Department, other than the IRS, is tasked with programming
for over $655 billion in aid to more than 35,000 recipients, includ-
ing state, local, territorial, and tribal government entities, all in a
relatively short period of time. My office is responsible for oversight
of 12 programs, and I will talk today about four of them where our
oversight has found improper payments, fraud, question costs, and
internal control problems. They are the Air Carrier Payroll Support
Program, the original Coronavirus Relief Fund, the Emergency
Rental Assistance Program, and the State and Local Fiscal Recov-
ery Fund.
The Air Carrier Payroll Support Program requires Treasury to
provide financial assistance to passenger and cargo air carriers and
related contractors for the continuation of payments of employees’
wages, salaries, and benefits. Among the three acts, a total of $63
billion has been and will be made available to these recipients. We
are mandated to audit the certified financial reports that a subset
of this eligible universe provides to Treasury and that determines
the funding amounts that they receive. In our work, we found that
unclear guidance and rules resulted in systemic calculation and re-
porting mistakes. We worked with Treasury to correct this, and the
applicants resubmitted their reports, but it allowed self-certifi-
8

cation with no independent Treasury review of the financial infor-
mation. This is not fully effective, and we are working with the De-
partment to get a statistically reliable estimate of improper pay-
ments.
Moving on. The Coronavirus Relief Fund appropriated $150 bil-
lion for making payments to states, territories, tribal governments,
and qualifying units of local government for costs incurred between
March 2020 and December 2021, or December 2022 for tribal enti-
ties. Through our reviews of the quarterly audited awardee report-
ing, through audits and desk reviews, we have identified question
costs of $2.6 billion thus far for unsupported and unallowable
charges to the CRF. We have identified internal control defi-
ciencies, such as lack of supporting documentation, unallowable
costs, and payroll expenses not supported, and we expect that these
types of findings will likely occur in other Treasury programs if not
corrected.
Under the two emergency rental programs, $47 billion was ap-
proved for grants to states, territories, tribal governments, and cer-
tain units of local government. We are auditing Treasury’s imple-
mentation of the program, and we have noted concerns with an
overall delayed standup of the grantee reporting portal and Treas-
ury’s compliance monitoring functions, which impedes monitoring
and audit. These ERA programs have engendered a lot of coverage
and a lot of complaints that we have received. We have set up a
cross-functional component made up of auditors, investigators, and
lawyers to review and process these complaints to determine
whether they warrant investigation, or audit, or referral to another
agency for resolution. That is a significant priority for us.
Last, the $350 billion State and Local Fiscal Recovery Fund has
a broader set of allowable uses. And we have been auditing the im-
plementation of this, and we have noted, again, a delayed standup
of the portal for grantee reporting and monitoring functions, and
this, of course, impedes monitoring and audit.
So, in sum, I would say that the challenge of quickly setting up
operations to disperse large quantities of money to large networks
of recipients created issues. The Agency should not solely rely on
self-certification by entities. Relief guidance needs to be accurate
and issued quickly. The absence of internal controls creates prob-
lems for people getting money that they are not entitled to. Failing
to stand up timely reporting capabilities creates monitoring chal-
lenges. Watchdogs need timely access to the data, and program in-
tegrity can be enhanced by other means such as state and local en-
forcement, both criminal and civil. Thank you for the opportunity
to testify before you.
Mr. SESSIONS. Mr. Delmar, thank you very much. Mr. Shoe-
maker, you are recognized.
STATEMENT OF SHELDON SHOEMAKER, DEPUTY INSPECTOR
GENERAL, U.S. SMALL BUSINESS ADMINISTRATION
Mr. SHOEMAKER. Chairman Sessions, Ranking Member Mfume,
and distinguished Members of the Subcommittee, on behalf of In-
spector General Ware, who is unable to be here this afternoon due
to a death in his family, thank you for the opportunity to appear
before you today. I am honored to represent the dedicated men and
9

women of SBA OIG and their work to combat fraud and improper
payments in SBA’s pandemic response programs.
Our office proactively raised awareness of the risk associated
with loan programs intended to mitigate economic damage and dis-
asters. Prior to the kickoff of SBA’s pandemic response programs,
we issued three white papers to offer insights learned from our dec-
ades of oversight, including oversight of SBA’s role in the Nation’s
response to the Great Recession of 2008 and natural disasters, such
as major hurricanes. Our insight offered key internal controls for
policymakers to consider in mitigating the risk of fraud and im-
proper payments, put another way, to avoid a pay-and-chase model.
Though SBA’s programs are credited for bolstering the Nation’s
small businesses during the pandemic, our oversight has found the
internal control environment did not prevent or deter fraud, and,
in many instances, did not provide assurance that eligible recipi-
ents receive funds. SBA’s first round of PPP loans resulted in 14
years’ worth of lending in 14 days, and its EIDL Program included
a bridge grant up to $10,000 to expedite funds to assist the Na-
tion’s small businesses and instill confidence in the Nation’s econ-
omy. As the program swelled to more than $1 trillion, so did the
risk to taxpayers.
Our oversight efforts identified systemic weaknesses that existed
prior to the pandemic were further strained by the effort. For ex-
ample, SBA’s disaster response programs are consistently at risk
for improper payments. This is due in large part to the speed at
which the disaster loans are delivered relative to the calibration of
the internal control balance. We can see the parallels in SBA’s re-
sponse programs. While fraudulent payments are considered im-
proper, not all improper payments are the result of fraud. However,
the fraud committed in SBA’s programs has been characterized as
the biggest fraud in a generation. We have unleashed the power of
data analytics in our oversight fueled by the expertise and experi-
ence of our criminal investigators, auditors, and analysts. We in-
tend to publish an estimate of the fraud existing within PPP and
EIDL Programs in mid to late spring.
Our office has designated SBA’s Pandemic Response Program as
the most significant top management and performance challenge
facing the Agency. Our oversight reviews and resources are di-
rected toward this challenge along with other top management
challenges. To date, we have issued 29 pandemic-related reports
with dozens of recommendations for corrective action to the Agen-
cy. In one report, we questioned the expenditure of $4.5 billion in
EIDL Advanced Program. The criteria in place allowed for $1,000
in grant money for each employee, up to 10 employees. We found
$4.5 billion in payments to sole proprietors that exceeded the allow-
able $1,000 per employee. A simple system control that disallowed
payments over $1,000 for each employee or a validation with tax
identification records could have prevented these improper pay-
ments.
We also found in both PPP and EIDL, the Department of Treas-
ury’s Do Not Pay list was not included within the initial internal
control environment, resulting in billions of dollars of likely im-
proper payments. The EIDL Program also was rife with suspected
identity theft, with SBA having received over 1.6 million com-
10

plaints associated with EIDL applications. When identity assur-
ance is not provided to the internal control environment, we can
anticipate improper payments and fraud.
With our law enforcement partners, we have taken the fraud
fight directly to the doorsteps of the wrongdoers. Our investigative
work has resulted in 793 indictments, 635 arrests, 446 convictions,
and that is as of January 2023. Also, over $8 billion in EIDL funds
have been returned to SBA by financial institutions and another
$20 billion by borrowers. OIG has played a key role in the return
of these funds by working with law enforcement partners, financial
institutions, and educating the public about fraud in the pandemic
relief programs. We are grateful for congressional action last year
to extend the statute of limitations for PPP and EIDL to 10 years.
It is vital that sufficient resources also are available to our office
to bring wrongdoers to justice and deter future wrongdoing. The
Nation can depend on OIG to provide independent, objective, and
timely oversight of SBA. Thank you for the opportunity to speak
to you today. I am happy to answer any questions you may have
of me.
Mr. SESSIONS. Gentlemen, thank you very much, the opportunity
for you to be here highlights your viewpoints in working within
your agencies. Mr. Turner and Mr. Shoemaker, what happened to
the money that was recovered?
Mr. TURNER. Well, it was an easy target for fraudsters partly be-
cause of self-certification, I believe, and with the IG not able to go
and get direct access to the data that we needed, we couldn’t deter-
mine it earlier. But we were one of the first groups to identify that
self-certification was a problem, and we brought it to the attention
of the Department. I believe the first nine months with the self-cer-
tification went unchecked, and that had a lot to do with a lot of
the fraud.
Mr. SESSIONS. OK. Mr. Shoemaker, you referred to money that
was, as a result of the investigation, found and brought back. What
happened to that money?
Mr. SHOEMAKER. Yes. As I indicated, there was $20 billion re-
turned from borrowers and $8 billion by financial institutions.
There is also money that is recovered through our investigations,
so this money is coming back to SBA in multiple different vectors.
And you know, the timeliness of it actually landing in the Treasury
is an issue. We actually have an ongoing review to trace that
money, to audit to ensure exactly where that money is coming back
into the SBA programs so that it can be made available potentially
for other uses or, at a minimum, be available within the Treasury.
Mr. SESSIONS. Mr. Mfume, would that be something that you
would like to also have us work together on?
Mr. MFUME. It would be.
Mr. SESSIONS. They went out and got money, they brought it
back in, what did you do with it.
Mr. MFUME. It would be.
Mr. SESSIONS. So, we will be following back up on that, and Mr.
Shoemaker and Mr. Turner, I would like to flag that for you. We
are interested in the money that was recovered, where that money
exists, where it came back, where it exists, and what the legality
is of those funds.
11

