Investigating Pandemic Fraud: Preventing History from Repeating Itself — Hearing (October 19, 2023)
Summary
Hearing record Investigating Pandemic Fraud: Preventing History from Repeating Itself, before the Subcommittee on Oversight of the Committee on Ways and Means, House of Representatives, on October 19, 2023 (Serial No. 118–OS03). Opening statements are listed for Hon. David Schweikert, Arizona, Chairman, and Hon. Bill Pascrell, New Jersey, Ranking Member. Witnesses were Linda Miller, Founder and CEO, Audient Group; Amy Simon, Principal, Simon Advisory; Rebecca Shea, Director of Audits, Forensic Audits and Investigative Services, U.S. Government Accountability Office; and Robert Asaro Angelo, Commissioner, New Jersey Department of Labor and Workforce Development. The record adds member questions for the record with responses from Linda Miller and Rebecca Shea, plus public submissions.
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“Investigating Pandemic Fraud: Preventing History from Repeating Itself — Hearing (October 19, 2023).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-118hhrg54909-investigating-pandemic-fraud-preventing-history-from-df41f06fa2/
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INVESTIGATING PANDEMIC FRAUD: PREVENTING
HISTORY FROM REPEATING ITSELF
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
OCTOBER 19, 2023
Serial No. 118–OS03
Printed for the use of the Committee on Ways and Means
(
U.S. GOVERNMENT PUBLISHING OFFICE
54–909 WASHINGTON : 2024
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COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LAHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, JR., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SÁNCHEZ, California
RON ESTES, Kansas BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma SUZAN DELBENE, Washington
CAROL MILLER, West Virginia JUDY CHU, California
GREG MURPHY, North Carolina GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania DON BEYER, Virginia
GREG STEUBE, Florida DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
MARK ROMAN, Staff Director
BRANDON CASEY, Minority Chief Counsel
SUBCOMMITTEE ON OVERSIGHT
DAVID SCHWEIKERT, Arizona, Chairman
BRIAN FITZPATRICK, Pennsylvania BILL PASCRELL, New Jersey
GREG STEUBE, Florida JUDY CHU, California
CLAUDIA TENNEY, New York BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota SUZAN DELBENE, Washington
BETH VAN DUYNE, Texas GWEN MOORE, Wisconsin
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
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C O N T E N T S
OPENING STATEMENTS
Page
Hon. David Schweikert, Arizona, Chairman ......................................................... 1
Hon. Bill Pascrell, New Jersey, Ranking Member ................................................ 2
Advisory of October 19, 2023 announcing the hearing ......................................... V
WITNESSES
Linda Miller, Founder and CEO, Audient Group ................................................. 5
Amy Simon, Principal, Simon Advisory ................................................................. 17
Rebecca Shea, Director of Audits, Forensic Audits and Investigative Services,
U.S. Government Accountability Office .............................................................. 27
Robert Asaro Angelo, Commissioner, New Jersey Department of Labor and
Workforce Development ....................................................................................... 54
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record to and Responses from Linda Miller,
Founder and CEO, Audient Group ..................................................................... 83
Member Questions for the Record to and Responses from Rebecca Shea,
Director of Audits, Forensic Audits and Investigative Services, U.S. Govern-
ment Accountability Office .................................................................................. 88
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions .................................................................................................. 114
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INVESTIGATING PANDEMIC FRAUD:
PREVENTING HISTORY FROM
REPEATING ITSELF
THURSDAY, OCTOBER 19, 2023
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON OVERSIGHT,
COMMITTEE ON WAYS AND MEANS,
Washington, DC.
The subcommittee met, pursuant to call, at 10:03 a.m., in Room
1100, Longworth House Office Building, Hon. David Schweikert
[Chairwoman of the Subcommittee] presiding.
Chairman SCHWEIKERT. Good morning, and welcome to today’s
oversight hearing on the investigating pandemic fraud and pre-
venting history from ever repeating itself again.
We have all seen the headlines: biggest fraud in a generation.
Easy money. The great grift. These terms were used to describe the
historic amount of fraud that has plagued the government assist-
ance program during the COVID–19 pandemic. It is my hope today
that we will deliver deep—that we will dive deeper into how. And
this is the key point. Walk us through not only your fixes, particu-
larly the technology discussion some of you have, but how was it
done?
I think, for many of us, the visualization in our heads of how do
you move billions of dollars, how—in some of the details we are
going to hear, how so much of it ended offshore. In many ways, this
is not partisan; we are actually trying to understand how American
people that needed the help and governments who are struggling
to finance it, where did the money go and how was it stolen?
The goal of the hearing is to—is not to cast blame on one side
of the aisle or the other. Rather, my hope is in this hearing we will
help identify and—identify corrective action needed to prevent mas-
sive fraud from happening when resources are pushed out in the
future.
There was a great sense of urgency to get a massive amount of
resources out the door into the pockets of Americans who were in
need. For example, in the first 14 days of the Paycheck Protection
Program, the Small Business Administration distributed over $300
billion of loans. The unprecedented amount of spending naturally
made benefit programs more susceptible to bad actors. We know
the unemployment insurance fraud totaled at least—and we are
having a running dispute, and all of you, I will ask to speak to this
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if you think you have a more accurate number—100 to $135 billion,
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2
and the IRS now has issued a moratorium on the Employer Reten-
tion Tax Credit due to its fears of significant fraud.
There are too many stories of pandemic fraud in today’s media.
Can I give you one example? For one instance—and you will love
this one—the FBI discovered a Nigerian state government official
who was in possession of stolen bank credit card and tax informa-
tion of numerous Americans and used these identities to obtain
$350,000 worth of unemployment benefits from several states. But
he is just one example of scores of foreign fraudsters that use sto-
len identification to loot the aid intended to help Americans.
In other cases, a man from Michigan who was on parole when
he filed dozens of fraudulent unemployment claims using the iden-
tity of federal and state inmates who were not eligible to receive
the benefits,—he obtained their personal information using the
website off the dark web by falsely claiming he could help improve
their credit ratings. This man has since pled guilty to wire fraud
and aggravated identity theft.
And those examples only start to scratch the surface. We must
understand how the fraud was committed so we can stay ahead of
the criminals and use whatever—the most advanced technology
available to stop this in the future.
I will encourage that the Pandemic Response Accountability
Committee formed by an—the committee formed an initiative by
data scientists using artificial intelligence and a risk model to ana-
lyze pandemic spending and identify abnormalities. This type of
data sharing can help law enforcement agencies pursue fraud in-
vestigations. It is my hope that using tools like this will not only
help hold criminals accountable for their actions in the past but
will also guide the future efforts of Congress.
We recognize three things. There is a dispute over the dollar
amounts. We have already spent some time trying to blame each
other, whether it be on the partisan facts—that is not the goal of
this committee. But the third thing, it is the single thing I think
is most important to Mr. Pascrell and myself: how did they do it;
what do we implement so it never happens again?
Chairman SCHWEIKERT. And with that I yield to the ranking
member, Mr. Pascrell.
Mr. PASCRELL. Thank you, David. Good morning, everybody. It
is good when you see bipartisanship. It happens so infrequently up
here. And David, thank you for your selection of the witnesses
today.
I want to welcome our witness, Rob Asaro-Angelo, New Jersey’s
labor commissioner. He is a very good friend, hard worker, relent-
less, and he has done a great job, even under your estimates——
Chairman SCHWEIKERT. Do you know everyone in New Jer-
sey? [Laughter.]
Mr. PASCRELL [continuing]. In administering and modernizing
our state’s unemployment insurance program during the worst em-
ployment crisis in generations.
So, Congress acted decisively in the face of historic adversity to
keep Americans safe. And I think you heard the chairman reiterate
that. Our unemployment aid kept families together, and it saved
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lives. More than 1.5 million Garden Staters received unemploy-
ment from March the 20th to September 2021. It stopped mortgage
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3
defaults, kept the electricity on, put food on tables and in children’s
stomachs.
Then, in March of 2021, we passed the American Rescue Plan be-
cause the crisis was not over. It included unemployment aid, strong
enforcement protections—we thought—to fight fraud and recover
taxpayer dollars. President Biden used those protections to pros-
ecute frauds. States have recovered nearly $1.2 billion so far, so en-
forcement is working.
As Rob will testify, New Jersey put these dollars to excellent use,
bringing our system into the 21st century with a focus on accessi-
bility and security. In the Federal Government, we have not even
done that. I don’t care whether there is a Democratic president or
is a Republican president, we have failed the Nation by not keeping
up to the times.
The majority claims to care about misuse. I believe they are—in
their souls. But the other side sought to rescind unspent American
Rescue Plan money funding allocated to crack down on fraud, to re-
cover overpayments, and improve unemployment insurance secu-
rity.
Our pandemic measures exceeded expectations. We emerged
stronger than any other country in the world. Every job lost during
the pandemic was recovered. All our economic output loss is re-
gained. Job growth is at a 40-year high. Unemployment is at a 54-
year low. I think the economy is booming, and I think there is a
long way to go. And they are not contradictory.
I am happy to work together with our chairman to ensure Fed-
eral dollars are well spent. Fraudsters must be held accountable,
period. Our witness from New Jersey deeply understands this, Mr.
Chairman, the unemployment insurance fraud, has ideas on how
we could prevent this in the future.
It is imperative that, when seeking solutions, we refrain from
shaming our workers and lying about our strong economy. And
what is, is. The truth is our actions during the pandemic saved
lives and saved the American economy.
Mr. PASCRELL. Mr. Chairman, thank you for putting us to-
gether this morning, and I look forward to the—hearing from the
witnesses.
Chairman SCHWEIKERT. Thank you, Mr. Pascrell.
Would you like a vanilla cappuccino? [Laughter.]
