Time's Running Out: Prosecuting Fraudsters for Stealing Billions in Unemployment Benefits from American Workers

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                    TIME'S RUNNING OUT: PROSECUTING5                  FRAUDSTERS FOR STEALING BILLIONS IN6                       UNEMPLOYMENT BENEFITS FROM7                            AMERICAN WORKERS89=======================================================================1011                                HEARING1213                               BEFORE THE1415                            SUBCOMMITTEE ON16                             WORK & WELFARE1718                                 OF THE1920                      COMMITTEE ON WAYS AND MEANS21                        HOUSE OF REPRESENTATIVES2223                    ONE HUNDRED NINETEENTH CONGRESS2425                             FIRST SESSION2627                               __________2829                            FEBRUARY 6, 20253031                               __________3233                          Serial No. 119-WW013435                               __________3637         Printed for the use of the Committee on Ways and Means3839[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]4041                                __________4243                   U.S. GOVERNMENT PUBLISHING OFFICE4459-658                    WASHINGTON : 20254546-----------------------------------------------------------------------------------47                      COMMITTEE ON WAYS AND MEANS4849                    JASON SMITH, Missouri, Chairman5051VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts52ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas53MIKE KELLY, Pennsylvania             MIKE THOMPSON, California54DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut55DARIN LaHOOD, Illinois               DANNY DAVIS, Illinois56JODEY ARRINGTON, Texas               LINDA SANCHEZ, California57RON ESTES, Kansas                    TERRI SEWELL, Alabama58LLOYD SMUCKER, Pennsylvania          SUZAN DelBENE, Washington59KEVIN HERN, Oklahoma                 JUDY CHU, California60CAROL MILLER, West Virginia          GWEN MOORE, Wisconsin61GREG MURPHY, North Carolina          DON BEYER, Virginia62DAVID KUSTOFF, Tennessee             DWIGHT EVANS, Pennsylvania63BRIAN FITZPATRICK, Pennsylvania      BRAD SCHNEIDER, Illinois64GREG STEUBE, Florida                 JIMMY PANETTA, California65CLAUDIA TENNEY, New York             JIMMY GOMEZ, California66MICHELLE FISCHBACH, Minnesota        STEVEN HORSFORD, Nevada67BLAKE MOORE, Utah                    STACEY PLASKET, Virginia68BETH VAN DUYNE, Texas                TOM SUOZZI, New York69RANDY FEENSTRA, Iowa70NICOLE MALLIOTAKIS, New York71MIKE CAREY, Ohio72RUDY YAKYM, Indiana73MAX MILLER, Ohio74AARON BEAN, Florida75NATHANIEL MORAN, Texas76                       Mark Roman, Staff Director77                 Brandon Casey, Minority Chief Counsel78                                 ------7980                     SUBCOMMITTEE ON WORK & WELFARE8182                    DARIN LaHOOD, Illinois, Chairman83MIKE CAREY, Ohio                     DANNY DAVIS, Illinois84RUDY YAKYM, Indiana                  JUDY CHU, California85MAX MILLER, Ohio                     GWEN MOORE, Wisconsin86AARON BEAN, Florida                  DWIGHT EVANS, Pennsylvania87NATHANIEL MORAN, Texas               JIMMY GOMEZ, California88BETH VAN DUYNE, Texas89RANDY FEENSTRA, Iowa90                         C  O  N  T  E  N  T  S9192                              ----------9394                           OPENING STATEMENTS9596                                                                   Page97Hon. Darin LaHood, Illinois, Chairman............................     198Hon. Danny Davis, Illinois, Ranking Member.......................     299Advisory of February 6, 2025 announcing the hearing..............     V100101                               WITNESSES102103Haywood Talcove, Chief Executive Officer, LexisNexis Risk104  Government105  Solution.......................................................     4106Anna S. Hui, Director, Missouri Department of Labor and107  Industrial Relations...........................................    17108Jeff Ficke, Chief Executive Officer and Founder, Russell Allen109  Partners.......................................................    29110Shelbey Meyenburg, Unemployment Insurance Worker, AFSCME Council111  28 Washington Federation of State Employees....................    41112113                    MEMBER QUESTIONS FOR THE RECORD114115Member Questions for the Record and Responses from Haywood116  Talcove, Chief Executive Officer, LexisNexis Risk Government117  Solution.......................................................    71118119                   PUBLIC SUBMISSIONS FOR THE RECORD120121Public Submissions...............................................    