Mr. Turner, some of the things that we talked about today deal
with issues that we spoke of down when Mr. Mfume and I were at
your table and deals with getting data from states. Is this idea that
you have that, that we are concurring on, something that you
would like us to work together, or is it something that you would
go do theoretically by yourself?
Mr. TURNER. Well, I think it would help to get help from you be-
cause our interpretation of the CARES Act allowed us to have au-
thority to get that data. Also, the IG Act gives us the authority.
However, the Department interpreted that they didn’t have the au-
thority to provide that directly to us.
Mr. SESSIONS. That is great. Mr. Shoemaker?
Mr. SHOEMAKER. On unemployment insurance?
Mr. SESSIONS. On the opportunity to work—whether you need
our assistance to work with you on these problems in dealing with
the states?
Mr. SHOEMAKER. SBA’s programs are not state programs. The
pandemic response programs—the PPP Program, SBA has lending
partners, you know, which is across the Nation, but SBA’s pro-
grams are not directed to the states.
Mr. SESSIONS. Right. Right. Where the problem is, is also in
banks that represent those people, so we will have to work on that.
Thank you very much, gentlemen. Mr. Mfume?
Mr. MFUME. Thank you, Mr. Chair. Well, gentlemen, one thing
we are sure of, and that is that the road to hell is still paved with
good intentions. We were in an absolute national emergency. Mem-
bers of this body on both sides of the aisle and in the other body
all were searching for answers. We had to come up with a way to
appropriate funds to get them out. And as I listen to your testi-
mony now regarding what you have found, the best intentions
there have often gone astray, and that is why I keep getting back
to what you found, what you think we ought to do with it, and how
that we never, ever make these kinds of mistakes again.
Mr. Shoemaker, I want to talk a bit about the Emergency Rental
Assistance. That particularly got my attention because of this
whole issue of self-certification, which I think everybody should
have realized that a bell was going off. And I don’t know if that
was the case at SBA or anywhere else, but when you allow self-
certification, you allow a lot of hanky-panky to take place. And
there are a lot of people, unscrupulous people who took advantage
of this, which is what I keep saying over and over again. I am glad
you are prosecuting them, I am glad they are going to jail, and I
am glad that for the people who pay their tax dollars. In this in-
stance at least, there is some hope that some of the money will be
recovered. And I am thinking particularly about senior citizens who
really needed rental assistance, people with disabilities, our Na-
tion’s veterans, middle-class people who are unemployed, and poor
people, all of which needed this Emergency Rental Assistance. And
your findings are astounding, and I am just hoping that moving
forward the lessons learned here are lessons learned forever.
Now, we extended the statute of limitations, as you mentioned.
Do you think, or any of you think, there needs to be another exten-
sion beyond the 10-year window that we are in right now?
12

Mr. TURNER. I believe there should be an extension beyond the
10 years. You know, just the cases that we have alone that are
open, 168,000, we figured it would take 11 years just to go through
those cases, and we are getting 100 to 300 complaints weekly.
Mr. MFUME. OK. While I have you, Mr. Turner, you talked also
about the impediment that you face in terms of data access. Can
you expand on that for just a moment?
Mr. TURNER. Yes, I can. At the beginning of the pandemic, we
had to issue IG subpoenas because we went to the Department,
and we are not able to get them to agree as we felt that they
should be able to provide us direct access. And I think going for-
ward, if Congress could somehow be more explicit in terms of what
can and cannot be done will probably be helpful. But anyway, I had
to issue IG subpoenas, and that took months to get the data that
we couldn’t get the Department to give out guidance directly. And
that also caused us some of the delay because we had to get it in
a certain format in addition to that, but we didn’t stop there with
notifying the Department.
We also gave advisory reports and alert memos and met with
Members of Congress to alert them to the problem. It was only be-
cause of what we put forth that that was officially changed nine
months later, but at that point, about $80 billion had gone through
the PUA Program.
Mr. MFUME. And do you find now with this sort of congressional
oversight, by way of committees that have jurisdiction over many
of these agencies, that they are complying faster, or is it about the
same in terms of your access to their data?
Mr. TURNER. Well, we have a temporary fix in place right now
that expires at the end of the year. So, we are trying to work with
the Department, and they have given grants to the states that com-
ply with our requests. But again, that agreement expires at the
end of the year, and then there is about a 14-month delta there be-
tween them using the rulemaking process to try to put a rule in
place.
Mr. MFUME. And unfortunately, there is no way we can truncate
the subpoena process, so compliance, I think, is the best remedy
there. And I hope the word at least goes out from this hearing to
all respective agencies of the government that they have to find a
way to provide access to this data. I am surprised that you have
got, how many pending, 180,000?
Mr. TURNER. We have 162,000 that are open complaints right
now that we are still going through.
Mr. MFUME. OK. So, the suggestion for an extension, again, on
the statute of limitations is well taken and well heard. Mr. Turner,
one quick thing and I will yield. I don’t have any time left. Would
direct hiring authority expedite the recruiting process and enable
your office to recruit a deeper pool of candidates to assist you?
Mr. TURNER. Yes, we believe so.
Mr. MFUME. Thank you very much. I yield back, Mr. Chair.
Mr. SESSIONS. Thank you very much. The gentleman from Ari-
zona, Mr. Biggs.
Mr. BIGGS. Thank you, Mr. Chairman. I thank the witnesses for
being here. The Federal Government spent $5 trillion-plus in relief
programs in response to COVID–19. And estimates vary widely,
13

but testimony from experts before this Committee last year sug-
gested that waste, fraud, and abuse in the COVID–19 unemploy-
ment program alone exceeded $400 billion, at least half of which
went to organized foreign crime syndicates. So, I have got a bunch
of questions for each of you. I am not going to be able to get to all
of them, but I am going to start with Mr. Delmar. I will try to get
back to you, Mr. Turner, so you are off the hook for the beginning.
But, Mr. Delmar, the Treasury Department is responsible for man-
aging coronavirus relief funds, state and local fiscal recovery funds,
as well as several other funds. Can you provide the Committee
with the total amount of funding that remains unspent across ac-
counts at Treasury?
Mr. DELMAR. Yes, I can. We can actually give you a specific writ-
ten summary.
Mr. BIGGS. When might we expect that?
Mr. DELMAR. I can get that to you next week, sir.
Mr. BIGGS. That would be beautiful. Thank you, Mr. Delmar, and
that would include state agencies as well?
Mr. DELMAR. I am sorry?
Mr. BIGGS. Would that include what amount of money remains
unspent in state agencies? Do you have that information?
Mr. DELMAR. I don’t know. I will find out and I will get back to
you.
Mr. BIGGS. OK. Does your office have, and you will need to get
back to me, I am sure, on this, too, state-by-state numbers for
unspent funding, both obligated and unobligated in programs that
are unexpired or otherwise expired?
Mr. DELMAR. I believe we have them for overall, and I am sure
we could probably find them on a state-by-state basis.
Mr. BIGGS. OK. If you could please provide what information you
have to the Committee by next week, that would be great.
Mr. BIGGS. Mr. Turner, during testimony delivered to this Com-
mittee last year, we were informed that the California state auditor
reported that the state’s Employment Development Department
was slow to take action to address unemployment insurance fraud.
In total, California alone lost in excess of $10 billion to fraudulent
claims, and you have mentioned some of those. Can you identify for
us some of the failures of the California Department?
Mr. TURNER. Well, let me just say, it was just not California. We
found that some of those problems that California experienced was
experienced throughout the country. I hear what you are saying,
but it was really through our reviews——
Mr. SESSIONS. Could the gentleman answer the question——
Mr. BIGGS. Yes.
Mr. SESSIONS [continuing]. Specifically as it relates to California,
please?
Mr. BIGGS. I am OK if you just say they all have self-identifica-
tion, which was a problem. Are we getting back to that?
Mr. TURNER. Yes, with self-certification, and also there was sto-
len identity, stolen Social Security numbers.
Mr. BIGGS. So, you had ID theft as well?
Mr. TURNER. Correct.
14

Mr. BIGGS. OK. In what ways does the Department of Labor
track state work force agencies that slow walked correction of fraud
in UI Programs?
Mr. TURNER. State that again, please? I’m sorry.
Mr. BIGGS. Yes. In what ways does the Department of Labor
track state work force agencies that slow walked correctives of
fraud in the UI Programs?
Mr. TURNER. Basically, through our reviews and audits, we were
able to take a look at are they meeting the standards. I think the
standard is to issue those payments out between 14 to 21 days, and
the average was one to two months.
Mr. BIGGS. Thank you. Mr. Shoemaker, with regard to SBA, a
year ago—this is a year ago—there was estimates that there was
$76 billion in potential fraud in the SBA program. The SBA itself
estimated $78 billion. Secret Service estimated $100 billion in im-
proper payments. What is that number finally that SBA holds to
now in improper payments?
Mr. SHOEMAKER. Thank you for the question. The number you
are referring to was $78 billion in the EIDL Program. That was a
result of work from our office, and that was a collection of our re-
ports that we remove the duplicates. So, we had a number, it was
$78 billion. That number is $86 billion from ensuing work. That
does not include the PPP Program. You know, our work in that
area has uncovered probably another $20 billion potential fraud in
the PPP Program, but we have an ongoing project right now to
come up with a comprehensive estimate of the fraud within the
PPP and the EIDL Program. So currently what I could tell you, it
will be more than $100 billion.
Mr. BIGGS. Thank you, and then I just want to get back to you,
Mr. Turner. I want to make sure I understand what is the estimate
of the fraud that your Agency has uncovered, the IG’s office has un-
covered in the unemployment arena.
Mr. TURNER. We are looking at $76 billion, and that is based on
the fraud rate that the Department produced at 8.5 percent of $888
billion, so $76 billion, and we believe that is on the low end for the
fact that PUA was not included in that number. And the Depart-
ment will have the PUA number issued sometime this year is what
they have told us.
Mr. BIGGS. All right. Thank you. I appreciate all of you being
here. Thank you, Mr. Chairman. I yield.
Mr. SESSIONS. Mr. Turner, I would like to just ask a question
just to follow up, be sure Mr. Mfume and I got it. Social Security
numbers were duplicate to where they went to two people, or it
went to a different person that may not have qualified?
Mr. TURNER. It went to kind of both. We had Social Security
numbers that were stolen off the dark web, and in some cases, we
have one person file for claims in 42 different states.
Mr. SESSIONS. Thank you, Mr. Turner. The gentlewoman from
the District of Columbia, Ms. Norton.
Ms. NORTON. Thank you, Mr. Chairman, and I appreciate this
hearing. The Pandemic Response Accountability Committee, Mr.
Shoemaker, provides independent oversight of approximately $5
trillion in pandemic relief spending and helps coordinating to facili-
tate oversight by Federal inspectors general. Congressional Demo-
15