Mr. PASCRELL. Thank you very much, Mr. Chairman.
Chairman SCHWEIKERT. And now to the big chairman, Chair-
man Smith.
Mr. PASCRELL. Do you have a nomination? [Laughter.]
Chairman SMITH. ‘‘The big chairman’’ just kind of makes me
nervous. But I would like a cappuccino, if I could have one. I am
just kidding. More like a monster drink. [Laughter.]
Chairman SMITH. But thank you, Chairman Schweikert, Rank-
ing Member Pascrell. It is always a pleasure to be with you all.
Part of our oversight responsibilities here in Congress is to as-
sess when the fraudulent use of tax dollars occurs, and account for
what has been lost. But the American taxpayer also expects us to
put an end to as much of that fraud as—that we can to hold the
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fraudsters accountable and, better yet, stop the illegal activity be-
fore it happens. That is why I appreciate that today’s hearing is
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4
forward looking. We are focusing on not just the when and where,
but on the how and why fraud occurs, because that is how we get
to the solutions that will protect the taxpayer and the rightful
beneficiaries of these programs.
The numbers are staggering. A recently-released Government Ac-
countability Office report pegs the cost of fraud in the pandemic-
era unemployment insurance program at 100 billion to 135 billion,
doubling GAO’s previous estimate that the Comptroller General
shared with this committee in February. Some outside experts put
the level of improper payments as high as 400 billion. And that is
just in the UI programs. As I noted in our hearing on this issue
back in February of this year, this is the greatest theft of taxpayer
dollars in American history.
We also know the Employee Retention Tax Credit program has
been an easy and convenient target for criminals seeking to de-
fraud the government as well as small businesses to such an extent
that, as we discussed at our oversight hearing in July, the ERTC
program is on the IRS’s Dirty Dozen list of worst scams in the
country. In fact, as of the end of July the IRS has initiated 252—
252—investigations covering over 2.8 billion of potentially fraudu-
lent ERTC claims from 2020 to 2022.
To be clear, the type of criminals we are talking about are not
just homegrown fraudsters or lone wolves looking to prey on
unsuspecting beneficiaries. We are talking about transnational or-
ganized criminal enterprises. Moreover, we have found that, in cit-
ies that were able to crack down on the UI fraud they saw occur-
ring, violent crime in those same localities went down, meaning
these were more violent criminals committing this fraud. In Balti-
more, they found that 60 percent of violent criminals were also
committing some type of COVID–19 fraud. When they started pros-
ecuting COVID–19 fraud cases, they saw a 20 percent reduction in
homicides—20 percent reduction in homicides.
I appreciate the fact that we have witnesses today from both
within government and outside of government. With an estimated
$280 billion in stolen COVID–19 relief funds, we need to be seeking
input from as many experts as we can to bring as many perspec-
tives as we can to build a more robust defense against fraud. I look
forward to the solutions that will come from today’s discussions.
Chairman SMITH. And I yield back to you, Mr. Chairman.
Chairman SCHWEIKERT. Thank you, Chairman Smith. One
last bit of business to do. I have two vanilla cappuccinos left. Raise
your hand if you want one of them. I got one sold and—no one else?
They are really good. Okay, I got the two sold.
All right. Linda Miller is the founder and CEO of Audient Group.
Did I say that right?
Ms. MILLER. Audient Group.
Chairman SCHWEIKERT. Audient Group, okay. Well, it is a
weird spelling.
She also serves as the executive director of the Pandemic Re-
sponse Accountability Committee and spent 10 years working for
the Government Accountability Office.
Amy Simon is a principal for Simon Advisors. She is—previously
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served as the acting deputy secretary for employment and training
administration at the U.S. Department of Labor.
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Rebecca Shea, which is a famous name in the Scottsdale Phoenix
area, so she says, not related to the name, is the director of audits
and forensic audits and investigative services at the U.S. Govern-
ment Accountability Office.
And Robert Angelo is the commissioner of the New Jersey De-
partment of Labor and Workforce Development.
Thank you for joining us today. You each have five minutes.
Also, to—last thing, I want to echo Mr. Pascrell’s—you are a ter-
rific panel. We are here to do something a little different than we
often do; we are here to listen.
Ms. Miller, start to educate us.
STATEMENT OF LINDA MILLER, FOUNDER AND CEO, AUDIENT
GROUP
Ms. MILLER. Thank you so much. It is a real pleasure to be here
today in this forward-looking hearing with this committee. I am
really excited.
My name is Linda Miller, and I have, as Chairman Schweikert
mentioned, started my own consultancy working on fraud risk
management. But I have spent my entire career in the government
fraud space, including serving as deputy executive director of the
Pandemic Response Accountability Committee.
In talking about what happened during the pandemic when it
comes to fraud, there was a combination of inadequate oversight
and internal controls, large-scale organized fraud rings, and anti-
quated data and information systems that contributed to the wide-
spread and massive fraud that we saw during the pandemic. Going
forward, two significant problems must be solved.
One, fraud prevention is simply not a priority for Federal and
state agencies. The pandemic highlighted this critical gap.
And two, the use of data in government is broken. Data is an es-
sential tool, and the fight against fraud and sharing data and using
it to prevent fraud is simply not working.
My written statement today outlines five key actions Congress
can take to help ensure history doesn’t repeat itself. Today, I am
going to highlight a couple of those.
First, a dedicated anti-fraud office with senior-level authority
should be created. Agencies struggle with competency and fraud
and data analytics. They struggle with data sharing, and they
struggle with a lack of incentives to allocate resources to these ac-
tivities. An all-of-government strategy should be established and
implemented by a well-funded, centralized entity with the author-
ity to effect real change. Such an office would have the necessary
skills and resources to work solely on addressing the data, account-
ability, and technology challenges agencies face at every level of
government.
As part of this office Congress should direct the creation of a
fraud analytic center of excellence modeled on the PRAC’s Pan-
demic Analytic Center of Excellence. A centralized analytics hub in
the management side of government would create an economy of
scale, and would place a data-driven emphasis on fraud prevention,
where it can be the most effective.
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Second, we must adopt approaches that are used in the private
sector. Conventional wisdom today holds that you can promote cit-
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izen access to government services or you can prevent fraud, but
you cannot do both. This trade-off doesn’t exist in the private sec-
tor, and it shouldn’t in government. Banks effectively balance the
competing business imperatives of attracting and retaining cus-
tomers and preventing fraud every day. Both are vitally important
to their bottom line.
Part of the challenge lies in outdated laws, and—that limit agen-
cies’ ability to use data and prevent fraud, especially given the rise
of data breaches and the epidemic of identity theft that we are see-
ing today.
Developing innovative projects in partnership with the private
sector can help mature the government’s capacity to prevent fraud.
For example, the Senate Appropriations Committee’s fiscal year
2024 financial services bill contains language directing Treasury to
lead a public-private partnership to counter the increasing threats
of financial fraud, which will facilitate information sharing between
government and private sector, develop best practices, and encour-
age innovations in fraud prevention.
Another approach Congress should consider is the creation of a
regulatory sandbox that would allow the private sector to work
with agencies on data-driven fraud prevention approaches with a
degree of assurance that those won’t run afoul of statutory and reg-
ulatory requirements such as privacy laws that limit the use of
data for fraud prevention.
Third, agency leaders need incentives to prevent fraud. Company
CEOs respond to the demands of their customers and their share-
holders. As citizens, we are government’s customers and its share-
holders, and we do not demand fraud prevention, we demand time-
ly access to services. Agency leaders need incentives to prevent
fraud. Congress can incentivize agency leaders by holding regular
hearings to discuss actions to prevent fraud, building fraud preven-
tion into the performance metrics of those leaders, and measuring
their activities against an established benchmark.
A word of caution, though, on incentives. The hidden nature of
fraud makes it easy to ignore. If agencies are only measured on the
amount of fraud they have, they will establish meaningless fraud
indicators and then give the false impression that fraud is con-
trolled. Incentives in fraud prevention should be focused on the ac-
tions that agencies are taking and the rigor with which they are
measuring the effectiveness of those actions.
And finally, we need dedicated funding set aside for fraud pre-
vention and large spending bills. The Bipartisan Infrastructure
Law and the Inflation Reduction Act both contained enormous
grant and loan programs but provided no funding or requirements
for safeguarding the integrity of those funds. Fraud actors will tar-
get those programs with the coordinated fraud schemes that they
did during the pandemic.
Data and analytics can be a game changer. Massive amounts of
third-party data can be mined and leveraged to identify suspicious
indicators. Establishing dedicated funding for fraud prevention in
these spending bills will provide the focus and resources needed.
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When it comes to fighting fraud, an ounce of prevention really is
worth a pound of cure. We must put fraud prevention tools in the
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hands of government leaders and hold them accountable to prevent
history from repeating itself. Thank you.
[The statement of Ms. Miller follows:]
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Chairman SCHWEIKERT. Ms. Miller, that was remarkably help-
ful.
Ms. Simon.
STATEMENT OF AMY SIMON, PRINCIPAL, SIMON ADVISORY
Ms. SIMON. Chairman Schweikert, Ranking Member Pascrell,
thank you for the opportunity and invitation to testify today.
As a former leader in the U.S. Department of Labor’s Employ-
ment and Training Administration during the pandemic, I was a
firsthand witness to both the economic devastation of the pandemic
and to the extraordinary legislative policy and operational re-
sponses contained in multiple pieces of legislation, starting with
the CARES Act. And later, as an unemployment insurance claim-
ant and victim of identity theft, I was a firsthand witness to the
system’s flaws and operational weaknesses. And so I believe this
question of what do we do next and how do we move forward is
incredibly timely, and I appreciate the committee’s attention.