75122123[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]124125                    TIME'S RUNNING OUT: PROSECUTING126                    FRAUDSTERS FOR STEALING BILLIONS127                        IN UNEMPLOYMENT BENEFITS128                         FROM AMERICAN WORKERS129130                              ----------131132                       THURSDAY, FEBRUARY 6, 2025133134                  House of Representatives,135                  Subcommittee on Work and Welfare,136                               Committee on Ways and Means,137                                                    Washington, DC.138    The subcommittee met, pursuant to call, at 2:00 p.m., in139Sam Johnson Room, 2020, Rayburn House Office Building, Hon.140Darin LaHood [chairman of the subcommittee] presiding.141    Mr. LaHOOD. The subcommittee will come to order. I want to142welcome everybody today to our Work and Welfare Subcommittee143titled Time's Running Out: Prosecuting Fraudsters for Stealing144Billions in Unemployment Benefits from American Workers. I want145to welcome our witnesses here today and thank you for traveling146to be a part of this hearing.147    And I want to also welcome our new members to the148subcommittee. A few of them are here. I want to welcome Rudy149Yakym from Indiana who is a new member of Ways and Means and150the subcommittee; Aaron Bean from Florida is a new member here,151too, and welcome back our old members, and he is not new to152Ways and Means but new to the subcommittee, Randy Feenstra from153Iowa. Randy, welcome to the Subcommittee on Work and Welfare.154    As the returning chairman of the subcommittee, we have a155unique opportunity to build on our past bipartisan work and156look forward to working with all of you. My district that I157cover is the 16th congressional district, which covers much of158central and northwestern part of Illinois. The purpose of159today's hearing is to learn how Congress can hold fraudsters,160how we can identify fraudsters and other criminal organizations161accountable by extending the statute of limitations for CARES162Act-related unemployment insurance fraud, which will expire on163March 27th of 2025 without congressional action.164    The Ways and Means Committee has conducted considerable165oversight since the UI program's weaknesses were exposed during166the COVID-19 pandemic. In February of 2023, the committee held167a hearing with the government witnesses from the GAO and the168Pandemic Response Accountability Committee who testified to169problems with outdated state systems and weak online security170that made the program vulnerable to fraud.171    Subsequently, in May of 2023, the House passed the172Protecting Taxpayers and Victims of Unemployment Fraud Act. The173bill would have extended the statute of limitations for an174additional five years and incentivized states to go after fraud175and recover funds. It also included program integrity reforms176to stop the pay and chase model of benefit delivery.177Unfortunately, those reforms fell short of becoming law and178Congressional action is needed now more than ever.179    All told, for the unemployment insurance program alone, GAO180has estimated between $100 and $135 billion were lost to fraud181during the pandemic. That number is astounding. Even more182concerning, the Department of Labor tells us that only $5183billion has thus far been recovered. Meanwhile, we know law184enforcement agencies have thousands of cases currently pending.185The Department of Justice has charged more than 600 criminal UI186fraud cases with associated losses of over $300 million.187    As of January 28th of this year, DOJ has more than 1,600188criminal matters that remain open and uncharged. Without an189extension of the statute of limitations, these instances of190suspected pandemic UI fraud will go unpunished. First and191foremost, we need to provide law enforcement with the tools and192resources to hold fraudsters accountable while pursuing reforms193that can stop this type of UI fraud from happening again.194Congress must act to extend the statute of limitations. I hope195that in the coming weeks we can work together in a bipartisan196fashion to pass legislation to do just that and get a bill197across the finish line before the March 27th date.198    In addition, we need to examine how international crime199rings and hostile nations continue to target the UI program.200There are countless examples of criminals, foreign and201domestic, deploying sophisticated schemes to defraud the202government and UI recipients. For example, my staff recently203shared with me a press release from the Department of Justice204shown on the board behind me here announcing that a205Pennsylvania man pled guilty to obtaining $59 million in public206benefits, including unemployment and laundering the proceeds to207China. As a member of the House Select Committee on China,208cases like this are deeply concerning to me and can confirm our209worst fears regarding the attacks on our institutions by210hostile nations such as the CCP, the Communist Chinese Party.211    I strongly believe we have a responsibility to bring212accountability back to Washington and find out what we can do213to bring restitution for taxpayers in the face of such214staggering amounts of fraud. There is a lot more work to be215done to hold these criminals accountable through the criminal216justice system, and recoup the billions of dollars on behalf of217American taxpayers.218    So, again, I want to thank our witnesses for being here219today, for traveling, their valuable time, and their