crats enacted the American Rescue Plan, which provided an addi-
tional $40 million to the Pandemic Rescue Accountability Com-
mittee to further strengthen their oversight. In 2021, the Pandemic
Response Accountability Committee created the so-called Pandemic
Analytical Center of Excellence—we call that PACE—a leading-
edge analytic platform that inspectors general can leverage to root
out and prevent fraud. So, Mr. Shoemaker, my question to you is
how has your office leveraged the enhanced data analytics capabili-
ties that the PACE offers to optimize the effects of your limited re-
sources?
Mr. SHOEMAKER. Thank you for the question. Our office in the
early days of the pandemic received over 100,000 hotline com-
plaints. That was within the first year. We typically receive less
than 1,000. That number has since increased to over 230,000, so
we engaged the PACE to help us triage those hotline complaints.
That was at the initial stage. We have since developed an in-house
data analytics capability where we have further refined that proc-
ess to use topic modeling artificial intelligence to distill that
230,000 leads into 81,000 actionable leads, which equates to about
100 years’ worth of investigative work for our office.
The PACE also has what we would consider a kind of a
groundbreaking effort of shared service where they put in place a
blanket purchase agreement for data scientists, data validate, data
visualization, and data structuring. We have taken advantage of
that contracting vehicle. So, the limited number of data scientists
we have within our office—we also have contracted data scientists
to help us do our work, so we are using the data scientists to basi-
cally force multiply our criminal investigators so we work harder
and smarter with these tools.
Ms. NORTON. All right. So, as I understand it, enhanced data
analytics do save you valuable time and resources by enabling your
office to determine which complaints to pursue. That is correct?
Mr. SHOEMAKER. That is correct, and at SBA OIG, we have basi-
cally integrated data analytics into heart of our oversight.
Ms. NORTON. Mr. Shoemaker, how could codifying the capabili-
ties of the PACE ensure that you and other inspectors general can
more effectively and efficiently conduct oversight?
Mr. SHOEMAKER. At the early stages, they were a resource that
we were able to leverage. So, the fact that you would want that re-
source to be available during the next disaster for the inspector
general community, I think that that is a worthwhile investment.
Ms. NORTON. Thank you. Mr. Delmar, do you agree that access
to a permanent and effective data analytics capability would help
you do your job?
Mr. DELMAR. Yes, ma’am. Like Mr. Shoemaker, we have set up
an in-house data analytics function. We have hired several data
professionals, and we have found that it is an excellent tool to just
basically get our arms around the incredible volume of information
that we are getting from all the reporting from all the thousands
of recipients. And it gives us an opportunity to make sense of the
raw numbers and detect trends, detect where problems are.
We do a lot of what we call risk analysis to decide where the best
places are to devote our resources with the best chance of finding
mistakes and finding fraud, so I think the big thing about the
16

PACE is it is a lesson from the last time. The Recovery Operation
Center with the RAD board back in the crisis of 2008, that was not
maintained, and so when this new crisis came, oversight was pretty
much starting from scratch. And for the matter of that, the Depart-
ment was in a lot of ways starting from scratch. Having an in-
house capability and saved knowledge will make it quicker and
more efficient to be able to respond to the next crisis.
Ms. NORTON. Thank you. Thanks very much, Mr. Chairman.
Mr. SESSIONS. Thank you very much. The gentleman from North
Carolina, Mr. Edwards.
Mr. EDWARDS. Thank you, Mr. Chairman. To all of you, thank
you for being here. We appreciate you taking time. My questions
are for Mr. Turner. Your office issued an advisory around claims
using Social Security numbers that were filed in multiple states,
used for deceased persons, of Federal inmates, and used to file for
unemployment claims with suspicious email accounts. What mech-
anisms exist for states to know when Social Security numbers are
used in multiple states?
Mr. TURNER. Well, I think going through NASWA, the Integrity
Data Hub is a tool that they can use to compare and cross ref-
erence Social Security numbers.
Mr. EDWARDS. And you say they can use it, yet this happened.
So, were they not using it?
Mr. TURNER. Well, it is not mandatory. It is not required for
them to belong to that or participate in the IDH. So, it is optional,
and not all states participate.
Mr. EDWARDS. Maybe we can change that. In December, you
issued to the Department a qualified opinion on its financial state-
ments, in part because it could not support $7.9 billion in unproc-
essed claims. How are there still unprocessed claims?
Mr. TURNER. We would like to know the same. Part of it has
been because some of the appeals that some of the states have
made or some of the claimants have made has not really been proc-
essed, and some states have not even reported the status, and that
is what really caused that. And so, the $7.9 billion that the Depart-
ment mentioned was really kind of a guess and we needed more
accountability and more proof, and that was the work that needed
to be done by the Department.
Mr. EDWARDS. Thank you for that. What are the key metrics that
this Subcommittee should track to determine if progress is being
made to prepare for the next crisis and to protect against fraud and
improper payments generally in unemployment programs?
Mr. TURNER. Well, I think there are several. One I would say
would be the improper payment rate. The other one would be the
fraud rate. And then I think also if the Department could keep
track of whether we get permanent access to the data that we are
requesting would be another thing they could look at, as well as
the PUA rate, which is supposed be released at the end of the year.
Those will be the four things that I would say.
Mr. EDWARDS. OK. And your office has referred over 23,000
fraud matters, I understand, that don’t meet Federal prosecution
guidelines back to the states for further action. Are you tracking
somehow what the states do with those cases?
17

Mr. TURNER. Yes, we do. When we refer those cases, we do track
those. We also plan on doing audit work to see exactly what they
did with those cases.
Mr. EDWARDS. OK. Last question from me. I served on the Over-
sight Committee in North Carolina for our unemployment program,
and I know that during the pandemic, we were issued a couple of
sequestration orders from the Federal Government to return sev-
eral hundred thousand, maybe even a few million dollars of unem-
ployment money that we had received. Would you know what the
total amount of unemployment money is that was sequestered from
around the country?
Mr. TURNER. I am not sure what that would be because unem-
ployment insurance is an entitlement, so I don’t know why that
would have been sequestered.
Mr. EDWARDS. All right. Thank you. Mr. Chairman, I would like
to yield the rest of my time to Representative Biggs.
Mr. SESSIONS. Mr. Biggs? I am sorry, would the gentleman state
that again who he would like to give the——
Mr. EDWARDS. I was going to yield the balance of my time to
Representative Biggs, but I am told that he is——
Mr. SESSIONS. You can’t see him. He is not here.
Mr. EDWARDS. OK.
Mr. SESSIONS. The gentleman yield back his time?
Mr. EDWARDS. Yes, sir.
Mr. SESSIONS. The gentleman yields back his time. Thank you
very much. The distinguished gentleman from Florida, Mr. Frost.
Mr. FROST. Thank you, Mr. Chairman, and I appreciate you all
being here today. Unemployment insurance programs are essential
to emergency lifelines. Obviously, when the pandemic hit, millions
of Americans could not work. Congress passed expanded unemploy-
ment benefits to keep people fed, keep people housed. The govern-
ment did its job, but it quickly became obvious that without func-
tional state infrastructure, which we have spoken about a little bit,
to distribute it, that aid, a lot of times, can get wasted. That is
where a lot of waste, fraud, and abuse really stems from. And we
have to talk about these antiquated state unemployment insurance
systems wasting the time and abusing people who are facing hard
times.
I want to return quickly to a question that my colleague from Ar-
izona had brought up. He seemed pretty specifically concerned with
the state of California’s unemployment system. Mr. Shoemaker,
you indicated that identity theft was one of those issues. Would you
say this issue was unique to California, or did many states experi-
ence this problem with identity theft verification?
Mr. SHOEMAKER. I believe Mr. Turner was speaking about unem-
ployment insurance relative to California. For SBA, though, the
EIDL Program did experience identity theft. I would be happy to
speak to that, but I think the question about California is to Mr.
Turner.
Mr. FROST. Yes, Mr. Turner?
Mr. TURNER. Yes. I think in the early days, the first maybe five
or six months, California had a high rate because there was not
really the scrutinization when it came to Social Security numbers.
18

Mr. FROST. Yes. Was this a problem that was unique to Cali-
fornia, or if any other states——
Mr. TURNER. No, that was a problem that occurred throughout
the country.
Mr. FROST. OK. So, it was a problem that occurred throughout
the country. You know, in my state, there are reports that have
come out that show that our Governor, Governor DeSantis knew
before the pandemic that Florida’s unemployment system had
major problems, glitches, and different messages. There was no
really serious attempts to help remedy those problems. At the
height of the pandemic, my state of Florida actually had the worst
unemployment system, slowest unemployment system, in the coun-
try in terms of processing claims, and at one point, the system
crashed. People had to move to using paper forms. The state rep-
resentative of mine, Anna Eskamani, had to really step up to really
help people through the process, and we are still hearing from con-
stituents that are having problems with the website right now.
This means in days of hunger, people not knowing if they have
enough money to buy groceries, and et cetera. You know, it helps
increase that anxiety and desperation.
Mr. Turner, are certain states still challenged to pay unemploy-
ment insurance claims in a timely manner?
Mr. TURNER. Certain states are still challenged. In part, it has
been because of the lack of IT modernization that we have pointed
out on a lot of our reviews, and the antiquated systems that they
had at the beginning of the pandemic, which still have not been
completely addressed.
Mr. FROST. What is being done to modernize these states’ IT sys-
tems so that way, unemployed workers don’t suffer, you know,
lengthy delays to receive their benefits?
Mr. TURNER. Well, I think it is going to require more oversight
on the Department’s part to make sure that the funds that are
being given are being utilized. During the Recovery Act of 2010,
there was $7 billion that was set aside for IT modernization, and
I think about $2 billion of that actually went to benefits payments,
and another $1.3 billion did not get used in the time that it was
required.
Mr. FROST. Got you. Got you. Now, to, like, you know, turn to
the solutions. You know, Congress enacted the American Rescue
Plan, $3.1 billion to modernize and strengthen Federal unemploy-
ment insurance systems. Mr. Turner, if a state unemployment in-
surance system is modernized, do you think that directly translates
to more efficient and effective user experience?
Mr. TURNER. Without a doubt.
Mr. FROST. And would you agree that that means there is less
waste, there is less fraud, there is less abuse when we are able to
put more money into those IT systems?
Mr. TURNER. Yes, I would agree with that.
Mr. FROST. OK. Thank you. I pray that my home state of Florida
will take advantage of the opportunity to modernize the IT system
so constituents are better served. Thank you all for your time, and
I yield back.
Mr. SESSIONS. And the distinguished gentleman from Florida,
Mr. Donalds, is recognized.
19