My prepared remarks highlight the incredible scale of both the
pandemic benefits and the scale of fraud. And due to this hearing’s
focus on fraud, I did not address the many adjacent and sub-
stantive policy issues in unemployment insurance. That would cer-
tainly need to be part of a more comprehensive conversation. In-
stead, in my opening statement, I would like to highlight just two
themes.
First, I often sense an inherent tension that fraud detection and
prevention and benefit accessibility are opposing goals. This is a
false dichotomy. It was often eligible claimants who waited for
months on end, while fraudsters easily stole millions. It was often
eligible claimants who found out that their benefit accounts had
been drained when fraudsters socially engineered access. It was
often eligible claimants who found out that they couldn’t get bene-
fits because a fraudster had already applied in their name. These
claimants are the heart of the program’s mission to provide tem-
porary partial income replacement for workers out of a job for no
fault of their own. If you care about the program, you need to care
about fraud. It does not have to be one or the other.
Second, I think that unemployment insurance pandemic fraud
lessons are broader than just unemployment insurance. Three
quick examples.
Fraud is constantly evolving, targeted, and agile. Unemployment
insurance fraudsters repeatedly went to public sources for tutorials
and help on how to more effectively accomplish their fraud
schemes. Government’s response was not evolving, targeted, or nec-
essarily agile, especially at the beginning of the pandemic. Static
solutions to dynamic threats are not going to move the needle
quickly enough in this environment.
Second, pandemic fraud did not stay in the pandemic. Fraudsters
are paying attention, and we do not have the luxury of returning
to pre-pandemic norms. Mission success and program performance
metrics must reflect the extent to which benefit programs are or
are not managing fraud risks effectively.
And third, there are potential national security implications for
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domestic benefit programs when billions of fraudulent dollars flow
through them to unfriendly international or even state-sponsored
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18
cyber crime groups. I believe there are active roles for Congress to
play on each of these fronts.
I appreciate the opportunity to testify and look forward to your
questions.
[The statement of Ms. Simon follows:]
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Chairman SCHWEIKERT. Thank you, Ms. Simon.
Ms. Shea.
STATEMENT OF REBECCA SHEA, DIRECTOR OF AUDITS, FO-
RENSIC AUDITS AND INVESTIGATIVE SERVICES, U.S. GOV-
ERNMENT ACCOUNTABILITY OFFICE
Ms. SHEA. Good morning, Chairmen Smith, Schweikert, and
Ranking Member Pascrell, and members of the subcommittee.
Thank you for inviting me to discuss some of GAO’s resources and
recommended actions to better prevent fraud in normal operations
after the unprecedented levels of fraud in COVID relief programs.
GAO’s goal in general, and my goal in particular as a director in
our forensic audit group, is to encourage agencies to prevent fraud
in order to avoid the very costly pay-and-chase approach. The im-
portance of prevention is the cornerstone of GAO’s fraud risk
framework. Requirements have been in place for many years for
agencies to manage fraud risk. But, as GAO’s comptroller general
testified earlier this year, agencies’ lag in implementing these re-
quirements led to significant fraud in COVID programs.
Yes, agencies across the Federal Government acted quickly to
stand up new programs and greatly scale up existing programs to
combat the effects of the pandemic. And yes, that made for an un-
usually attractive target to fraudsters. But the nature of COVID
relief schemes was not dissimilar from fraud schemes that occurred
in years prior.
Some schemes were simple and benefited a simple—a single
fraudster, like a case where an individual received a quarter mil-
lion dollars from the Coronavirus Food Assistance Program for
claimed loss of livestock at a commercial farming operation, despite
not owning or operating a farm. Others used technology or brought
others along to scale up the impact of the fraud, like a case where
the owner of a tax preparation business recruited people to prepare
fraudulent tax returns and COVID EIDL loan applications. She
charged her clients up to 50 percent of the fraudulent proceeds and
paid her employees a flat fee for each application that received
funding, and she also claimed fraudulent EIDL, PPP, and unem-
ployment benefits for herself.
Regardless of scale, misrepresentations of eligibility and identity
are primarily at the core of these schemes. Had agencies been bet-
ter prepared to prevent and detect identity and eligibility represen-
tations in normal operations, they would have been better prepared
for the emergency, which leads us to the question of why agencies
weren’t prepared and what is needed to get them there.
Based on my audit experience, I would put the root causes for
this in two buckets: mindset and direction. The mindset issue I
have seen is that program managers often don’t think fraud is a
problem, at least not in their programs, or they don’t think fraud
is their problem, particularly when the program is administered
through grants, contracts, or other third parties. And if agencies
don’t think there is a problem, or that it is theirs to manage, they
aren’t going to spend time and resources on it. The unprecedented
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scope and scale of COVID relief fraud has put a dent in that
mindset, but we need sustained focus on accountability to eliminate
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28
that mindset once and for all, and that is where GAO resources
and congressional action can provide direction.
In addition to our audits and recommendations to address spe-
cific fraud vulnerabilities, GAO has developed resources like our
conceptual fraud model, our fraud risk framework, our anti-fraud
resource, and, most recently, our framework for managing im-
proper payments, all of which provide a roadmap for fraud preven-
tion. Providing this direction was a key driver for developing our
conceptual fraud model that lays out the who, what, how, why, and
where of fraud schemes so agencies can better understand what
fraud looks like and how it happens in order to respond to those
vulnerabilities.
GAO has also suggested actions Congress can take, including re-
instating requirements for agencies to report on their progress with
fraud prevention, making permanent the data analytics function in
the oversight community, and making permanent Treasury’s access
to Social Security’s full death data to help prevent payments to de-
ceased individuals.
In addition to these efforts, GAO has work underway to identify
possible incentives for fraud risk management such as funding op-
tions, ways to measure prevention activities, and enhance data
sharing and analytic programs.
Unfortunately, not everyone’s moral compass points due north.
Fraud will happen, and bad actors will be creative in finding
vulnerabilities and exploiting opportunities for their personal gain.
But with a better understanding of how fraud happens, by
leveraging available resources to prevent fraud, and by taking ac-
tions GAO has recommended to agencies and to Congress, the Fed-
eral Government as a whole will be better positioned to prevent
fraud in any environment.
I thank you for this opportunity and look forward to your ques-
tions.
[The statement of Ms. Shea follows:]
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Chairman SCHWEIKERT. Thank you, Ms. Shea.
Mr. Asaro-Angelo.
STATEMENT OF ROBERT ASARO-ANGELO, COMMISSIONER,
NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT
Mr. ASARO-ANGELO. Good morning, Chairman Schweikert,
Chairman Smith, and Ranking Member Pascrell, members of the
Subcommittee on Oversight, and to all your hard-working members
of your staff. Thank you for inviting New Jersey to this important
conversation. I can assure my colleagues to my right that anti-
fraud measures have always been a priority in New Jersey.
In the winter of 2020, we were in great shape, with record num-
bers of people working. Nobody could have predicted the economic
and personal chaos of the global COVID–19 crisis. From February
to April, in just 2 months, our state lost over 730,000 jobs, more
than 1 in 6. On April 1, we saw a 2,700 percent increase in UI
claims from that same week the prior year—2,700 percent.
With Congress’s quick action through the Families First
Coronavirus Response Act and the CARES Act, we provided life-
lines to those who needed help staying afloat when they lost their
jobs. In just 21 months, we distributed close to $40 billion to 1.6
million workers. But, unfortunately, there are those who took ad-
vantage of the situation as an opportunity for ill-gotten gain.
Since New Jersey has a higher-than-average benefit rate, we
have always taken fraud very seriously. We have instituted aggres-
sive measures and applied several anti-fraud processes. We rely on
this layered approach, from analytics to third-party identity-proof-
ing, to both catch suspicious claims and act as a deterrent, greatly
reducing fraud attempts to begin with.
Prior to the pandemic, UI fraud generally meant someone was il-
legally collecting benefits while working, or otherwise being dis-
honest on their application or weekly certification. Identity theft
had been a long-time but manageable issue. But now, with the vast
amounts of personally identifiable information—or PII—available
on the dark web, fraudsters were ready to weaponize it.
To be clear, I am not just talking about domestic attacks. There
are global fraud rings, as mentioned earlier, who share
vulnerabilities of various state systems and cherry pick the ones
easiest to deceive.
With a dramatic increase in claimants and a dramatic increase
in benefits, there is a dramatic increase in fraudulent claims.
Fraudsters saw the pandemic as the perfect time to attack, as—
and they saw almost—an almost perfect target: Pandemic Unem-
ployment Assistance, or PUA. While enacted with the best of inten-
tions, PUA added a whole new population of beneficiaries to our
system that we had never had before. We simply did not have the
mechanism and, more importantly, the statutory authority to verify
their employment.
For PUA, eligibility was based solely on self certification, and
states were prohibited by law from confirming this information: the
perfect recipe for fraud. Unlike regular UI, where every individual
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claim is verified or contested by an employer, a crucial backstop for
fraud, states didn’t have the ability to check this information until
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55
the end of 2020 with passage of the Continued Assistance Act. The
constantly changing rules, along with the pressure to get these
payments out as quickly as possible, made every state all the more
vulnerable.
So the challenge during the height of the pandemic and still to
this day has been balancing our efforts to get payments out quickly
to the claimants who deserve them while safeguarding our trust
fund from cheaters and criminals. And these steps take time.
During the pandemic our anti-fraud efforts were challenged like
never before, battling dark web tutorials on how to commit fraud,
caches of stolen PII, and tutorials on social media with step-by-step
instructions on how to commit fraud to get benefits. But our sea-
soned professionals rose to the occasion, identified risks, acted
swiftly, and went above and beyond their traditional fraud preven-
tion and risk management operations.
Our Cyber Fraud Investigations team was created out of neces-
sity during the pandemic due to the tremendous and relentless at-
tacks. They teamed up with our IT division to combat the cyber-
fraud attempts, with a focus on technology to support their efforts.