insight220that we will hear from a little bit later here. With that, it221is now my pleasure to recognize the gentleman from Illinois,222our ranking member Danny Davis.223    Mr. DAVIS. Thank you, Mr. Chairman, and I, too, want to224welcome all of our members back of this subcommittee and to our225witnesses today. For certain, Democrats want to hold criminals226that stole from workers in our unemployment insurance or UI227program during the pandemic accountable unequivocally and228without a doubt. We provided $2 billion in the American Rescue229Plan Act to strengthen program integrity, access, and equity.230Democrats want to work on a bipartisan basis to finish the job.231    However, I cannot begin this hearing and pretend that232business is usual in the face of illegal and unethical actions233by this administration. I must recognize and criticize the234firing of the Department of Labor Inspector General whose job235it was to investigate and prosecute UI fraud and who236specifically asked our committee to extend the statute of237limitations for UI fraud.238    Inspector General Larry Turner served with distinction in239both the Trump and Biden administrations and led the Inspector240General's Office to 1,400 successful pandemic UI fraud241prosecutions and over $1 billion in court-ordered restitution242and payment.243    Mr. Turner was recently fired by President Trump along with244nearly all of the non-partisan inspectors general. After firing245these IGs charged with prosecuting fraud and making sure246agencies followed the law, the Trump administration illegally247blocked states from accessing essential health, childcare,248child welfare, and other funding authorized and appropriated by249Congress and illegally blocked nonprofit organizations from250accessing already appropriated funds just as they were trying251to make payroll. The harm done by short delay in payments gave252us a preview of what might happen if we enacted the cuts being253pushed by my Republican colleagues.254    In the last few days, President Trump gave Elon Musk, an255unselected billionaire, and his hackers unfettered access to256the extremely confidential data regarding payments to workers,257businesses, seniors, and entities around the world via the258systems with the Treasury Department centers for Medicaid and259Medicare, Labor Department, and NIH. These systems include260private financial information for seniors receiving social261security or Medicare, workers receiving tax refunds, private262health information about you and your loved ones, and the263privileged information of Mr. Musk's business competitors.264    This hearing is about preventing fraud, yet this265administration appears to be gifting Mr. Musk the unlimited266ability to defraud individual Americans to access their most267private financial and health information while inappropriate.268Will Mr. Musk illegally stop your social security, tax,269Medicare, Medicaid, or disability payment? Will he claw back270your tax refund or social security payment if he thinks you271didn't deserve it? Will he use his unchecked power to sell your272social security numbers or bank account information to the273highest bidder or delay government contract payments or grants274to his competitors or people he dislikes?275    As much as my colleagues and I want to finish the job of276prosecuting pandemic fraud and ensure that the unemployment277system is ready for the next recession, I cannot ignore the278silence of my Republican colleagues in this offensive fraud279against the American public. And the sad reality is that the280next recession might be very soon given the President's281determination to start trade wars with our closest allies that282will skyrocket prices on nearly everything Americans buy.283    I look forward to hearing from Shelby Meyenburg and getting284good advice from the workers on the front lines of making sure285that state UI programs pay the right workers the right amount286at the right time. Yet I am also extremely concerned that any287new inspector generals in this current lawless environment288would not appropriately target true criminal rings and instead289focus on the workers unemployed during the pandemic who290received overpayments due to no-fault of their own.291    The first step, the very first step, Mr. Chairman, is for292our committee to work together to protect the privacy and293prevent the defrauding of the American people.294    I thank you very much and yield back the balance of my295time.296    Mr. LaHOOD. Thank you, Mr. Davis, for your opening297statement. I will now turn to our witnesses here today and I298will introduce them here in a second. Again, thank you for299being here today and look forward to your testimony and our300questions and answers from the committee members.301    I will introduce from my left to right. Our first witness302is Haywood Talcove, who is the chief executive officer of303LexisNexis Special Services Incorporated in McLean, Virginia.304    Next we will hear from Ms. Anna Hui, who is the director of305the Missouri Department of Labor and Industrial Relations in306Jefferson City, Missouri.307    Thirdly, we will hear from Jeffrey Ficke, who is the CEO308and founder