DOL OIG Alert Memo on Escheated UI Holdings (May 28, 2026)

Summary

An alert memorandum from the U.S. Department of Labor Office of Inspector General to the Employment and Training Administration (ETA), dated May 28, 2026, Report No. 50-26-003-03-315, on unemployment insurance holdings escheated by an institution called Financial Institution 1. It follows an OIG alert memorandum of January 30, 2026, which reported $738,475,819 in UI funds held on prepaid card accounts and $266,853,492 escheated as of September 2025. From February 2026 data, the OIG assesses that $376,134,538 was escheated between September 2025 and February 2026, a 41 percent increase, and that 53 jurisdictions' unclaimed property administrators received the funds. It finds $315,071,914 went to administrators in the same jurisdiction as the issuing state agency. The memorandum concludes that ETA has an opportunity to address ongoing escheatment.

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Full text

U.S. Department of Labor Office of Inspector Generat
Washington, DC 20210

May 28, 2026

MEMORANDUM FOR: HENRY MACK
Assistant Secretary
for Employment and Traini

FROM: ANTHONY P. D’ESP.
Inspector Genera

SUBJECT: Alert Memorandum: Additional Findings Regarding the
Recovery of Significant Unemployment Insurance Holdings
Escheated by Financial Institution 1
Report No. 50-26-003-03-315

Through our Alert Memorandum’ remitted to the Employment and Training
Administration (ETA) on January 30, 2026, the Office of Inspector General (OIG)
notified ETA of urgent concerns the OIG identified through its ongoing work with
financial institutions, including concerns related to unemployment insurance (UI) funds
still held or escheated by Financial Institution 1 (F11).

You will recall that, at the time the OIG issued its findings regarding Fl1’s UI fund
holdings, the OIG assessed that:

e $738,475,819 in total Ul funds were being held by FI1 as of September 2025? on
prepaid card accounts that had not been escheated, including substantial
amounts previously reported to ETA as potentially fraudulent.?

e $266,853,492 in UI funds were escheated* by FI1 as of September 2025.

In February 2026, Fl1 provided the OIG an updated list of escheated UI funds and UI
funds scheduled for escheatment, which my office then provided to ETA.

1 Alert Memorandum: The Employment and Training Administration Needs to Ensure State Workforce
Agencies Take Action to Recover Significant Unemployment Insurance Holdings Still Held by Financial
Institution 1's Prepaid Card Program, Report No. 50-26-001-03-315 (January 30, 2026)
https://www.oig.dol.gov/public/reports/oa/2026/50-26-001-03-315.pdf

2 September 2025 reflects the timing of OIG’s receipt of Financial Institution 1’s first subpoena
productions; totals referenced herein are approximate due to rounding.

3 Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk Areas
Increased to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022),
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf

4 in the referenced alert memoranda, the term escheatment refers to the mandatory obligation for
financial institutions to surrender unclaimed funds. These requirements and their deadlines vary by state,
and funds from a single account may not be transferred all at once but rather determined by the date of
deposit against the state’s required time period. These funds are not surrendered directly to SWAs, but
instead go to state unclaimed property administrators.

Working for America’s Workforce

Due to the OIG’s ongoing concerns about Ul funds from one state workforce agency
(SWA) being escheated to various other jurisdictions’ unclaimed property
administrators,° | directed my special agents and data science team to examine Fl1’s
updated UI escheatment schedule. The OIG assesses that:

e $376,134,538 (a 41 percent increase) in Ul funds were escheated by FI1
between September 2025 and February 2026.

e Anestimated $500,000,000 or more in total UI funds once held by FI1 will have
been escheated by September 2026 if ETA does not take further action.

Finally, the OIG used the February 2026 FI1 data to analyze which jurisdictions’
unclaimed property administrators ultimately received UI funds from Fl1.° Based on this

analysis, the OIG assessed that:

e 53 jurisdictions’ unclaimed property administrators received escheated UI funds
from the SWAs that were clients of Fl1.

e On average, 34 different jurisdictions’ unclaimed property administrators received
Fl1-escheated UI funds originally issued by the SWAs.

e $315,071,914 in Ul funds escheated to date (an average of 80 percent per state)
were deposited with the unclaimed property administrator located in the same
jurisdiction as the SWA that originally issued the UI! funds (see Table 1 below).

Overall, the OIG Identified
about $376 Million in Fl1 Ul Funds That Have
Escheated to Date

The OIG found this updated escheatment estimate
represents about a 41 percent increase in the
escheatment estimate the OIG cited in its January 30,
2026 Alert Memorandum,

elae|

The OIG found about $315 million (about an 80 percent
average per state) of the escheated UI funds were
deposited with the unclaimed property administrator
located in the same jurisdiction as the SWA,

and

The OIG found that more than $120 million in Fl1 UI
funds will escheat by September 2026 without further
action by ETA.

5 Fifty states, as well as several territories, have funds with agencies administering unclaimed property.
§ The OIG has not included information on all jurisdictions’ unclaimed property administrators and Ul
prepaid card accounts affected but can provide that information to ETA upon request.

-2-
Conclusion

As a result of this analysis, the OIG assesses that an opportunity exists for ETA to:
ensure SWAs finalize and remit their fraud findings for all Fl1 Ul prepaid card accounts
to ETA; communicate historical escheatment data findings to state unclaimed property
administrators; and assess methods to temporarily pause or otherwise address Fl1’s
ongoing escheatment of UI funds.

The OIG provided a draft of a non-public version of this alert memorandum to ETA for
technical review. ETA responded timely with comments on the draft, which the OIG
substantially incorporated into this alert memorandum. We also issued further details to
ETA. We look forward to continuing to work with ETA personnel on this urgent concern
and appreciate the cooperation and courtesies ETA has extended to us.

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Our copy

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Original

www.oig.dol.gov