Partnering with ID.me, a federally-credentialed security vendor,
New Jersey became the first state to offer three ways to digitally
verify claimant identity that all meet heightened Federal security
standards: self-service, live video chat, and in-person. During the
pandemic, New Jersey halted hundreds of thousands of fraudulent
payments, protecting billions of dollars.
Although claims have slowed overall, including false ones, we are
always shoring up our defenses. Through the National Association
of State Workforce Agencies, or NASWA, we are collaborating with
other states to share findings, trends, and best practices. The fund-
ing we have received through the American Rescue Plan to mod-
ernize our unemployment system has been critical. Building a
newer, more modern system improves equity of access and security,
which go hand in hand with fighting fraud.
It is vitally important we continue supporting efforts for national
improvements to create overarching systems that work with each
other, instead of having each state operate independently.
Fraudsters love nothing more than having 53 separate systems to
pick through to see which can be hit the easiest and the hardest.
There is no silver bullet to completely eradicate fraud from our
benefit system, but we can combat it in every way possible, contin-
ually learning and training so we stay one step ahead. We look for-
ward to working with our Federal partners across multiple agen-
cies to combat fraud, apply lessons learned, solidify policies, and
see concrete action at the national level to ensure we never see
such widespread UI fraud ever again.
I am grateful for this time to speak with you all. I am happy to
address any questions you may have to the extent that I can with-
out revealing any of our trade secrets to the fraudsters who are
most certainly watching this hearing. Thank you.
[The statement of Mr. Asaro-Angelo follows:]
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65
Chairman SCHWEIKERT. Thank you, Mr. Asaro-Angelo.
All right, as the chairman I guess I get to ask the questions first.
Yay.
I still remember when the pandemic started off, and have—how
many of you had this family experience where you pick up the
phone and it is your wife, and your wife is going, ‘‘You know, I am
here handling all these unemployment requests’’ at the surgery
center she ran, and a lot of it were people who had never worked
there, people who hadn’t worked there in years. But the best one
was when she was getting unemployment requests or the
verifications for herself. And the phone call was, ‘‘Do you want me
to quit now? Because apparently I am already asking for the unem-
ployment.’’ And okay, a small surgery center, I think they may
have had 20 to 30 employees. And she said they added up over that
year—hundreds of these came in.
I have a board here, and this is sort of going on the theme—and
forgive me, I am going to do something a little awkward, but I
don’t have a better way to do this. We are trying to not only—and
this is going to go to you substantially, Ms. Miller, because you
have actually touched on things that everyone else also touched on.
We were trying to get our heads around if we had a national data
exchange for the verification as our friend from New Jersey just
spoke about.
Does it stop it where the identities—the identities are out there,
they have been stolen. We have actually, as Members of Congress,
had our identities stolen not too long ago. Does it stop it where the
actual applying—where in this process—because we have been
tracking some crazy stories of UI fraud that was converted to gift
cards, that got moved into buying cars, and then the cars were
shipped to North Africa as a way to wash the money.
Let’s say we had your data exchange. Where do I break the fraud
loop, the information, the ability to make the requests?
Ms. MILLER. Yes, well, thank you. The data is the way to ad-
dress this significant problem, which is identity theft that you are
talking about. And we saw unprecedented identity theft because of
the vast number of data breaches that we have experienced.
Every single American’s information is available for sale on the
dark web today. You can buy Social Security numbers for about
$0.25 a piece now. They have gone down. There were about $1 a
piece about a year ago. And so, as a result of having so much infor-
mation available for so little money and fraud actors being able to
monetize that information, what agencies need at the Federal and
the state level is the ability to identify quickly those indicators that
would suggest that somebody who is applying for a benefit is, in
fact, a stolen identity, things like the device geolocation.
So, in the UI fraud, for example, if somebody was applying for
pandemic benefits and they lived in Nigeria, and you were sitting
in the UI office in Iowa, you did not have any kind of IP address
tracking to know that.
Chairman SCHWEIKERT. But, Ms. Miller, can I bust that by
using, you know, a VPN?
Ms. MILLER. Yes. You can—most of these tools to steal—to
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use—to effectively use stolen identities can be circumvented, espe-
cially in the age of generative AI. So now we have even got much
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66
more sophisticated tools than we did at the beginning of the pan-
demic that they are using and exploiting right now.
And so, as a result, as Amy mentioned, the concept of, you know,
a dynamic and a static, we have got a dynamic adversary, and we
have very, very static processes that address them. Agencies need
to be able to use the kinds of tools that banks use, that technology
companies use, that—you know, where they can very quickly iden-
tify these patterns. And that is a data problem. And we have a
data problem in government.
We are very protective of the privacy of citizen data. And I am
not saying we shouldn’t be, but in—today, when every single one
of our identities are being stolen on the dark web, but the govern-
ment is protecting our information to the degree that the adver-
saries can use the data, but the government can’t use it to stop
them.
Chairman SCHWEIKERT. Okay, and I have a handful of ques-
tions, but I want to finish one last with Ms. Miller.
In your testimony, what do I have to change statutorily or rede-
fine statutorily so I don’t run into the constant excuse that we
often, as Members of Congress—‘‘Well, that has a privacy concern,
or that is over there.’’
Ms. MILLER. Yes.
Chairman SCHWEIKERT. At the same time that these people’s
privacy has long since been violated.
Ms. MILLER. You know, honestly, I am for privacy. I am a
good—I believe in privacy. But the privacy—there is a very, very
robust protection of privacy sort of lobby and group on one side,
who has gone so far—and it is—we need to consider that we live
in a different world now. The Privacy Act and the Computer
Matching Act were written at a time that we are in—this environ-
ment that we are living in is changing monthly. Literally, it is
changing every month. And we have got laws that we haven’t
changed in years.
So the Privacy Act, the Computer Matching Act, and the Fair
Credit Reporting Act, the FCRA, all three of those need to be con-
sidered on the basis of how we can better use data to prevent fraud
across the government.
Chairman SCHWEIKERT. Okay.
Mr. ASARO-ANGELO. Chairman Schweikert——
Chairman SCHWEIKERT. New Jersey——
Mr. ASARO-ANGELO [continuing]. Back to your original ques-
tion on that chart—and Mr. Fitzpatrick, I don’t want to hurt—with
bringing it up again, but, you know, this is where I think we need
to marry technology and policy because on that chart you had, you
know, the stolen identities, then the applying for unemployment,
and then getting the benefits.
Right now, under statute, we have to let everybody apply for UI
benefits, no matter if we know that they are stolen in advance. The
way this current statute is that we have to let everybody apply——
Chairman SCHWEIKERT. Okay, so——
Mr. ASARO-ANGELO [continuing]. And then do the security
check afterward.
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Chairman SCHWEIKERT. Say that sentence again. So even
when it hits your door, you still have to——
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Mr. ASARO-ANGELO. We have to process that application. Now,
clearly, the identity verification and all the other checks can be
part of that process afterwards. But we can’t deny anybody the
ability to apply for unemployment benefits at this time.
Chairman SCHWEIKERT. Okay. Ms. Shea—and this is one-off—
but I—for my own sanity, I need to ask. Have you seen any re-
search done on how many bad actors around the world this fraud
may have helped finance? Because, you know, think about, you
know, what is going on in the Middle East right now, and we have
had some things come to our office saying some of these organized
international criminal cartels were washing the money for violence.
Any place I can go to chase that down?
Ms. SHEA. Well, so no specific numbers and amounts, but we did
look at some of that information through the Department of Justice
press releases on cases. And so, we have some information about
foreign actors exploiting the various pandemic programs—in dif-
ferent programs, not just unemployment insurance.
But I do want to get back to this issue of addressing unemploy-
ment insurance fraud issues. In 2020, there is an integrity data
hub that provides services to states to check the verification of
whether or not there is an application across states if somebody ap-
plies in multiple states. The bank account verification—it will do
a validation of the bank account. It will check to see whether their
identity flags on a particular application. In 2020, 34 states partici-
pated in that integrity data hub, and the other states did not.
Chairman SCHWEIKERT. For the 34, how effective was it?
Ms. SHEA. Well, notwithstanding some of the issues Rob men-
tioned about prohibitions against certain checks, it provides infor-
mation to the states about where there are flags, where there are
areas of concern where the payment should not be made. Now, De-
partment of Labor has since been able to get all 50 states and 3
territories signed up for that service. It is a free service. It is avail-
able to them.
So I think, as we are thinking about resources and, you know,
additional data sources and new technologies that we can be—that
can be applied, it is also important to think about what is already
available to federally-funded programs and to Federal programs to
prevent fraud.
Chairman SCHWEIKERT. Okay, my very last question. Could I
take that data hub and enhance it with Ms. Miller’s AI and other
database touches?
Is there a way that this isn’t reinventing the wheel, but making
the wheel much more efficient?
Ms. SHEA. I——
Chairman SCHWEIKERT. Now I forced the two of you to talk to
each other. [Laughter.]
Ms. SHEA. Yes, that is what really needs to get done. I mean,
if we want to fix this, we have to think about the states working
together. And so there is this hub that does have—it is—it provides
an opportunity for those—for them to share data across the states.
If they augment that with third-party data, they are going to have
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a whole lot more robust data sets to be able to share information
and identify fraud schemes much quicker and more effectively.
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Chairman SCHWEIKERT. Okay, thank you, witnesses. It is ac-
tually appreciated.
Mr. Pascrell.
Mr. PASCRELL. Thank you, Mr. Chairman.
Ms. Miller, we can’t legislate directly identity theft. That is my
contention. So, we need to work from the front end, and put into
legislation reasonable—and unreasonable, sometimes—as you
pointed out, we are in a different world—but basically, reasonable
attempts to prevent the fraud or the possibilities of fraud from ever
happening. That is not only true here, unemployment insurance.