of Russell Allen Partners in Cincinnati, Ohio.309    And lastly, we will hear from Shelby Meyenburg, who is an310unemployment insurance worker with the Washington Federation of311State Employees. Welcome to you all.312    We will begin with you, Mr. Talcove. You are recognized for313five minutes to deliver your opening statement.314315    STATEMENT OF HAYWOOD TALCOVE, CHIEF EXECUTIVE OFFICER,316   LEXISNEXIS SPECIAL SERVICES INCORPORATED, McLEAN, VIRGINIA317318    Mr. TALCOVE. Chairman Smith, Chairman LaHood, Ranking319Member Davis, and distinguished members of the committee, thank320you for the opportunity to speak on fraud and government321assistance programs. During the pandemic, we witnessed a health322crisis and then a massive wave of fraud that shockingly323continues today. Domestic and transnational criminals likely324stole $1 trillion across all the systems programs meant to help325needy Americans. The money was used to traffic drugs, traffic326children, and threaten our democracy.327    COVID-19 was neither the first nor will it be the last328disaster to test this nation. Just this past year we witnessed329storms destroying whole communities in North Carolina and330wildfires that burnt across southern California, and once again331we are seeing the criminals attack at scale. Fraud is a332financial problem, fraud is a national security problem, and333fraud is a human problem.334    I would like to suggest three proven solutions that can335significantly reduce this transfer of assets to criminal336organizations. Number one, apply identity verification on the337front end; number two, end self-certification; and number338three, continuously authenticate beneficiaries. For too long339the government has treated identity verification as an340afterthought. For years we have seen the catastrophic result.341Criminals from across the globe flooding state and federal342systems, stealing trillions meant for Americans.343    We must finally understand that pay and chase does not344work. In fact, of the $250 billion stolen from taxpayers from345the unemployment insurance program during the pandemic, less346than $5 billion has been recovered thus far. Criminals do this347because the pandemic taught them that government programs are348the mark. They never run out of money and you likely won't be349arrested. If we fail to act, we are complicit in funding350fraudsters, organized criminals, nation states, and even351terrorists who use these programs as their personal checking352accounts.353    At the beginning of the pandemic, I spoke with a state UI354director who assured me her program had no fraud. Three short355weeks later, they had more benefit claims than residents over356the age of 18. Criminals move faster than government systems.357But fraud does not stop at the door. It is just not external358actors gaming the system. Insiders, corrupt employees, and359contractors steal from the programs taking advantage of their360access to systems and passwords bilking the very people they361are supposed to be serving.362    Today the threat is growing exponentially. AI-powered fraud363networks generate fake identities that pass dated364misverification standards from 2017. Frauds file thousands of365applications in seconds. Deep fake technology generates, quote,366unquote, real people that bypass security safeguards. Criminals367are evolving in realtime. Our response must be just as fast,368just as smart, and just as relentless.369    To stop this, we need AI, we need data sharing, and we need370changes to the 1974 Privacy Act. Fraud is a data problem and371can be mitigated in today's world. Fraud on this scale is not372inevitable. It is the result of legacy systems, outdated and373complex regulations, lack of data, and failure to act. This is374all achievable today.375    Taxpayers do not want their funds going to criminal groups.376The funds should go to those in need. I am not suggesting we377need technological breakthroughs. The solutions are clear378tested and available now and used by the private sector whose379fraud rate is less than 3 percent compared to 20 percent in the380public sector.381    If we do the following: Number one, verify identities;382number two, eliminate self-certification; and number three,383continuously authenticate beneficiaries, then we can restore384integrity to our assistance programs, ensure taxpayer dollars385reach those who truly need them, and prevent criminals from386exploiting the American people. I would also urge you to extend387the statute of limitations related to the CARES Act that388expires on March 27th.389    We are failing the single mother who relies on food390assistance, the unemployed worker who genuinely needs support,391and families. We are also failing the taxpayer by allowing392around $1 trillion annually to be lost to fraud and improper393payments.394    Thank you, Chairman Smith, Chairman LaHood, Ranking Member395Davis, and members of the committee for the opportunity to396testify today.397    [The statement of Mr. Talcove follows:]398    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]399400    Mr. LaHOOD. Thank you, Mr. Talcove.401    We will now turn to Ms. Hui. You are now recognized for402five