Mr. DONALDS. Thank you so much, Mr. Chairman. Mr. Turner,
actually to pick back up, you mentioned just in the previous line
of questioning that about $2 billion of the $7 billion that was in the
Recovery Act was actually used for benefit payments, not mod-
ernization. Is that correct?
Mr. TURNER. That is correct, and they were allowed to do that
within the rules of the dispense of those funds. So, it was allowed,
but that is what happened to it, yes.
Mr. DONALDS. Do you know what the allocation was of the $2 bil-
lion that was used across the various states? Was that proportion-
ally used?
Mr. TURNER. I can’t answer that. I am not sure.
Mr. DONALDS. OK. All right. I just wanted to get clarification on
that because, I mean, like a decade ago, which is typical of Wash-
ington, we said you could spend X amount of money on this, and
then in rulemaking, it gets changed to be used for Y, you know.
Maybe sometimes you might wonder why some of these things
don’t get solved. I would actually argue for our colleagues as we ap-
propriate dollars into the future, if we say it should be appro-
priated for X purpose, it should not be allowed to be used for Y
purpose.
Mr. TURNER. I would agree with your recommendation.
Mr. DONALDS. Is that fair?
Mr. TURNER. That is what I would suggest, yes.
Mr. DONALDS. Actually, to the other IGs, is that a fair rec-
ommendation for Members of Congress to not be loose with appro-
priating standards?
Mr. DELMAR. I would say, sir, that, you know, the more clear the
legislation is, the more clear Congress’ intent is on what is to be
benefited and what isn’t, the more efficient the rule making and
the guidance will be, and the more efficient the actual administra-
tion of the program will be.
Mr. DONALDS. All right. Mr. Shoemaker, you can comment as
well if you would like to.
Mr. SHOEMAKER. I would just align myself with the comments.
Mr. DONALDS. Well, I appreciate that because, you know, some-
body who has, you know, been a legislator now in two different leg-
islative bodies, yes, a clear direction from the legislature, in this
particular instance, Congress, is necessary to help you guys do your
jobs and the agencies alike. So maybe that is homework for myself
and for my colleagues on both sides of the aisle. Real quick, Mr.
Shoemaker. You talked a little bit about the Treasury’s Do Not Pay
List with respect to the EIDL Program. Do you want to expand
upon your thoughts about why SBA was not using Treasury’s Do
Not Pay List?
Mr. SHOEMAKER. Yes, thanks for the question. These programs
are calibrated for speed, and I believe SBA at the time just did not
put that control in place. And then even once they did put the con-
trol in place, there is a validation that is required whenever you
get a positive hit. You know, they are not always, you know, a de-
finitive hit, so it does take resources to verify. So, I believe that
they calibrated the control environment to not include that just for
the sake of speed. And of course, we see the results of that, because
20

what occurs is you have that lack of assurance that only eligible
entities are receiving those funds.
Mr. DONALDS. OK. And I appreciate that. A real quick question
for all of you, and Mr. Delmar, I am going to start with you. Does
Treasury have an accurate accounting of the amount of taxpayer
dollars that have been distributed to deceased individuals?
Mr. DELMAR. I believe overall it does. I mean, the amounts that
go out can be quantified. The problem in the reporting is, from the
recipients, we don’t always get all the data that we need and we
do not get it in a timely fashion, and some of the recipients have
their own infrastructure problems that we have seen delays and,
you know, incomplete responses. And the purposes to which——
Mr. DONALDS. And not to cut you off, but when you say recipi-
ents, do you mean individuals? Do you mean organizations? Do you
mean business?
Mr. DELMAR. Organizations.
Mr. DONALDS. OK. So, there are organizations that Treasury
sends money to that do not have enough computers, enough ability
to respond back to the information that Treasury requires for dis-
pensing those funds?
Mr. DELMAR. We have seen examples of that.
Mr. DONALDS. And Treasury still dispenses the funds?
Mr. DELMAR. Well, I do not know off the top of my head, you
know, how often and how recently the funds have gone out. We can
certainly get you follow-up information on that.
Mr. DONALDS. Well, Members, look, it looks like we got some-
where else that we got to figure something out because if Treasury
is sending money out and there are requirements for information,
and the recipients aren’t getting that back to Treasury, why are we
sending them money? I mean, it is like a simple thing. If I am
going to give you $10 and I say, hey, but I need this, and you do
not do it, you don’t get $10 more from me. That is just a personal
thing.
Real quick, just wrapping up. Mr. Turner, Mr. Shoemaker, I
don’t know if you can comment. Do your areas, Labor or SBA, do
they keep track or have an accounting of money going to deceased
individuals?
Mr. TURNER. We have $267 million.
Mr. DONALDS. Billion or million?
Mr. TURNER. Million.
Mr. DONALDS. Million?
Mr. TURNER. Yes.
Mr. DONALDS. Well, you almost scared me with that one. That
is $267 million scares me too, you know. OK. All right.
Mr. TURNER. But we identified $45.6 billion. That was part of
what we found in our review of those four areas, and $267 million
of that was for deceased individuals.
Mr. DONALDS. Forty-five billion dollars went out. I know I am a
little slightly over, Mr. Chairman. May I ask your indulgence just
to clarify this point?
Mr. SESSIONS. I appreciate the gentleman continuing his line of
questioning as any Member of this Committee would get that to
clarify questions.
Mr. DONALDS. OK. Thank you, Mr. Chairman.
21

Mr. SESSIONS. The gentleman may continue.
Mr. DONALDS. I appreciate that. Thank you, Mr. Chairman. Just
to clarify. We have $45 billion through the auspices of the Depart-
ment of Labor that have gone out, of which $267 million has gone
to deceased individuals?
Mr. TURNER. Yes, and that is potential fraud, but, yes, the num-
ber $267 million is correct.
Mr. DONALDS. All right. Listen, thank you so much, Mr. Turner.
Thank you for the indulgence, Mr. Chairman. I yield back.
Mr. SESSIONS. Mr. Donalds, thank you very much. The gen-
tleman yields back his time. The gentleman from Texas, Mr. Casar.
Mr. CASAR. Thank you, Mr. Chairman. In the 35th District of
Texas, we stretch from East Austin down to the west side of San
Antonio. The No. 1 industry that employs folks in my district is
service and hospitality. My constituents are overwhelmingly cooks,
servers, hotel workers, barbacks, the folks that oftentimes lost
their jobs during the pandemic. And so, to be really clear, there is
nobody that would be more upset about fraud and abuse of unem-
ployment insurance and fraud and abuse of critical programs that
were to keep their lives running and to keep them alive than the
working-class folks in my district. And that is why I am so appre-
ciative that the Biden Administration has put forward such signifi-
cant funds to looking out for fraud, especially from large criminal
organizations and oftentimes wealthy individuals that were trying
to game the system.
So, Mr. Turner, how would President Biden’s allocation of tens,
if not hundreds of millions of dollars to prosecuting systemic pan-
demic fraud address your findings on fraud in DOL pandemic as-
sistance programs?
Mr. TURNER. Thanks for asking that question. Currently, the
money that we have for ARPA expires at the end of this fiscal year,
and in the first and second quarter, the rest of the CARES Act
fund will expire. So, if we are able to sustain the level that we are
currently operating under, we will need some funds right away,
and so that $100 million that the President is proposing would
really help us do that. One of the caveats that I would say is that
we need it right away because without that, we are going to lose,
through attrition, about 30 employees this year and another 20
next year, so I just want to point that out. But it would really be
very helpful for us to be able to go after some of those fraudsters
that we have been talking about.
Mr. CASAR. And you expect that the investments we make in
pursuing that kind of fraud, we are going to get more than that
amount of money back?
Mr. TURNER. Well, let me just say this. I can’t say that because,
like——
Mr. CASAR. But that is your hope?
Mr. TURNER [continuing]. Once fraud goes out of the door, it is
hard to get it back. What we can do is go after the fraudsters that
committed these atrocities, so that is what I would tell you, but it
is quite hard and very complicated in getting funds back. We have
identified about $905 million that we through our work that we
have been able to get back, and that is not all in funds. That is
just through the process of the judicial system, civil cases that we
22

are able to get, and it takes a while for it to go through the judicial
system where it may be four or five years before we actually see
some of that.
Mr. CASAR. I appreciate that, and either for you, Mr. Turner, or
whoever else here is appropriate. I also just saw that in the budget
that was released today that there were continued significant in-
vestments in making sure that we recover funds and make invest-
ments in holding people accountable that are committing this kind
of fraud. Is there any further information that we need, Mr. Shoe-
maker?
Mr. SHOEMAKER. Sure. The President did put forward a request
for $100 million. I can assure this Subcommittee that you will re-
ceive return on investment from our office on that $100 million.
Our current base budget was $24 million. We have returned $9.2
billion in dollar accomplishments in just three years alone, which
represents an exponential return on investment. The President put
forward a budget for our office in Fiscal Year 2024 of $63 million.
Those funds, as Mr. Turner said, are critical to our office. If we do
not receive those funds, we will be in the same situation as Mr.
Turner, where we will have to, you know, consider the attrition
rate next year, in Fiscal Year 2024. So, it is critical that we have
our base budget of Fiscal Year 2024 as well as the supplemental
funds that were asked for last Thursday.
Mr. CASAR. Thank you, Mr. Shoemaker. I think you proved to us
how that kind of investment can make a really big difference. I
think it is a core function of what we should be doing as oversight.
Mr. Sessions likely recalls that there once was a legendary chair-
man of this Committee, Jack Brooks from Beaumont, who, whether
administrations were Republican or Democratic, made sure that we
were going after fraudsters in this way. So, I hope that is a portion
of the President’s budget that we can have some bipartisan support
for to continue that kind of work. Thank you. I yield back my time.
Mr. SESSIONS. The gentleman yields back his time. Thank you
very much. The distinguished young gentlewoman from Colorado,
Mrs. Boebert.
Mrs. BOEBERT. Thank you, Mr. Chairman. Almost three years of
COVID madness, mask mandates, vaccine mandates, a $4.6 trillion
spending spree, school, church, statewide shutdowns, this Com-
mittee is finally committed to getting to the bottom of the $560 bil-
lion in taxpayer money that was lost in waste, fraud, and abuse.
The GAO estimates that there is still $90.5 billion in COVID–19
relief funds that remain available for obligation and are vulnerable
to that same waste, fraud, and abuse. GAO and IGs have identified
multiple recommendations to protect against waste, fraud, and
abuse that have yet to be implemented by the Biden Administra-
tion. Instead, they have thrown more money at the problem. Rath-
er than being reactive and spending more money to find money, the
Federal Government should enact policies to ensure that this kind
of abuse never occurs again.
Media reports have found that payments were made to over a
half a million Federal prisoners, Japanese citizens living in Japan,
illegal immigrants, and 1.1 million deceased individuals. In addi-
tion to this, our office issued an advisory around claims using So-
cial Security numbers filed in multiple states and filed under sus-
23