We talked about it yesterday, every Federal program.
I am not a—never met anybody on this panel, this committee, on
either side—now, no one is privy to virtue in politics. Let’s get that
straight. But we can’t be helpless to the problem, knowing it is
going to get worse. The chairman has pointed that out vividly. But
everybody on this panel doesn’t simply send their support for legis-
lation because so what? Somebody gets it that doesn’t deserve it,
so what? No, no, that undermines the credibility of the program.
You know that better than I do. So, we need to take a very close
look at this, and it is a serious, serious problem dealing with seri-
ous, serious money.
Mr. Commissioner, the title of this hearing is ‘‘Keeping History
from Repeating Itself.’’ What are the top things we here can do to
keep this criminal activity—this is criminal, what we are talking
about here—from happening again? Because there are going to be
programs in the future that are ripe for those who wish to deceive.
And those who wish to deceive are taking money from their peers
who are getting the advantage of the programs.
So I don’t want to hear generally about the poor. The poor are
many times crooks. Really? Are you serious?
So what do you think we can do about it?
Mr. ASARO-ANGELO. Well, hopefully, we never have to have a
situation like COVID ever again. But if one does arise, if some kind
of national emergency, don’t ever pass a program like PUA again.
PUA was primarily for independent contractors and self-employed.
It should have been in Treasury or SBA. The 1099 workers, the
self-employed are inherently small businesses. PUA was the main
cause of UI fraud during COVID, and sort of got the camel’s nose
under the tent, as they say. In regular UI the employers of the
workers are the crucial part of the anti-fraud process.
Congressman Schweikert, you talked about your wife working at
the surgery center. That is how we stop fraud. Very often we hear
from the employers who say, ‘‘Hey, I got a filing for this person,
and they don’t—one, they don’t exist, or two, they don’t work for
us, or three, they are still employed.’’ That is one of our most im-
portant ways to fight fraud.
Mr. PASCRELL. The specifics that you are talking about, would
you please, at your leisure, put them down in very specific order
in terms of the—being in parallel to what you testified today, and
get it to everybody on this panel? I would ask you to do that. Is
that asking too much?
Mr. ASARO-ANGELO. Not at all, Congressman.
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And to answer Congressman Schweikert’s question of before——
Mr. PASCRELL. And let me ask——
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Mr. ASARO-ANGELO [continuing]. He does know everybody in
New Jersey, yes.
Mr. PASCRELL. Thank you. Every Democratic member on this
panel worked very closely with the President to include $2 billion.
Correct me if I am wrong, anybody—for unemployment insurance
fraud-fighting measures in the landmark the American Rescue
Plan was not that long ago.
Can you provide some examples of how New Jersey spent these
Federal dollars to modernize its UI program in support of workers
to prevent fraud?
Mr. ASARO-ANGELO. There is a lot. I will try to keep it really
brief.
We have increased staff, fraud staff specifically, with the creation
of our cyber fraud investigations unit. We contracted with an iden-
tity credentialing vendor. We have—now we have a dark web moni-
toring service. We procured IT services to enhance an existing data
analytical tool, which allowed us to ingest numerous data elements
like Ms. Miller talked about to identify fraud trends and patterns.
Supported our pilot, along with Arkansas from U.S. DOL, our
claimant experience pilot, which informed much of our current re-
search and best practices on our new application, which we will
launch in just a couple of weeks. We established our Office of Un-
employment Modernization to deliver a UI system built with small-
er modular pieces, not one big chunk all at one time. That usually
leads to failure. And all other forms of our UI modernization, which
is always going to make our systems more secure.
Mr. PASCRELL. Go ahead.
Chairman SCHWEIKERT. Mr. Pascrell, are you telling me I
have things to learn from New Jersey?
Mr. PASCRELL. Yes.
Chairman SCHWEIKERT. We are going to go to two-to-one on
this, just because we are running into some interesting conference
time.
Mr. Fitzpatrick.
Mr. FITZPATRICK. Thank you, Chairman Schweikert, for hold-
ing the hearing. My first question is for Ms. Miller.
In December of 2022, the Secret Service announced that hackers
linked to the Chinese Government stole at least 20 million in U.S.
COVID relief benefits, including UI funds in over a dozen states.
A former assistant U.S. attorney who indicted these hackers from
this Chinese criminal group in both 2019 and 2020 said that the
hackers have ‘‘tens of thousands of machines’’ going at one time to
obtain personally identifiable information and generate criminal
profits.
Even more concerning, officials and experts told one media outlet
that other Federal investigations of pandemic fraud seem to point
back to foreign state-affiliated hackers. So, my question, Ms. Miller,
American officials have blamed Chinese hackers for the breaches of
OPM, of Anthem Health, and Equifax. And it is clear that COVID
fraud is not just a domestic issue; this is a matter of national secu-
rity.
So, based on your experience working with the Pandemic Re-
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sponse Accountability Committee, which is a member of, of course,
of DOJ’s International Organized Crime Intelligence and Oper-
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70
ations Center, what are the national security implications, in your
view, of foreign state-affiliated hackers stealing taxpayer funds
that were intended to be for COVID relief benefit programs?
Ms. MILLER. Yes, we—data on this is still being evaluated. But
there are some estimates that half of the Pandemic Unemployment
Assistance fraud went to adversarial nations, and that is pretty
problematic when you consider that people, when they think about
fraud, they think, oh, it is just a little rounding error, it is a prob-
lem. These are—this was fraud that is funding our adversaries.
That is what happened during the pandemic, and that is why there
is so much attention on it, which is valid.
These hackers—and they—there is a full underground market of
fraud actors today. We call it fraud as a service. And it is a full—
those fraud actors, they have at their disposal really sophisticated
artificial intelligence tools. They have the flexibility and agility to
be able to move. If something is not working, they can just take
something down and put it back up. We have seen where the DOJ
has taken down a malware site, and it has been back up two
months later, and it is even more effective.
So we cannot fight this adversary the way that we are currently
fighting this adversary, because this adversary is serious, and they
are looking to steal money to create not just a financial problem,
but a national security problem.
Mr. FITZPATRICK. Thank you, Ms. Miller.
Ms. Shea, what are the existing tools that agencies can be using
to prevent money that is fraudulently claimed from going out the
door?
Ms. SHEA. So GAO is dedicated to helping agencies enhance
their strategic approach to fraud risk. You know, we are always
going to come back to what it is that the program managers can
do. And, you know, you are hearing a lot about the risk involved.
And so trying to encourage them to better understand that risk
so that they can strategically plan for it, identify what the best so-
lutions are. And we do that through things like our fraud risk
framework, which lays out 38 leading practices, a roadmap for
agencies to understand how best to strategically manage risk. We
have developed an anti-fraud resource, which is a web-based, inter-
active, user-friendly guide that lays out the who, what, when,
where, why, and how of, you know, how fraud happens, so that
they can understand and take action.
There are other tools and resources like Treasury’s Anti-Fraud
Playbook, which helps agencies figure out how to best manage their
risk and understand them, so—in addition to a couple of matters
that we have recommended to Congress to take to help address
these issues.
Mr. FITZPATRICK. And in your position of director of forensic
audits, you made recommendations to Federal agencies on how to
improve their fraud prevention.
So, number one, have the agencies agreed with those rec-
ommendations?
And number two, have they implemented those recommenda-
tions?
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Ms. SHEA. So we have made a number of recommendations in,
you know, normal operations and, of course, in the COVID pro-
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71
grams. And I would say about 27 overall, 28 overall related to
COVID-specific fraud risk management, and there are still, I think,
about 18 of those left open.
So agencies do not always agree, and that is true in normal oper-
ations. We don’t always get agreement. And that relates back to
the mindset issue. They aren’t always appreciating the risk that
exists.
Mr. FITZPATRICK. Thank you. Thanks to the panel for being
here.
I yield back.
Chairman SCHWEIKERT. Thank you, Mr. Fitzpatrick.
Mr. Steube.
Mr. STEUBE. Thank you, Mr. Chairman.
The COVID–19 pandemic and the resulting shutdowns imposed
tremendous costs on our nation. Unfortunately, criminals exploited
our dysfunctional Federal Government to steal American taxpayer
funds intended to alleviate the suffering. This resulted in the
fraudulent transfer of over $280 billion to criminals, according to
an Associated Press analysis. American taxpayers were fleeced,
and their government failed in its duty to protect their tax dollars.
GAO has estimated the unemployment fraud during the pan-
demic may reach as high as 135 billion. That figure represents 15
percent of all unemployment insurance benefits paid out during the
pandemic. Meanwhile, criminals further victimize American citi-
zens through identity theft schemes. The Federal Trade Commis-
sion reported a 3,000 percent increase in identity theft claims re-
lated to government benefits in 2020. This caused difficulty in ac-
cessing benefits for many law-abiding Americans.
The sad fact is that much of this could have been prevented. The
Federal Government should be better stewards of the hard-earned
dollars American families pay in taxes. Law enforcement must
track down these criminals and recover the illegally-obtained
funds, but we also need to plan for the future to ensure this never
happens again. The tools exist for the Federal Government to pre-
vent this kind of fraud, we just need to make sure that the tools
are actually used.
Ms. Miller, the Pandemic Response Accountability Committee,
where you served as the deputy executive director, developed an
analytics tool called the Pandemic Analytics Center of Excellence,
which used analytic technology to uncover patterns, anomalies, and
red flags that point to potential fraud. This tool has been used by
numerous law enforcement agencies to open over 500 investigations
into 6,000 subjects, representing an estimated potential fraud loss
of 500 million.
Can you comment on the development of the PACE tool, as well
as other ways that technology can be used to address fraud in the
future?