minutes.403404 STATEMENT OF ANNA HUI, DIRECTOR, MISSOURI DEPARTMENT OF LABOR405       AND INDUSTRIAL RELATIONS, JEFFERSON CITY, MISSOURI406407    Ms. HUI. Chairman LaHood, Ranking Member Davis, and408distinguished committee members, my name is Anna Hui and I am409the director of the Missouri Department of Labor and Industrial410Relations and have served in that position since 2017. I thank411you and Chairman Smith for the invitation to come today and412testify before you all.413    Our division of employment security administers our state's414unemployment insurance or UI program and was responsible for415administering pandemic unemployment programs. I am proud that416Missouri is consistently among the nation's leaders in417preventing improper UI payments, providing benefits to the418rightful recipients, and along with state agency partners,419providing high quality reemployment services to unemployed420Missourians.421    But first let me explain the basics of regular unemployment422insurance. Imagine you are purchasing car insurance. You pay423premiums. In turn, the insurance company covers potential424losses like car accidents. The more accidents you have, the425higher your premiums. Conversely, a clean driving record can426lead to lower premiums.427    The UI program operates similarly. Employers pay taxes and428those funds provide temporary partial income support to429eligible workers who lose their jobs through no fault of their430own. The system encourages employers to maintain a stable431workforce, minimize layoffs, and reduce the number of claims432filed against their accounts. Just as your car insurance433premiums will increase with accidents, an employer's UI tax434rate increases with frequent valid claims. This built-in435incentive motivates employers to actively participate in the436claims process and creates a greater likelihood that only437legitimate claims are paid out. Additionally, individuals438filing for unemployment insurance not only have to meet439eligibility requirements for the initial claim, but also every440week they make a request for benefits.441    Prior to the pandemic, UI fraud typically involved442claimants failing to meet work search requirements or receiving443benefits while employed. That was essentially what traditional444improper payments were. However, the pandemic dramatically445shifted the landscape. Fraud evolved to encompass large scale446identity theft with criminals stealing personally identifiable447information, PII, to file fraudulent claims. This shift was448driven by the massive influx of money into the system and the449rush to distribute it making traditional safeguards less450effective.451    In Missouri, we are fortunate to have already put in place452in 2016 a modernized information technology system, advanced453fraud detection methods, and tools and partnerships with third-454party vendors specializing in fraud prevention. Additionally455for years, Missouri has been a member of the National456Association of State Workforce Agencies, NASWA, Integrity457Center and has actively participated in the integrity data hub.458This multifaceted approach was and is still critical to our459success, to the integrity of Missouri's UI system, and to the460value of every tax dollar.461    With the right systems, tool, and partnerships, stopping UI462fraud is not impossible, but extending the statute of463limitations for CARES Act related UI fraud and overpayment464recovery is crucial. The current deadline is March 27 of 2025465and it looms large. Without an extension, prosecutions will be466impossible after that date allowing criminals to escape justice467and potentially leaving billions of dollars in overpayments due468to fraud unrecovered. This is unacceptable.469    Beyond extending the statute of limitations, broader UI470program reforms are essential as proposed in H.R. 1163, the471Protecting Taxpayers and Victims of Unemployment Fraud Act. We472must move away from the pay and chase model, which is473inherently vulnerable to fraud, and implement more robust474preventative measures.475    The current Department of Labor administrative funding476model often penalizes efficient states. Its heavy reliance on477workload is a means to redistribute funds can serve as a478deterrent for states to pursue transformative efficiencies.479This disincentivizes efficiency and perpetuates systemic480problems. The current funding model plays catch up to actual481program needs, especially during economic downturns. It is also482a disincentive to long-term investment as a short-term nature483of some funding sources discourages the state from making484critical investments in technology and cybersecurity that incur485ongoing costs for licensing, maintenance, and support.486    In 2023, Missouri businesses paid approximately $130487million in federal unemployment tax act, food to taxes, to the488U.S. Treasury, yet Missouri only received $38.5 million in UI489program administrative funding from DOL. This chronic490underfunding forced us to lobby for state funds in the Missouri491legislature to shore up funding for our UI program and create a492long-term modernization plan. For every state UI administrator493in the U.S., this situation