picious email accounts. Now, I know that some of my colleagues
have inquired about these Social Security issues that we are hav-
ing, but, Inspector General Turner, if I may, what mechanisms are
currently in place for states to identify these suspicious Social Se-
curity numbers and identify these instances of fraud before they
happen?
Mr. TURNER. I would say IT modernization is one of the keys, but
also, a lot of the states are using the Integrity Data Hub, which
the national association like workforce agencies are using. Our only
challenge with that is that that is a volunteer, you know, program,
so it is not required, and so, therefore, they do not get a chance
to do the cross matching that is needed.
Mrs. BOEBERT. OK. Good to know that that is just volunteer. And
are there any specific challenges states are having to access the
Master Death File at the Social Security Administration?
Mr. TURNER. I believe that the IDH as well, that is where they
can do that cross match, and they do use the——
Mrs. BOEBERT. Yes, sir.
Mr. TURNER [continuing]. Master Death File.
Mrs. BOEBERT. And it was also mentioned that your office has re-
ferred over 23,000 fraudulent claims that cannot be processed fed-
erally back to the states for further action, and you are tracking
those. Have any criminal referrals aligned with this—been made
from any of the IGs? Have there been any kind of criminal refer-
rals issued for the waste, fraud, and abuse?
Mr. TURNER. Are you saying about from the 23,000 or just in
general?
Mrs. BOEBERT. In total?
Mr. TURNER. There is——
Mrs. BOEBERT. I am sorry. I know about the 23,000.
Mr. TURNER. OK.
Mrs. BOEBERT. But over all of this, have there been any?
Mr. TURNER. Yes, we have 1,200 indictments and we have
had——
Mrs. BOEBERT. OK.
Mr. TURNER [continuing]. Six-hundred convictions.
Mrs. BOEBERT. Incredible. Thank you. And Inspector General
Shoemaker, with over $76 billion of potential fraudulent PPP and
EIDL loans, what is SBA’s plan to investigate these cases, and how
does your office plan to conduct the oversight for this plan?
Mr. SHOEMAKER. Sure. So, our investigative work so far has re-
sulted in 793 indictments, 635 arrests, 446 convictions. We have re-
ceived $20 billion returned from the borrowers in the EIDL Pro-
gram as well as $8 billion from the financial institutions. We have
over 500 cases ongoing at present, and we work cooperatively with
the DOJ Joint Strike Forces. You know, we bring evidence to the
prosecutors, they are willing to take these cases, and the wrong-
doers are getting significant sentences, four, five years.
Mrs. BOEBERT. Thank you very much, Inspector General, and ac-
tually, Inspector General Delmar, same question to you. Any crimi-
nal referrals, indictments, prosecutions that have taken place?
Mr. DELMAR. Yes, ma’am. I don’t have the number with me. I can
certainly get that for you. We have worked with the Department
24

of Justice, and we have worked with some state agencies as well.
We also pursue and encourage civil remedies to recover the funds.
Mrs. BOEBERT. Thank you very much. I appreciate all three of
you being here and testifying before this Subcommittee today. I ap-
preciate your work and your service, and with that, I yield.
Mr. SESSION. Thank you very much. The distinguished gen-
tleman from Vermont is recognized. Excuse me. You would think
I could read. The gentlewoman, Ms. Stansbury, from New Mexico.
Ms. STANSBURY. Thank you, Mr. Chairman, and thank you also
to our Ranking Member, and I want to just start this afternoon by
thanking you especially for the tone you set in this Subcommittee
hearing of bipartisanship, of collaboration, and of true oversight.
That is truly in the spirit of why we are here, and I really appre-
ciate it.
Mr. SESSIONS. And I thank the gentlewoman. And I hope that
you will expect the same from Mr. Connolly, Mr. Mfume, and my-
self because we intend to deliver that on behalf of the American
people, and I thank the gentlewoman for recognizing that.
Ms. STANSBURY. Thank you. I am proud and excited to be able
to serve on this Subcommittee. I am a former Federal employee
myself. I worked at the Office of Management and Budget, and I
was a program examiner there. And so I know very well the work
of our OIGs and the critical work that you do to investigate waste,
fraud, and abuse in our agencies, make sure that individuals who
are conducting their affairs in a way that is not congruent with the
oaths that we take are held accountable, and that, ultimately, this
body, Congress, is able to take action in order to have account-
ability as well as our court systems.
I know today we are here to talk about pandemic relief. I did
want to follow on one of the comments that you made, Mr. Turner,
about the perfect storm that happened at the beginning of the pan-
demic. I was serving in the New Mexico State House at the time,
and I really appreciate the way you characterized the situation be-
cause I think for folks who were sort of in the trenches trying to
implement these programs, it is hard for folks to understand. In
my district alone, we had thousands and thousands of people who
suddenly were home. They had no way to earn income. They had
rent or their mortgages coming up. They had no way to get gro-
ceries. And in my communities that I represent, which are pre-
dominantly low income and many folks who are on fixed incomes,
Medicaid, Medicare and, of course, other programs, it was an in-
credibly difficult time.
And what I saw on the front lines of our state agencies is that
they just were not prepared. They did not have the infrastructure.
They didn’t even have the IT infrastructure to handle the volume
of phone calls and emails that they were getting, more or less the
ability to serve all of the needs, and I think we also saw this at
the Federal level with the SBA. When I took office in the summer
of 2021, we had a number of our constituent cases that involved
individuals whose SBA loans had been stolen through passwords
through the system, so I think we all know that it was an incred-
ibly difficult time. Our Feds, our state entities really rallied and
did their best, and I want to thank those of you who were serving
at that time. I know it was a really difficult time.
25

I know that the main focus of this hearing is really on oversight
of the pandemic programs themselves, but since we are here and
this is our first hearing, I would love to just do a quick lightning
round with my remaining two minutes from each of you to just
hear from you generally what tools and resources would help you
do your jobs better as inspectors generals and how can Congress
actually help. And we will start with Mr. Turner and then rapidly
go down the line.
Mr. TURNER. I think direct access to data would help us. It would
allow us to get to issues faster. Had we had direct access, then we
wouldn’t have had to wait nine months to find the problems that
were going on with the PUA. I also think modernization. As you
mentioned, there are a lot of antiquated systems, and it is a game
changer to have IT that is really modern. It does not take, you
know, long for IT systems to be antiquated, and to go 10 years or
15 years is quite a while.
Ms. STANSBURY. Absolutely. And Mr. Delmar?
Mr. DELMAR. Data access, certainly. IT modernization, certainly.
One thing I would say is we found that the no-year and multi-year
funds that we got to do our work with respect to the CRF and a
couple of other programs were very helpful, and that would be a
good idea to be able to focus over the length of the program, funds
devoted to enabling the oversight.
Ms. STANSBURY. Thank you very much, and Mr. Shoemaker?
Mr. SHOEMAKER. We received $25 million in the CARES Act and
$25 million in ARPA as supplemental funds no-year money. Those
funds will be exhausted by 2024. We have approximately 185 dedi-
cated men and women working for us. The President has put for-
ward a budget for our base in Fiscal Year 2024 that would allow
us to sustain that as a permanent resource. SBA as an agency is
forever changed, so we need to match that with our oversight. And
the systemic weaknesses that SBA experienced on a day-to-day
basis, the strain that it was under, we believe that we can provide,
you know, a lot of oversight to drive corrective action.
Ms. STANSBURY. That is extremely helpful. Thank you, gentle-
men, and thank you to your staffs who are sitting behind you for
serving the American people. We appreciate you.
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much. The distinguished gentleman, my friend from Lou-
isiana, Mr. Higgins, is recognized.
Mr. HIGGINS. Thank you, Mr. Chairman. Gentlemen, I am going
to move pretty quickly here. Each of you, ‘‘Yes’’ or ‘‘No,’’ are you
familiar with the various Do Not Pay systems?
Mr. DELMAR. Yes.
Mr. TURNER. Yes.
Mr. HIGGINS. Mr. Turner?
Mr. TURNER. Yes.
Mr. HIGGINS. Mr. Delmar?
Mr. DELMAR. Yes.
Mr. HIGGINS. Mr. Shoemaker?
Mr. SHOEMAKER. Yes.
Mr. HIGGINS. OK. So, for the purposes of clarity for the Ameri-
cans watching, Do Not Pay systems, in my understanding, is the
Treasury inspector general oversees the Bureau of Fiscal Service,
26