Ms. MILLER. Yes, thank you. The PACE is one of the bright
spots in government anti-fraud activities that is in the history of
American government. The PACE has created a center of excel-
lence, a center, a hub. They—and they negotiated 95 data use
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agreements. Honestly, that is probably the biggest accomplishment
of the PACE.
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It is—I can’t overstate how challenging it is for agencies to share
data. They actually usually just stop trying because of how hard it
is to put a data use agreement in place. But because the PACE’s
whole focus was on trying to gather a lot of data in one place in
order to use it to prevent fraud, they were able to get those 95 data
use agreements in place. They also have FinCEN data, they have
suspicious activity reports data. They are using a lot of third-party
data, and they are using really impressive artificial intelligence
tools. This should be the model going forward.
And—but my—the important point I want to make, though, is
that is only for investigations. We know that we recover about
$0.50 on every dollar of fraud that has been stolen. And with iden-
tity theft it is even less than that. We need a PACE inside of the
management side of government, so that these kinds of tools can
be used prior to making a payment, which is why I have been advo-
cating for the creation of a management-side center of excellence.
Where that sits is open to discussion. Treasury could be one area
that you could put it in, but it needs to have the same capabilities,
and it needs to have that dedicated focus because, again, the people
at the PACE, that is their entire job is negotiating data sharing
agreements, acquiring data, pulling data scientists in.
The other thing the PACE did was create a data science fellow-
ship, and they were able to get recently-graduated data scientists
from different universities to come and work on these projects. It
is very difficult to get the data science resources within the Federal
Government. And so such an analytic center of excellence sitting on
the management side should also look at that as a model in order
to acquire the data science expertise that is needed.
Mr. STEUBE. So you are proposing the creation of a dedicated
anti-fraud office for basically the entire Federal Government. What
is preventing agencies from using these existing tools to protect
against fraud instead of creating that?
Ms. MILLER. So agencies, number one, most of them don’t
have—they will tell you—I am not there, but they will tell you that
they don’t have the resources. They will say, hey, our—and this
is—this gets back to this whole incentives piece. They will say,
‘‘Our job is to get a benefit out. That is our job. Our mission is ben-
efit delivery. Our mission is not prevention of fraud. That is the
IG’s mission.’’ And the focus, what we have been trying to do at
GAO, and when I was at GAO and ever since, is trying to get agen-
cies to understand that their job is to prevent fraud.
But until they don’t—so they will say they don’t have the re-
sources, they will say that they don’t have the ability to get the
data. They will tell you that the data is the problem. The problem
is partly because they can’t negotiate these data sharing agree-
ments, it is partly because they think privacy laws and FCRA re-
quirements limit them from using that data. So they will tell you
all kinds of things. But really, the challenge is that they are not
sitting in this hearing today. And, you know, typically we weren’t
having hearings about fraud until the pandemic happened. Once
they sit in the hot seat, I think you will start to see them take this
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more seriously.
Mr. STEUBE. All right, thank you. I have seven seconds.
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So, Ms. Simon, are—can you just explain quickly some cases
which COVID relief benefits were stolen and subsequently used for
criminal activity?
Ms. SIMON. Certainly. Just one quick P.S. on Linda’s point.
When I was in the Department of Labor and we tried to get data
on incarcerated individuals at the Federal level during the pan-
demic, which, as you know, would have been very helpful, we ran
straight into a brick wall of legal and financial obstacles. And so
I just want to say, from experience, that is an incredibly real re-
ality.
Yes, pandemic fraud is effectively a vertical for many criminal or-
ganizations, and it is an income source. And there was a recent
DOJ indictment, I believe, in Michigan that was a sprawling
scheme that was funded by multiple kinds of pandemic fraud, in-
cluding unemployment, that had murder for hire as one of its serv-
ices. So these are not run-of-the-mill, someone down the street
claimed a few extra weeks that they shouldn’t have claimed. This
is serious street crime.
Mr. STEUBE. Thank you for being here today.
I yield back.
Chairman SCHWEIKERT. Thank you, Mr. Steube.
Ms. Chu.
Ms. CHU. Yes, I would like to start by reminding my colleagues
that the Pandemic Unemployment Assistance program was author-
ized by the CARES Act and extended by the Consolidated Appro-
priations Act of 2021, both in overwhelmingly bipartisan votes.
Additionally, Ways and Means Democrats secured funding to
fight fraud and recover taxpayer dollars in the American Rescue
Plan.
The pandemic was an unprecedented disruption of our economy,
and we hope that this does not happen again. But what was clear
was that there was necessity for benefits, unemployment benefits,
and that is why Democrats and Republicans acted together to ex-
pand unemployment benefits as quickly as possible to assist Amer-
ican families who, through no fault of their own, suddenly found
themselves without a way to provide for their family’s basic needs.
This was a success, which is why the U.S. has had a stronger eco-
nomic recovery than any of our peers.
From my district, I have heard from many individuals that fed-
eral pandemic unemployment benefits were a lifeline for providing
for basic necessities like food and lifesaving medications. That in-
cludes Gretchen from Altadena, California, who has been in the
film and television industry for the last 30 years, and is a cancer
survivor whose medical coverage is predicated on the number of
hours worked; and Mary from Pasadena, California, a nursery
school teacher whose employer’s doors closed and had to file for un-
employment for the first time in her 26-year career; and May, the
primary breadwinner for her family living in Sierra Madre, trying
to stay afloat, all while distance learning with her three kids. The
swift action of Congress mitigated the hardship that jobless work-
ers and their families suffered, and it was essential in stabilizing
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an economy that lost a staggering 22 million jobs in just 2 months
in early 2020.
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74
We know that there are lessons to be learned from these efforts
that can strengthen and sustain the UI system for future emer-
gencies, and I hope that it is the goal of the hearing to not neglect
our duties to protect our workers in the midst of a global pandemic.
So, Mr. Asaro-Angelo, I do want to note that Democrats took the
issue of fraud seriously as part of the American Rescue Plan Act,
or ARPA. Democrats provided the Department of Labor with $2 bil-
lion to strengthen the integrity and preparedness of state UI sys-
tems, as well as to provide grants to states for fraud detection and
prevention and overpayment recovery efforts. However, earlier this
year, the Fiscal Responsibility Act of 2023 rescinded ARPA funding
for UI programs and reduced the total funding for UI programs
from 2 billion to $1 billion.
So, in your testimony, you mentioned that New Jersey used these
funds to modernize your unemployment system. Can you talk about
how these modernization efforts are critical to preventing fraud,
and what would be the impact on fraud mitigation by cutting these
funds?
Mr. ASARO-ANGELO. Thank you for your question, Congress-
woman.
Yes, as I mentioned earlier, these funds have been critical be-
cause modernization is key to fighting fraud as well. And the im-
portant part of this is that modernization doesn’t end, and I think
it has been a real problem for our systems for far too long that a
state would spend millions of dollars—sometimes hundreds of mil-
lions of dollars—to go get a procurement for a new system that
may or may not have included anti-fraud measures. Then years
later, they would be delivered this system that is already out of
date, and any changes they want to make to that system they need
to go back and get change orders, get a new contract. I don’t think
I need to tell anybody here government procurement is not fast or
agile.
But what we have done is used the agile method using the GSA
contract, where we are working with a team, a vendor team that
is working together about building this product, about building
small modular parts, which was considered in ARPA, by the way.
That way, not only can we be more agile about putting new pro-
grams in, we can share them with other states.
And the funding that came out of the ARP for modernization spe-
cifically states that states who use these funds have to be able to
share that with other states, because right now, when you go to the
vendor, they own the code, for the most part, and sharing amongst
states on this stuff is very difficult. So I am really thrilled that the
U.S. DOL put that in their grant writing for the modernization. We
were very proud to receive one of the $11.35 million grants. Be-
cause of that rescission, though, not every state could receive it. It
became a competitive process, as opposed to every state receiving
those dollars. So—but it was very smart how they wrote that—
whenever dollars are being used out of that, we have to be able to
share that product and those victories with other states, as well.
Ms. CHU. Very good.
I yield back.
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Chairman SCHWEIKERT. Thank you, Ms. Chu.
Ms. Tenney.
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Ms. TENNEY. Thank you, Mr. Chairman and Ranking Member,
and thank you to the witnesses. Great testimony, lots of great doc-
uments in here. I really appreciate it.
And I come from New York State, which got a tremendous
amount of money for unemployment insurance and a tremendous
amount of fraud. And I just wanted to address this first, I think,
to either—well, first I will go to Ms. Miller. Maybe Ms. Simon first,
and then, Ms. Miller, have you comment.
The previous Department of Labor OIG report provided oversight
on the Unemployment Insurance Program stated that some inter-
nal controls had traditionally been used or recommended by—to
the states but were not used. So, I cite back to a recent committee
hearing that we had with the Office of the Inspector General
wherein they cited the State of New York was warned back in 2010
that they did not have adequate controls in place to handle the ex-
isting unemployment insurance claims that they had.
And I will just give you a—pre-pandemic, an improper payment
amount was roughly about 10.34 percent. After the pandemic it
was almost 30 percent. The fraud rate of 4.5 percent—and this is
before pandemic, with poor controls in place—it went to almost 18
percent. The claims before the pandemic in 2019, the quarter be-
fore, there were $530 million in claims went to—in 2021, after the
first quarter of 2021, went to 6.5 billion, from 530 million to 6.5
billion, an 1,124 percent increase in claims because of the lack of
New York State to have controls.
And while my colleague wants to make this partisan, all of this
information is coming from Democratic Comptroller Tom DiNapoli,
who has provided numerous reports on warning New York on what
is happening to taxpayer money.
