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Smith, Crapo Urge Watchdog Agency to Continue Investigating Fraud in Unemployment Insurance Program

March 23, 2023

WASHINGTON, D.C. – After bombshell testimony revealed an estimated $191 billion may have been misspent, with a significant portion lost due to fraud, according to the Biden Administration’s Department of Labor Inspector General, House Ways and Means Committee Chairman Jason Smith (MO-08) and Senate Finance Committee Republican Leader Mike Crapo (R-ID) are calling on the Government Accountability Office (GAO) to intensify its investigation and shine a light on how much taxpayer money in COVID unemployment insurance (UI) programs was stolen or misspent.

In a new letter to GAO Comptroller Gene Dodaro, Chairman Smith and Republican Leader Crapo urged GAO to continue investigating the full extent of the fraud perpetrated on American taxpayers, warning that failure to do so may impact the federal government’s ability to respond to future emergencies:

In the wake of the February 8 hearing, we remain deeply concerned about the extent of fraud in the UI program and the degree to which fraud risks that emerged during the pandemic could carry over into the regular UI program and exacerbate the problem. We are further concerned about DOL’s capacity to respond to future emergencies that could involve substantial expenditure of UI funds and thus renewed fraud risks. At the February 8 hearing, you stated that GAO has work under way to, among other things, develop a more comprehensive estimate of UI fraud.

Estimates of COVID unemployment fraud vary by hundreds of billions of taxpayer dollars. GAO’s initial estimate puts fraud at $60 billion; the Department of Labor’s Office of the Inspector General puts the figure of improper payments at $191 billion, with a significant portion attributable to fraud; and non-government sources have put the figure as high as $400 billion. Just over $5 billion has been recovered.

The Biden Administration has no idea how many tax dollars have been lost to fraud or improperly paid which underscores the critical need for a complete accounting of pandemic UI fraud, like the one Smith and Crapo are requesting from GAO.

In the wake of testimony from government panel witnesses at its February hearing, the Ways and Means Committee passed the Protecting Taxpayers and Victims of Unemployment Fraud Act to help recoup stolen tax dollars, incentivize states to pursue fraudsters, and seek justice on behalf of victims.

Yesterday’s letter asks GAO to develop a complete estimate of COVID unemployment fraud with a lower and upper estimate, identify how much states have recovered from fraudulent payments, and determine whether the Biden Labor Department has taken steps to improve its ability to manage fraud.

Read the letter here.