which operates a Do Not Pay system, the systems or data matching
services that agencies use to help to prevent fraudulent payments
in various systems. And further, there is another layer of that sys-
tem that the Consolidated Appropriations Act in 2021, is my under-
standing, allows the Social Security Administration to share its
state-reported death data with the Treasury Department’s DNP
portal. So there appears to be, prior to many of these fraudulent
payments going out, an effort by Congress and by the executive
branch to put protective measures in place whereby our bureauc-
racies would not send out billions of dollars of fraudulent payments
in manners that are shocking to Americans when they are re-
vealed.
I am going to ask Mr. Delmar and Mr. Turner to respond. I am
advised that largely regarding COVID payments, the DNP systems,
why they were not used, or underused, or set aside, for what rea-
sons I do not know, and that the Social Security Administration’s
death record system was not utilized to filter payments before they
went out. So, we are talking about responding as a Congress and
working together with the executive branch to protect against this
ever happening again. It does not appear that the protections we
had in place were utilized to stop it from happening this time. Mr.
Turner, please respond?
Mr. TURNER. Yes, I think part of the problem is that the states
were inundated and some states did not participate in the Integrity
Data Hub, which actually has access to the Master File, so that
was part of the problem. Also, I think in their——
Mr. HIGGINS. Well, let me interject, Mr. Turner, not to cut you
off, good sir, but to stay in this dialog because the American people
are watching and the government had no problem telling us every
night how many people allegedly were dying of COVID. There
seemed to be plenty of death records available through the CDC be-
cause we were inundated with data about how many people were
dying allegedly of COVID. It turned out they died with COVID, but
that is another story for another day. So, you are saying that you
did filter your payments through death records?
Mr. TURNER. What I am saying to you is not all states did be-
cause not all states participate, but also unemployment insurance
is an entitlement, which is not affected by the Do Not Pay list.
Mr. HIGGINS. But the Do Not Pay systems, again, my under-
standing—it is not my area of expertise. It is why you gentlemen
are here. We are asking. Doesn’t the Do Not Pay system protect
against, say, the same name used multiple times at different ad-
dresses or the same address with hundred different names, or, you
know, a variety of reasonable reviews that computers conduct to
protect against fraudulent payments. Isn’t that what the Do Not
Pay systems are?
Mr. TURNER. I would have to defer to Mr. Delmar.
Mr. DELMAR. The Do Not Pay system takes in data from a num-
ber of other data bases. You mentioned the Social Security Death
Master File. The 2021 appropriation did create a three-year oppor-
tunity for Social Security to provide that information to DNP. It is
supposed to start by the end of this year and go for three years.
It is my understanding that the Department——
27

Mr. HIGGINS. Were other filters engaged, sir, before payments
were sent out for COVID moneys that were fraudulently accessed
protecting against, say, multiple payments going to the same ad-
dress under different names, et cetera?
Mr. DELMAR. Well, the DNP system, whatever information was
in there, in addition to the Death Master File, there are a couple
of other systems from other agencies that the Fiscal Service would
like to get to make the DNP a more complete resource to provide
a filter.
Mr. HIGGINS. Thank you, gentlemen. Mr. Chairman, I am not
sure I actually got an answer here in the five minutes, but I yield
my time. I am expired.
Mr. SESSIONS. The gentleman yields back his time. The gen-
tleman from California, Mr. Garcia, is recognized.
Mr. GARCIA. Thank you very much, Mr. Chairman. I thank our
witnesses. I appreciate you all being here today. Just a few broad
notes. Before joining Congress, I was mayor of Long Beach, Cali-
fornia. It is a city of about half a million people, and I was mayor
the entire time during the COVID emergency. I think it is impor-
tant to remember that this was the single largest loss of life event
not just in my city, but in the country. In the modern era, it was
a devastating emergency. It was serious at every level, and cer-
tainly, when you have that level of an emergency, mistakes are
going to be made along the way, and I think overall, agencies did
the very best to respond in the best way possible.
I am personally very proud of the response that we had in our
community. The White House called our response in Long Beach a
national model. The Governor called the response the best in the
state. And so, I think we did what we could, but we also made, like
every single community across the country, some mistakes that we
learned from. I think the idea here, and hopefully, the goal of this
Committee and many others is that we can work to prevent future
pandemics so if a pandemic were to arise, that we do the best we
can to address them and to get folks support and help. And I know
that is something that all of you are working to ensure that our
systems are at a better place in the future.
The CARES Act, American Rescue Plan literally saved commu-
nities, saved states, and saved cities, and we know this because we
have seen the data. I know it by what I saw in my own community.
And so, I want to thank all of you for also looking into these pro-
grams and for also the work that you have done in ensuring that
the money is being spent adequately and in the right places, so
thank you for that. Through that money, we funded testing pro-
grams, we funded lifesaving programs for families, and helped
small businesses across the community, which is important. And
also, I think one thing we have heard throughout the Committee
is a lot of attacks on programs and the PPP Program, which is un-
derstandable, but this all started, and the pandemic started, and
this program and PPP started under President Donald Trump.
And so, I understand that when the President set up initially the
response and the programs, it wasn’t perfect. There were mistakes
that were made, and as much as I wish the Trump Administration
had done a lot more to help small businesses to set up this pro-
gram so there would be less fraud and less abuse—I wish that
28

would have happened—it didn’t happen. But I also understand that
we were in a national emergency, and sometimes folks, and par-
ticularly public servants across Federal agencies, are doing the best
that they can.
I very much support the work that was done to support small
businesses. We saved small businesses and communities, and I am
very grateful for that, and I want to also, just beyond that, on the
PPP Program ask a specific question. It is something that relates
to a few instances in California. We have had numerous workers
reach out to our office and others in the state that are concerned
that some of the PPP funds that may have gone to large corpora-
tions. And in this particular case, we are talking about hotel work-
ers where PPP funds may have not gone to the workers themselves
or to support some of the salary needs that were part of the re-
quirements for certain loans.
My direct question, and perhaps this can be for the SBA inspec-
tor, for Mr. Ware, SBA OIG currently has tens of thousands of com-
plaints, I believe. How are those being prioritized right now?
Mr. SHOEMAKER. Thank you for the question. In regards to size
standards, we actually have an ongoing review right now looking
at the size standards relative to PPP. So, if you have constituents
that have complaints, you know, please contact our hotline to give
us that information. We certainly will take that into consideration.
How are we looking at our hotline? So, I indicated we have
230,000 hotline complaints. We have used data analytics, specifi-
cally artificial intelligence, machine learning through a process
called topic modeling to differentiate the complaints into eight
buckets. Of that, we have identified 81,000 of actionable leads. We
are now marrying that data with the actual PPP loan data, and in
doing so, we will prioritize our work to look at the cases that have
the most impact, that instill the most integrity within SBA’s pro-
grams, and I say that because we have limited resources. We have
51 criminal investigators.
Mr. GARCIA. I appreciate that, sir. For example, in this case, I
have been certainly approached by a group of workers and some of
our hotel workers that have big concerns about some of the PPP
loans. And if we are able to directly maybe get that information to
you about this specific instance, that would be very helpful to
them, and I do appreciate your time.
Mr. SHOEMAKER. Thank you.
Mr. GARCIA. Can I get that commitment, sir?
Mr. SHOEMAKER. Absolutely.
Mr. GARCIA. Thank you very much, sir. And with that, Mr.
Chairman, I yield back, and as I do, I also want to thank the Com-
mittee for what has been a pretty productive subcommittee meet-
ing, so thank you.
Mr. SESSIONS. Thank you very much. The gentleman yields back
his time. The distinguished gentlewoman from Georgia, Ms.
Greene.
Ms. GREENE. Thank you, Mr. Chairman. I appreciate it. And gen-
tlemen, I thank you for coming before the Committee today and
discussing this very, very important issue, especially given that our
government has the American people in over $31 trillion in debt.
So, we appreciate you helping track that down and where it goes.
29

Since all the money has been spent on COVID, there is approxi-
mately over $400 billion missing, which is extremely concerning to
most Americans, and I just want to talk for a brief second about
how difficult it has been. Obviously, everyone knows this: the gov-
ernment shutting down our economy, shutting down businesses,
paying people basically to stay home, the difficulties for employers
to get their employees to come back to work to start going again.
And, you know, here we have the GAO estimates that the total
fraud in pandemic UI Programs amounts to at least $60 billion.
Just a brief question for you, Mr. Turner. Were there any states
that seemed to be particularly vulnerable to fraud and improper
payments in their UI Programs?
Mr. TURNER. We saw across the country most states exhibit the
same problems and challenges, saw all of them that were vulner-
able, and there was vulnerability that was displayed.
Ms. GREENE. What types of problems were there?
Mr. TURNER. Again, the multi-state claims with stolen identities
was the No. 1 problem. Just multi-claims and people filing for nu-
merous people, to include deceased individuals, prisoners, sus-
picious email, multi-states.
Ms. GREENE. Chasing down those basically criminals, has that
been something that your Department has been putting a lot of
time to?
Mr. TURNER. Without a doubt, I mean, from day one. And we
have only maybe just scratched the surface, so that has been the
biggest challenge for us.
Ms. GREENE. Approximately how many charges have you filed or
how many people have you filed charges against?
Mr. TURNER. Twelve hundred indictments and 600 charges, and
just kind of let me give you an example of the scope of what we
have been dealing with. You know, before COVID, before the pan-
demic took place, we had maybe 100 cases or complaints a year on
UI fraud. Since then, we have been getting 100 to 300 a week.
Ms. GREEN. Wow, that is a considerable amount. Thank you for
answering my question. I would like to ask about the Do Not Pay
system. I know you all have been asked about this a good bit be-
fore. The Office of Management and Budget and the Treasury De-
partment jointly maintain the Do Not Pay system, which is a free
service that agencies can use to verify a recipient’s eligibility for
payment. I would just like to ask Mr. Delmar, Mr. Turner had said
previously that some states don’t use the Do Not Pay system. Is
that correct, and if so, why not?
Mr. DELMAR. I believe they are now required to, but that wasn’t
always the case. So, I think the combination of they have made im-
provements in their interface, it is an easier system to use than it
was, and the additional data bases that we talked about, the Death
Master File and a couple of others. And one point I was going to
make is the current legislation allows a three-year use of the Death
Master File for DNP, so that would go from the end of this year
through the end of 2026, roughly. I think there is a proposal to
make that a permanent allowance, and I think that would do a lot
to make the system more effective in stopping multiple payments
or ineligible payments.
30