And the reason I am so concerned about this is we have created
this huge burden on our unemployment insurance trust fund and
that our small employers, who were forced to lay off during the
pandemic, are now paying for this, as are New York State tax-
payers, because the funds were squandered that came through ei-
ther the American Rescue Plan or other CARES Act monies.
What can we do to get New York up to speed, and really being
a true, sound steward of taxpayer dollars that have been wasted?
And, you know, you mentioned, you know, ring—international
rings up to 50 percent of the monies. What can we do? What can
New York do today to protect its small businesses and its tax-
payers in preventing this colossal fraud that we have seen, largely
due to the inability of the Department of Labor in New York State
to properly implement programs?
What can we do, like today, in the next few months, to curb the
costs that we are seeing to prevent this fraud?
And, Ms. Simon, I think I will address it to you first, and then
maybe Ms. Miller.
Ms. SIMON. Certainly. I think the one thing that—specifically
about this hearing and the question that you asked is that the
questions I have started asking when I look at a state’s posture is,
are the use cases across the fraud life cycle being addressed?
So——
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Ms. TENNEY. Is your microphone on?
Ms. SIMON. I think so. Should I——
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Ms. TENNEY. Yes, talk right——
Ms. SIMON. Can you hear me? Okay.
Chairman SCHWEIKERT. You have to be really close.
Ms. SIMON. Okay, perfect. One of the questions I ask is, if you
think about the use cases across the fraud life cycle and ask hard,
specific, clear questions of the New York Department of Labor be-
fore a claimant applies, ‘‘What tools do you have, what information
are you getting, what are you doing with that information as the
claimant is applying, how are you verifying their identity, what do
you do with high-risk identities,’’ and then, after they have applied,
‘‘When you see suspicious activity, how do you handle that? What
tools do you have in place? What processes, how many fraud inves-
tigators do you have? How many cases are going to prosecution?’’
But those kinds of questions have not traditionally been asked to
state departments of labor, certainly not by Federal counterparts.
And often folks like the state auditor are the ones asking those
questions.
So I am happy to have a conversation also offline, and give you
specific advice. But I think one of the questions is to get very, very
specific about the entire life cycle. What is the state doing? What
tools does it have in place? And what is it doing with the informa-
tion it gathers?
Ms. TENNEY. Thank you.
Ms. Miller, if you could just———
Ms. MILLER. Yes, I would just———
Ms. TENNEY. Just a plan.
Ms. MILLER. Sure. I mean, I just think———
Ms. TENNEY. To start.
Ms. MILLER [continuing]. One of the things is, though, is when
no one else is looking.
So who calls one of you guys? Someone who says they didn’t get
a benefit, right? Nobody really calls and says, ‘‘Oh my God, there
is a ton of fraud in the UI program.’’ That only happens later,
when the IG puts out a report and everyone gets alarmed. And so
when this is done, and when this blows over, they are still going
to go back to worrying about getting that benefit out quickly, be-
cause that is who they are going to hear from. They are going to
hear from a congressperson when a constituent is saying, ‘‘I am not
getting my benefit.’’
So I am going back to incentives to fraud prevention. Internal
controls is not exciting stuff. They don’t want to worry about inter-
nal controls until there is a hearing. And so we have to—you, Con-
gress, has to incentivize them and build this into their performance
metrics: ‘‘We are glad you are getting benefits out the door quickly,
but we also want to make sure that you are doing things to make
sure only eligible benefits—beneficiaries are getting those benefits,
and not just worrying about the squeaky wheel, which is did I get
my benefit and did I get it quickly?’’
Ms. TENNEY. Right, yes. We keep flooding these agencies with
billions of dollars in taxpayer money, and we are hurting our small
business community.
So, thank you so much for your expertise, I appreciate it.
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Chairman SCHWEIKERT. Thank you, Ms. Tenney.
Ms. TENNEY. I yield back.
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Chairman SCHWEIKERT. Those are terrific questions.
Mr. Feenstra.
Mr. FEENSTRA. Thank you, Chairman Schweikert and Ranking
Member. Thank you very much.
I want to also thank our witnesses, and for all your information
that you have given. To me, it is all about solutions. We have got
to figure out solutions. We have got to really dig down and under-
stand. Obviously, we know what is happening and we have im-
proper payments, we have fraud, we have waste. We have crimi-
nals trying to take advantage of our taxpayers. So here is my ques-
tion to Ms. Miller and Ms. Simon.
We have AI. We have private companies that deal with this all
the time. When it comes to credit card companies, they do a great
job. We have bank companies that are also doing the same thing.
What can we take from them, as a Federal Government and say,
hey, let’s apply this to what we are doing and to reduce this fraud?
And Ms. Miller, first, how can we handle this? I mean, how can
we identify the fraud with these new techniques, and then how can
we apply it?
Ms. MILLER. Sure, yes. We—the private sector has really, really
advanced tools that they use at the front of what they call the front
of the sale, so at the very beginning, right? So when someone is ap-
plying for a new benefit, if they are opening an account at a bank,
or if they are looking to make a transaction, the bank can very
quickly, in what they call in their words as a low-friction tech-
nology, right?
They can take a ton of data about me when I apply and say this
looks like Linda’s—we have seen this Social Security number and
this address associated with Linda, but we have never seen it com-
ing from that IP address. Or, you know, this person says that they
are applying for this benefit here, but we have information that
shows that that bank account is actually in an entirely different
state, or maybe even a different country.
Mr. FEENSTRA. Right.
Ms. MILLER. And so they are able to take all that kind of infor-
mation and triangulate it.
They are also able to say, oh, this new applicant for this loan is
actually affiliated with four other people, all of whom have been in-
dicted with—for fraud. This looks like this person might be a shell
company associated with a number of—in a fraud ring.
These are the things that the private sector can do. The govern-
ment has very little, if any, ability to use that kind of data to make
those determinations. And that is why the———
Mr. FEENSTRA. Why not?
Ms. MILLER [continuing]. Fraud actors are———
Mr. FEENSTRA. Well, why can’t we use that data?
Ms. MILLER. Well, partly it is that most agencies don’t even—
honestly, most of them don’t even know that these are capabilities
they can have. There needs to be a lot more education of agency
leadership, of what kinds of tools could they put in place.
But again, it gets back to no one is really telling them this is an
important priority. So when they get a budget, their budget is fo-
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cused on getting benefits out the door, it is not focused on pre-
venting fraud. If instead there is built in this money here, we are
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going to give you this $10 million, but we expect you to use 1 mil-
lion of that to build in fraud prevention tools using data———
Mr. FEENSTRA. Yes.
Ms. MILLER. And if they are told that, then they can go and
find those. But right now they are not even looking for it.
And so you see things like the Inflation Reduction Act or the In-
frastructure Act, where money is going out to states and local gov-
ernments all across the country. There is very likely enormous
fraud in those programs, and there is very little fraud prevention
tools being used today.
Mr. Feenstra. So it is the dollars and it is the technology. And
that is why I am saying———
Ms. MILLER. Exactly.
Mr. FEENSTRA [continuing]. This is ripe for AI.
Ms. MILLER. Yes.
Mr. FEENSTRA. I mean, absolutely, we—I mean, we have to
look at the private sector and solve our problems with what they
have been experts on.
Ms. MILLER. Yes, and you can use large language models
like———
Mr. FEENSTRA. Yes.
Ms. MILLER [continuing]. Generative AI, like a ChatGPT to—
within seconds you could take applications to a program and iden-
tify anomalies.
Mr. FEENSTRA. I understand.
Ms. MILLER. You could identify text that is duplicative that in-
dicates that someone is using the same information.
Mr. FEENSTRA. Agreed.
Ms. MILLER. This could be done in seconds if agencies could
adopt those technologies.
Mr. FEENSTRA. Thank you.
Ms. Simon, if you could, add on to this. I mean, and what are
your thoughts on—I mean, I just don’t see this as rocket science.
It is just a matter of getting the tools to our Federal Government.
Ms. SIMON. Absolutely. So I think two things.
One, to underscore both of your points, I had a vendor call me.
This was after I left government. This is a vendor that is used by
most of the large banks for that front-end piece sort of intelligence.
And he said, ‘‘I have been calling state workforce agencies and I
can’t get people to call me back. I want to help. I want to be part
of the solution.’’
So, I think, on one side, there is—that is an issue. However, it
would be unfair to say workforce agencies if we didn’t acknowledge
the administrative funding struggles that they have. There is not
a dedicated line of funding for fraud. I think there should be, quite
frankly. The———
Mr. FEENSTRA. So the cost—it is really the———
Ms. SIMON. But———
Mr. FEENSTRA. I mean there are not dollars to do this. Is that
a fair statement?
Ms. SIMON. That—the dollars are not prioritized to do that, so
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the trade-offs are extremely steep for states.
Mr. FEENSTRA. Got you.
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79
Ms. SIMON. And so I think thinking about the funding that, if
we want fraud to be part of the mission, then the funding—the
mission funding needs to involve fraud-specific funding.
Mr. FEENSTRA. Right. And I would like to see the ROI on this.
Ms. SIMON. Yes.
Mr. FEENSTRA. I mean, return on investment of saying, all
right, if we put X amount of dollars for prevention, what do we get
back in return? And not only that, you are protecting your tax-
payers. So I just think this is not hard to solve, but we just, as a
government, got to do it.
With that I yield back. Thank you.
Chairman SCHWEIKERT. Thank you, Mr. Feenstra.
Mr. Pascrell would like to touch base on something you were
speaking of.
Mr. PASCRELL. I have no problem with what you just produced,
I really don’t. However, if you turn to what I think is a parallel
example: the IRS, in terms of the debates we had over that. Again,
neither side is privy to virtue.
But the point is, some folks use the data that you talk about to
destroy the program. And I am very fearful of that. You may say,
well, you are too fearful, but that is my thought in my mind.
Mr. FEENSTRA. And there has got to be protections for that,
100 percent.