Ms. GREENE. Right. There seemed to be plenty of them, I think.
Did all agencies involved in pandemic relief use the Do Not Pay
system?
Mr. DELMAR. I don’t think all did. I can get you more specific in-
formation and address your question, you know, with a lot more
depth, and we will do follow-up on that.
Ms. GREENE. Great. Thank you so much.
Ms. GREEN. The Pandemic Response Accountability Committee
found 69,323 questionable Social Security numbers allegedly used
to obtain $5.4 billion in COVID relief according to a report. Mr.
Shoemaker, do you know what happened to that money, and was
it ever recovered?
Mr. SHOEMAKER. In this specific instance, no, I do not know if
that money was recovered. It could possibly be associated with on-
going cases or cases in the past. That was a different type of a
project. That was a data analytics project just to review, but what
that report indicates is a very powerful resource, which is the So-
cial Security Administration. That data is not readily available to
the Office of Inspector General. It is not readily available to pro-
grams whenever they stand it up.
So, when we talk about the instances when an agency may not
have used Do Not Pay, the government has data available. If that
data is made available, we are in the business of best evidence. If
you are an auditor or you are an investigator and you are looking
for the best evidence, you go to the source. If that source data is
available in the programs and in oversight, we certainly can unlock
the power of that data.
Ms. GREENE. Right. Well, that makes sense. In October 2020,
your office said that SBA’s management continues to insist that it
controls are robust despite overwhelming evidence to the contrary.
Do you still agree with that assessment?
Mr. SHOEMAKER. Certainly, that assessment at that time, and I
believe that, that assessment has been proven true. The over 700
indictments and 600 arrests is further proof that there is rampant
fraud in the EIDL Program.
Ms. GREENE. Thank you very much. I yield back my time.
Mr. SESSIONS. The gentlewoman yields back her time. Thank you
very much. The distinguished gentleman from Virginia, Mr. Con-
nolly, is recognized.
Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you to Mr.
Mfume, the Ranking Member, for having this hearing. This is the
old part of my old subcommittee, so I look forward to working with
you as we progress. And thank you to our witnesses for being here
today. I must say I am impressed with the data you presented us
in terms of indictments, prosecutions, convictions, and recovery.
I think it is important to remember the context. Congress, in the
worst pandemic in 100 years, in which people, by the way, did not
allegedly die. They died. Almost a million and a half Americans are
dead. Mr. Garcia didn’t mention it, but I believe his mother and
stepfather succumbed to COVID when he was the mayor of Long
Beach. All of us have stories of loved ones, and friends, and associ-
ates who died from COVID because protocols weren’t in place, vac-
cines weren’t yet ready. We did not know how to manage this un-
known thing, but also the economy was collapsing.
31

Let us go back to April 2020. The economy was contracting by
double digits. Today, the economy is growing at almost three per-
cent. Unemployment was hitting depression level. Today, the un-
employment rate is 3.4 percent, and what plagues us is not enough
workers. Manufacturing was contracting. Small businesses were
failing about half a million a week, something like that. We
pumped $5 trillion into the economy, and it worked. We turned
around the economy. We saved small businesses. We saved state
and local governments. We saved people’s jobs. We kept food on the
table. We kept people in their homes free from eviction or reposses-
sion. It was a massive enterprise, and in that massive enterprise,
we know there are bad actors who are going to cheat, and that is
where you come in and try to help us prosecute those individuals
and to recover taxpayer dollars that are and were at risk.
Mr. Shoemaker, I remember particularly the Small Business Ad-
ministration, and I’ll focus on the other part of our Subcommittee,
which is the IT part. I believe the basic IT platform for SBA is E-
Tran. Is that correct?
Mr. SHOEMAKER. The 7(a) lending program, yes, the E-Tran.
Mr. CONNOLLY. Yes, and I believe back in April 2020, the normal
annual budget of SBA is about $20 billion a year. Is that correct?
Mr. SHOEMAKER. I think that is high.
Mr. CONNOLLY. That might even be high?
Mr. SHOEMAKER. Yes. Yes.
Mr. CONNOLLY. And we pumped $600 billion into SBA in April
2020?
Mr. SHOEMAKER. Yes.
Mr. CONNOLLY. Over 30 times the normal budget of SBA. Is that
correct?
Mr. SHOEMAKER. That is correct. So, SBA, its normal 7(a) lending
portfolio was about $35 billion. So, the CARES Act authorized $349
billion, and as you indicated, I believe Congress had a concern at
that time. There were oversight resources put into place, but what
was not foreseen was another $300 billion infused into the pro-
gram.
Mr. CONNOLLY. Correct.
Mr. SHOEMAKER. And another $150 billion, to take us to $813 bil-
lion.
Mr. CONNOLLY. And the problem was that we wanted it to get
to Main Street, to the mom and pop businesses, small, minority
owned, women owned, veteran owned, that don’t normally partici-
pate maybe in SBA programs. And that meant we had to find out-
reach to them quickly and to perhaps broaden the number of finan-
cial institutions and the kinds of financial institutions that might
manage those portfolios.
Mr. SHOEMAKER. That is correct. There were approximately 2,000
SBA lenders in the 7(a) Program. That number was expanded over
to 5,000 lenders to ensure that the money could, you know, make
it out into Main Street.
Mr. CONNOLLY. Right. So, I think SBA is a great example. We
wanted this money to go out quickly to save the economy, and to
save businesses, and to keep people employed and the public
served, and that put a huge burden on SBA. I mean, you had to
kind of retrofit almost overnight, and there were lots of hiccups
32

along the way. But how would you grade the agency’s performance
overall, though, when we look back on it in an unprecedented pan-
demic with unprecedented amounts of money and demand for loans
and loans turned into grants?
Mr. SHOEMAKER. So, our office at the inception of the pandemic,
you know, our job was to let SBA know of the risk and
vulnerabilities that we saw based upon our past oversight experi-
ence. And in doing so, we let the Agency know that strong guidance
to the lending community would be vital to ensuring these pro-
grams are issued timely, and then also to have a robust internal
control environment.
So, what is asked of any agency for any program, you know,
would have been an expectation of SBA at that time, would be to
have an objective. The objective would be to provide assistance to
eligible entities, and the ask from that point would be to establish
an internal control environment to meet that objective. And so,
from OIG’s perspective, it is to have assurance, you know, that is
what the internal control environment will be.
But you are absolutely right. There were guardrails that were
lowered as a result of that. You know, for example, the Congress
did not allow SBA to utilize tax transcripts for the EIDL Program.
The Congress also mandated the PPP Program have self-certifi-
cation as part of the process. So, when we talk about underwriting
in the PPP Program, we are not talking about underwriting that
is anywhere near what a 7(a) underwriting would look like. So
those guardrails were substantially lowered, and when you don’t
have assurance of an eligible entity, you, at a minimum, are going
to lead to an improper payment, and, as we see in these programs
today, fraud.
Mr. CONNOLLY. Thank you, and thank you, Mr. Chairman, and
thank you, Mr. Mfume.
Mr. SESSIONS. The gentleman yields back his time. The distin-
guished gentleman from Greenville, South Carolina, Mr. Timmons,
is recognized.
Mr. TIMMONS. Thank you, Mr. Chairman. We had a hearing
about a month ago on pandemic relief fraud. PPP came up, and I
asked Horowitz, the IG of DOJ, why he does not just get Treasury
or SBA to run a report of any business that got a PPP loan that
either didn’t have withholdings in 2019 or the formula was off. The
formula was technically your highest month in 2019 times 2.5.
Generally, that is how it was. And if that formula was substan-
tially divergent from what it should have been, then he goes and
looks into it.
And I didn’t realize this, but he said that would be great. I wish
I could have that, but it is illegal. They can’t give me that. This
is H.R. 1476, and what it does is it tells Treasury to run the report.
It is two separate reports. It is a list of every business that had
no withholdings whatsoever in 2019 that got a PPP loan because
that is clearly fraudulent. Well, there is an exception to that, or
any business, the PPP loan they got was four times their high
month in 2019, which is we are giving them some breathing room.
I am not trying to get people that were close. I am trying to get
people that just stole. That seems like a pretty good plan. What are
33

your thoughts? Do you think it is good legislation? Who wants to
start? We will start with Treasury, Mr. Delmar.
Mr. DELMAR. My office does not have oversight of the IRS, but
that said, you know, I agree with what Mr. Horowitz said about the
extent of Section 6103 and the uses to which tax information can
be put. But if your legislation is a specific exception to the general
prohibition in 6103, I am sure it would have——
Mr. TIMMONS. Have that effect.
Mr. DELMAR [continuing]. A useful effect.
Mr. TIMMONS. And again, we are not giving them anything other
than just this report, and that report would be sufficient to go and
subpoena other records to then build the case to then start arrest-
ing people. So, it seems to me that this legislation, if it was signed
into law, would accomplish the objective. And I guess, to his credit,
the President is trying to achieve the same objective. He just wants
to blow $300 million to achieve it.
So back and front, two pages. If he signs this into law, it saves
$300 million. I mean, I guess we are still going to spend some
money, because we are going to have to hire some additional pros-
ecutors because it is going to be a lot of people, but at the end of
the day, we are going to recover—it is allegedly up to $100 billion.
You have already identified $5 billion, so if there is $50 billion to
$90 billion out there, we are going to recover some. It is going to
cost a lot of money to pursue it, but it is going to save a lot of
money. I mean, all Americans can agree that if $100 billion was
stolen through the PPP loan program, I mean, I think these people
need to be held accountable. I don’t think that is a partisan issue.
Let’s go to Mr. Shoemaker. I mean, SBA has all of this data. The
legislation says that Treasury is going to work with IRS and SBA
to deliver this report to the Attorney General. I mean, this wouldn’t
be hard for you to do. You have software. I mean, you have access
to this information, do you not?
Mr. SHOEMAKER. We do have access to the PPP data. The SBA
does have access to some of the tax transcripts, but the data run
that IG Horowitz is indicating, that is not available to us at
present.
Mr. TIMMONS. OK. So that would be IRS?
Mr. SHOEMAKER. Yes.
Mr. TIMMONS. Well, the IRS and SBA are going to have to work
on this together, and that is what the legislation as drafted
says——
Mr. SHOEMAKER. Yes.
Mr. TIMMONS [continuing]. Because they are going to need your
help to see the PPP amount and then the alleged justification, and
then the actual tax records will show whether it was legitimate.
Mr. SHOEMAKER. An indication, yes.
Mr. TIMMONS. And again, there are always going to be excep-
tions, but overwhelmingly, this will achieve the desired objective
and save the $300 million that has being proposed to throw at it,
but also likely recover quite a bit.
Mr. SHOEMAKER. The thing that I believe that we need to think
through, this is after the fact. This is pay-and-chase. Imagine if
this control was on the front side.
34