Mr. PASCRELL. Well, I hope they stand up.
Mr. FEENSTRA. Yes, that is right.
Chairman SCHWEIKERT. Okay. For both of you, let’s have a
side conversation, because I think there is a simple technology so-
lution that actually fixes for both of your concerns.
Ms. Moore.
Mr. PASCRELL. Thank you.
Ms. MOORE. Well, thank you so much, Mr. Chairman, for con-
vening this hearing, and I do want to thank our panel for their pa-
tience and their extraordinary testimony, extraordinary efforts to
stop fraud and abuse.
I do want the chairman to know that I had my very first vanilla
cappuccino. [Laughter.]
Ms. MOORE. I am not going to become a latte liberal. [Laugh-
ter.]
Ms. MOORE. I am from the Midwest. We just drink plain old cof-
fee all the time. But I do appreciate your effort.
Having said that, I just want to join everyone on this panel to
say we are against fraud and abuse. We are against taxpayers foot-
ing the bill.
And just to look through some of this extraordinary testimony,
I am just looking, for example, with Ms. Simon, with your testi-
mony, I mean, who knew identity theft, synthetic identity, account
takeover, phishing schemes, benefit cards, skimming, bribery
schemes, self-dealing, document fraud, bot attacks—I mean, not to
mention places like Wisconsin, where our technology for unemploy-
ment—and I think you made this point, Mr. Asaro-Angelo, was
from 1970. I don’t even think you have to be all that bright to fig-
ure out how to breach something like that.
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That being said, you know, at the beginning of the pandemic, 22
million people lost their jobs due to no fault of their own. And just
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80
looking at the material here, it seems like we had a surge of like
33 million extra unemployment claims.
And one of the things that I guess I want to hear from the panel
is we had a hearing earlier on this committee—on the full com-
mittee—on unemployment fraud, and it seemed that there was a
tremendous effort going to be put into going after fraud for people
who may not even know that they got an overpayment. I mean, it
might have been somebody who got an overpayment of $1,200 they
didn’t deserve, but we had expanded unemployment benefits. They
may not have even known.
And so, I just want to hear from you, maybe Ms. Miller, Ms.
Simon, maybe Mr. Asaro-Angelo—I am running out of time—what
were the benefits versus the losses that we had in rescuing people
from poverty, making sure that some people could pay their mort-
gages, keep up with their bills, continue consumer spending?
And what message does it send for us to expend government re-
sources running after, you know, Joanne Smith, who got $1,500 she
didn’t deserve and may not have even known that she didn’t de-
serve it?
Ms. Miller.
Ms. MILLER. Yes, I mean, I think what you are raising is a real-
ly, really good point about risk. And when we talk about fraud—
and certainly GAO is the expert in this area—focusing on risk is
really important. We are not going to get back all the dollars, and
they are not all equal. When we are talking about organized crime
rims and nation state actors, that is who we need to be focusing
on, not someone who got an extra $1,500.
And it is really important, because we don’t have the resources
anyways, right, to go back and try to go after that money. And we
don’t want to send that message that it is—you know, we are turn-
ing the United States into some sort of police state, where we are
trying to make sure that everybody only gets exactly what they are
entitled to. That is why we want to use risk, and that is why we
want to use data and technology so that we can focus those efforts
on those most serious, most egregious actors that are operating
rings, and we can do that using technology.
And then, you know, when we have additional resources, the pri-
orities need to be set by the agencies, but the priorities should not
be on the small-dollar frauds. The priority should be on the large
nation state and organized crime rings. And that is where, I think,
all of us up here are in agreement that that should be the focus.
Ms. MOORE. Mr. Asaro-Angelo.
Mr. ASARO-ANGELO. Thank you for your question.
First of all, as far as the overpayments, I am proud that
NASWA, which I mentioned before, which includes my counter-
parts across the country, voted in a unanimous and bipartisan
manner to urge Congress to waive all non-fraudulent pandemic-re-
lated unemployment compensation overpayments. The amount of
time and staff needed to pursue these non-fraud overpayments
with a very low return absolutely undermines our efforts at fight-
ing current and future fraud.
Just real quick, I also want to mention we keep talking about as
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if there is one unemployment system. There are 53 different sys-
tems. I mean, if we want to solve or have a way better handle on
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81
the fraud, combine such—have more tools from the Department of
Labor, where all states can be talking to each other, where there
is one set of applications, one set of security procedures, one set of
anti-fraud measures. By these fraudsters being able to pick and
choose, they couldn’t be happier.
And to—whatever we can do to be talking more—and we do a lot
of this through NASWA, and I am very proud of our work on these
efforts. The IDH was mentioned before. I must say, though, even
though there were only 36 in 2020, it wasn’t as important then be-
cause it was only regular UI. So we always had the employers as
the backstop. PUA made the IDH really important.
So I think if whatever we do can consolidate our efforts across
the states and in the Federal Government, that we should be able
to do.
Ms. MOORE. Thank you. My time has expired.
Thank you for your indulgence, Mr. Chairman.
Chairman SCHWEIKERT. Thank you.
Ms. MOORE. I yield back.
Chairman SCHWEIKERT. Mr. Davis.
Mr. DAVIS. Well, thank you, Mr. Chairman and Ranking Mem-
ber, for giving me the opportunity to waive on to this hearing.
Although I am not a member of the subcommittee, my state of
Illinois, which is a rather large state, as a matter of fact, had tre-
mendous challenges and problems. But I also remember the great
work that the state employment agency did in terms of fielding
questions, all the requests that came through.
And so, when we discovered that this kind of fraud was taking
place, we were outraged, quite frankly, that criminal rings stole
unemployment insurance benefits during the pandemic, which is
the reason that we Democrats worked so hard to make sure that
we would provide the resources to do something about it. And I
can’t help but recall that not a single Republican voted for these
anti-fraud funds. So we also are proud of the work that we and all
of you in the states did to keep workers afloat during the pan-
demic, which led to the fastest economic recovery in our history.
Commissioner Asaro-Angelo, would forgiving overpayments and
you have partially answered that a moment ago, but would for-
giving overpayments made to workers who were completely without
fault free up resources that your state would need to improve ben-
efit access and prevent future fraud?
Mr. ASARO-ANGELO. There is no doubt about it. The going
after overpayments, as I mentioned before, is a really low return
on investment. And we also need to remember that during the time
of the COVID—the Pandemic Unemployment Assistance, all those
programs, the rules were changing, literally, day by day for us and
for claimants.
So to have a claimant be in a position where, if you apply in
March the rules are different than when you apply in December,
or the guidance we are getting from the U.S. DOL, through no fault
of their own—very clear, you know, things are changing very quick-
ly—our rules were different almost from week to week. So being
able to be eligible one week and not eligible the next week, it was
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very difficult for our claimants and for our staff, who are newly
trained up, newly implementing programs.
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So certainly, as I mentioned before, we are all in favor of waiving
all non-fraudulent overpayments that came from the pandemic pro-
grams.
Mr. DAVIS. And what happened when the pandemic hit to the
number of requests for benefits in New Jersey?
Mr. ASARO-ANGELO. Well, during the week of March—ending
March 6, we had 7,900 claims; 2 weeks later, during—March 21,
we had 155,000 people applied for UI. New claims increased to
205,000 the following week. Within five weeks, we had one million
claims in new Jersey.
Mr. DAVIS. Well, I know that you and your staff worked hard
to get the benefits out as quickly as you could. What effect did this
have on the workers?
Mr. ASARO-ANGELO. Well, I would say the benefits served
their purpose, as laid out in statute and regulation and—desire to
provide workers with an income during loss of employment and,
most importantly, keep them on their feet so that they can look for
work while still supporting themselves, their families, and their
communities.
The system also helped sustain our economies by sustaining the
purchasing power of millions of workers, as Congressman Pascrell
mentioned earlier. And so, over the past few years, even with
COVID, we have had a remarkable increase in the number of small
businesses in New Jersey, and I think largely because of the in-
vestment that came through to help workers during this trying
time.
Mr. DAVIS. Thank you very much.
And Mr. Chairman, after your treatment of giving me the oppor-
tunity to waive on, and also the refreshments that you served,
maybe I will waive on——
Chairman SCHWEIKERT. I have a coffee problem, Mr. Davis. I
hope everyone else will. But thank you for joining us. And forgive
the tyranny of our schedule and our clock.
Mr. Pascrell and I have a running agreement here as part of the
discussion that, in many ways, this is shorter than we would like
it to be, but one of the more interesting hearings we have ever had.
You did something unique as a group, all of you. You actually gave
us a path where we think we can do something positive, and maybe
make the future more robust, everything from things we are going
to need to know how to—New Jersey—meet the privacy standards
and the security standards of the Federal Government to the abil-
ity—could we actually take what Ms. Miller spoke about, the AI,
and Ms. Simon touched on, the—what is available out there, and
how it changes so rapidly, and could we ever wrap that around
some of the services that Ms. Shea spoke about that already exist?
It is traditional, as the chairman, at the end I need to tell you
that you are subject to potential written requests from members
that will be made part of the permanent record.
Please be prepared also for maybe more than just two weeks of
asking for your help as staff speaks to staff of what could we do
to never go through this again.
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And with that, this hearing is over.
[Whereupon, at 11:31 a.m., the subcommittee was adjourned.]
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MEMBER QUESTIONS FOR THE RECORD
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PUBLIC SUBMISSIONS FOR THE RECORD
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File and source
- File
- CHRG-118hhrg54909.pdf
- Size
- 22,460,057 bytes
- SHA-256
- 65253ac532d6e9d77d9fe0573cf2cb06e703597cb27c95d7c97cea410b9862d1
- Our copy
- CHRG-118hhrg54909.pdf
- Original
- www.govinfo.gov