Mr. TIMMONS. It would have delayed the ability to get the money
out, I am sure, and at the end of the day, we were building the
cars. We were driving 90 miles an hour down the road. I will say
that SBA and the government brought my faith back into human-
ity during COVID. People were working enormous amounts of time
to get the needed relief out the door, and so I appreciate all the
work that the Federal Government did to achieve that objective. I
am over time. Mr. Chairman, thank you. I yield back.
Mr. SESSIONS. The gentleman from South Carolina yields back
his time. The gentlewoman from Vermont, Ms. Balint.
Ms. BALINT. Thank you, Mr. Chair, and thank you, Mr. Turner,
Mr. Delmar, and Mr. Shoemaker. I know it has been a long after-
noon, so I really appreciate your time. I was on the front lines deal-
ing with the pandemic in Vermont. I was leader of the Vermont
Senate, and what I remember most about that time was thousands
and thousands of Vermonters calling my office, calling my col-
leagues with one message over and over again. We are desperate,
right? We can’t afford food. We can’t afford our housing. And the
answer for many of them was the Federal assistance they received
in expanded unemployment benefits and through the Paycheck
Protection Program.
So obviously, these are huge national programs. We are all, I
think, in agreement that we have to make sure we are rooting out
fraudsters, that we are making sure that we are, you know, holding
scammers accountable, but I want to put a face to this program,
PPP in particular. When Vermonters think about that program,
they think of places like Otter Creek Child Center and College
Street Children’s Center. The PPP Program helped these childcare
centers stay afloat in the early days of the pandemic so that they
could continue serving families. People were desperate for how it
was that they were going to continue to get the care that their chil-
dren needed.
And, you know, according to folks who work at Otter Creek Child
Center in Middlebury, PPP helped us support both families and
teachers through our closure period from March 18 to May 31. That
is 2020. The funds allowed us to continue to cover payroll, keep
spots available to families for when we reopened in June 2020, and
PPP provided a critical safety net and a stress relief in a very un-
certain time and a very stressful time. So, the funds allowed us to
successfully reopen in June 2020, meeting all required state and
Federal mandates, while only being at 50 of capacity because of ex-
tenuating circumstances related to the pandemic. So, I can say I
am here as a Member of Congress, newly elected, but I am also
here as a mom, and a former teacher, and a member of my commu-
nity, and I know how critical that program was.
PPP meant that hundreds of kids could keep getting high-quality
early childcare at places like Otter Creek and College Street Chil-
dren’s Center. It also meant that their parents could stay in the
work force or get back into the work force, something that we are
all still struggling with.
So, as I said earlier, we need these programs to have integrity,
right? We need to hold fraudsters and scammers accountable, not
just to the Federal Government, but accountable to their commu-
35

nities and the resources they were taking away from organizations
that desperately needed that money.
So, Mr. Shoemaker, can you just take me through how did
fraudsters take advantage of PPP Program and the expanded pro-
gram we called EIDL, or the Economic Injury Disaster Loan pro-
grams? Can you just give me some examples? And I apologize. I
was needing to be in another hearing. That is how it is in Con-
gress. You got to be in the other hearing. You got to run back. So,
if I am, you know, asking you something you have already covered,
please forgive me, but if you could highlight that, that would be
helpful to me.
Mr. SHOEMAKER. Sure. Within PPP, there are a number of dif-
ferent fraud scams. In Oregon, there was a dentist. There was $170
million attempted to be stolen across all the programs, RF pro-
grams alone. In May 2022, there was a scam called My Buddy
Loans, where these individuals, they put 400 applications in for
EIDL loans. Millions of dollars were lost, and so what you have is
identity theft, and SBA’s programs did not provide an assurance of
identity, so you had those types of scams. You had romance scams
where, you know, folks were duped. You had false businesses, false
documentation, where, if you had assisted an internal control to
validate the information, that could prevent that.
So those are the types of scams that are out there, but, you
know, IG Ware is sort of famous for this. Fraudsters are going to
do what fraudsters do. They are going to come for the money, so
you have to have the internal controls to root those guys out before
they, you know, tear down the system.
Ms. BALINT. I appreciate that. So, in essence, I think we all want
to try to focus on solutions here, right? It is a ‘‘yes/and.’’ Yes, we
helped a lot of people and we need to do it better in the future. And
so, I want to make sure that we are continuing to make the invest-
ments that inspector generals need in order to make sure that the
money that we are setting aside is going to those individuals and
those organizations that desperately need it and not going to
fraudsters. So, I thank you for your time. I yield back.
Mr. SESSIONS. The gentlewoman yields back her time. Now I rec-
ognize the distinguished gentleman from Alabama, the chairman of
the Policy Committee for Republicans, the gentlemen, Mr. Palmer.
Mr. PALMER. I thank the Chairman, and I associate myself with
the gentlelady’s remarks ‘‘running back and forth.’’ It is very aer-
obic being in Congress. I have got some serious issues with how
your agencies have handled the fraud. Would you repeat—and I
don’t remember who the witness was that gave the amount of
fraud that we think cumulatively has occurred. Did I hear it could
be as high as $800 billion?
Mr. TURNER. I know we calculated fraud to be $76 billion, and
this is on the conservative side. That is Labor.
Mr. SHOEMAKER. In PPP and EIDL, you know, currently our
work has demonstrated approximately $100 billion in potential
fraud, but we have an ongoing assessment that is due out in mid
to late spring to be a comprehensive look at PPP and EIDL fraud.
Mr. PALMER. Have you heard that it could be as high as $800
billion?
Mr. SHOEMAKER. No.
36

Mr. TURNER. I have never heard that amount.
Mr. PALMER. You never heard that amount?
Mr. TURNER. I think the most I have heard was $400 billion. And
again, we do not know where that came from because we get our
rate from the Department, and that is what our numbers are based
on.
Mr. PALMER. And I was involved in trying to get to the bottom
of the fraud in the state of Alabama. I was trying to get informa-
tion, but in my working with some of the investigators, I found it
very difficult. They were being denied access to information. That
included deputy inspector general from the Department of Labor,
Alabama investigators. I am concerned that the amount of fraud is
substantially higher than what you gentlemen have acknowledged,
and I just wonder how diligent, Inspector General Turner, the De-
partment of Labor is going to be in trying to recover this. Is there
any hope to recover this amount of money that has been taken
fraudulently?
Mr. TURNER. Well, let me just assure you we take fraud serious,
and we——
Mr. PALMER. I didn’t ask you that. I am asking you are you fo-
cused on this.
Mr. TURNER. Yes, we are. We are focused on it, but we also real-
ize that once fraud leaves out the door, it is so hard to get back
because there are so many factors beyond our control.
Mr. PALMER. Well, one of those factors that all of you are dealing
with are in some cases states that are not willing to work with you.
Is that a fair assessment?
Mr. TURNER. I don’t know if that is a fair assessment when it
comes to recovery because the states as well as other law enforce-
ment agencies, to include PRAC and DOJ, have all been partners,
and we have all been working this together.
Mr. PALMER. Well, the GAO recommended that the Department
of Labor collect data on the overpayments, what you have done in
the pandemic unemployment assistance program. And it was done
with regular unemployment payments, and the Department of
Labor agreed to do that. But as of September of last year, only 30
states have reported some of this data. So, if you can’t get the
states to report, I don’t care how much you are personally inter-
ested in trying to recover it, you are not going to get very far, are
you?
Mr. TURNER. I agree totally with you. You made my case for me.
We need direct access, and that is what we have said from day one,
and that is what we continue to say today.
Mr. PALMER. Mr. Chairman, it might be good if we start bringing
in some secretaries of labor from the states to have a discussion
about this. And one of the reasons I am so concerned about it is
that every dollar of this fraudulent money that we sent out is bor-
rowed. We just heard the director of the Congressional Budget Of-
fice yesterday tell us that in 10 years, the cumulative spending on
interest on the debt will reach $10.9 trillion. Part of that interest
is going to be on money that was stolen through these pandemic
relief programs.
I think we owe it to the American people to do everything that
we can within our power to recover this and hold people account-
37

able, and part of the problem was that we didn’t put guardrails on
this to reduce the amount of fraud, particularly on unemployment.
We had states taking applications from foreign IP addresses. They
were not requiring employer verification of layoffs. They were al-
lowing people to personally certify themselves for this, and I could
go on and on the list.
And it was very lucrative. If you looked at this on an hourly
wage rate for a regular 40-hour week, we were not only making
people whole, we were making people pretty well off. And I just
think, Mr. Chairman, that it is not enough to just hold this hear-
ing. And I know the frustration that I am sure each one of you feel
because I think you are committed to ensuring that the taxpayers’
dollars are well spent and appropriately spent. But I think we may
need to continue this and maybe bring in some secretaries of states
from some of these states where it was even more egregious than
it was in all of them and try to get to the bottom of this because
we owe it to the taxpayers. We are paying an interest on it. I yield
back.
Mr. SESSIONS. I thank the distinguished gentleman for his com-
ments. And, in fact, I would want to yield now time to Mr. Mfume
for any closing comments, and then we will close this one, folks. At
this time, the distinguished gentleman is recognized.
Mr. MFUME. Thank you very much, Mr. Chairman. I just want
to, again, express my appreciation to the three witnesses, to you,
and to other Members of this Committee for delving into this. It
has been a bipartisan effort, and I assume it will continue that
way. And there are a lot of ideas that have come out of this hear-
ing, particularly the extension of the statute of limitations and
other things, so I thank you very much. Sir, I yield back.
Mr. SESSIONS. The distinguished gentleman, the Ranking Mem-
ber yields back. I, too, want to, as we started this hearing, to thank
each of you and your staffs. But let’s extend that also to the people
who were back and IGs all across the country that you have that
worked diligently on behalf of the taxpayer, and I believe as part
of rule of law, and I believe part of Americanism. So, I want to
thank each of you.
We have had a consensus conversation, even though some have
come and gone and come and gone, about where we are going to
gather ourselves together, and I would expect to be able to politely
offer that to you for your feedback so that we continue down the
road. Mr. Mfume and I will work together, and we expect you to
do the same with us, and we thank you very much.
This ends the hearing today, and our thanks to each of you.
[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]
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