is unsustainable. In line with494NASWA'S 2025 legislative priorities, dedicated technology495funding should be a separate consistent stream for496modernization, including cybersecurity AI and data analytics.497    Finally, adequate funding investments in modernization498remain relevant and secure and we must make sure that ongoing499maintenance and support are there. The pandemic underscored the500need for modern resilient secure UI system. By prioritizing501accuracy, investing in technology, and reforming the funding502model, we can ensure that the UI program continues to serve its503vital function providing a safety net to workers during times504of economic hardship while safeguarding the integrity of the505system and the trust of the American people.506    Thank you. I am happy to answer any questions you may have,507and as this is a public forum, I cannot provide any specific508details to the fraud measures that we have in place in509Missouri.510    [The statement of Ms. Hui follows:]511    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]512513    Mr. LaHOOD. Thank you Ms. Hui.514    We will now turn to Mr. Ficke. You are recognized for five515minutes.516517 STATEMENT OF JEFFREY FICKE, CEO AND FOUNDER OF RUSSELL ALLEN518                   PARTNERS, CINCINNATI, OHIO519520    Mr. FICKE. Thank you, Chairman LaHood, Ranking Member521Davis, and members of the subcommittee. I want to thank you for522the opportunity to present. My name is Jeff Ficke and I am the523CEO of Russell Allen Partners located in Cincinnati, Ohio. My524entire career is focused on technology, innovation, and525operations around payments. I will give you a little background526about that, because it covers government and financial527services.528    In the '90s I was a founding member of a payments company529that supported government service organizations, several530federally funded state-operated programs including531unemployment. After that company was sold, I moved to the532financial services industry working for Fifth Third Bank. I led533central operations which transferred approximately $14 trillion534a year in funds using ACH wire card and check. After that I535moved on to run Fifth Third's commercial payments line of536business for the last six years of my career in banking.537    Before I present about the opportunities I see exist538between these agencies and financial services, I want to539discuss my role in the pandemic and the unemployment. At that540time, early phase of the pandemic, the pandemic unemployment541assistance program was being deployed to those not eligible for542traditional unemployment. Ohio was experiencing cybercrime543attacks that resulted in Ohio reporting about $1.8 billion in544fraudulent overpayments. $1.4 billion was for PUA and about545$400 million were about traditional unemployment. I do546understand that today the COVID-era pandemic unemployment547support is due to expire. I would encourage that to be548extended.549    I want to start by explaining my involvement in Ohio. It550started in 2021. My expertise in government services and551banking aligned well with Ohio's needs. I was named to run552Ohio's public private partnership. The volume of claims were553skyrocketing, the unadjudicated claims and backlog was growing554out of control, and citizens in crisis to the agency were555overwhelming.556    Governor DeWine made the decision to engage the private557sector. He worked directly with the Ohio Business Roundtable, a558group of about a hundred of Ohio's largest public sector CEOs559to engage their membership for expertise. The Ohio Business560Roundtable is run by former U.S. Congressman Pat Tiberi.561Governor DeWine recognized that the private sector had562experience in these crisis situations. My role was to lead the563coordination of all these activities between Ohio's Department564of Jobs and Family Services and the private sector.565    We provided advice and guidance during the execution of566these recommendations. We had access to senior leaders in567these--from places like Fifth Third Bank, Western Southern,568KeyBank, Nationwide Insurance, and others. As I had testified569multiple times that I had to testify, had the opportunity to570testify multiple times in front of the state's legislative571subcommittees. Governor DeWine and ODJFS's director Matt572Damschroder gave three clear objectives at that phase. The573first goal was to stop the fraudulent claims from being574submitted. In early 2021, the state was receiving over a575million claims a month for new unemployment claims and POA576claims.577    With advice from the private sector and ODJFS team, we were578able to deploy a new fraud stack, and that happened within the579first 60 days of our engagement. The results were overwhelming.580New fraud claims--new unemployment claims dropped in two months581to less than 25,000 a month. Over a 97 percent reduction in582fraud with a new set of technology that was deployed.583LexisNexis was a key partner for us at that point in the584process. And you can see on the graphic some of the reductions585that took place as a part of the PUA.586    The second objective was really clear. There was587approaching 5 million unadjudicated claims-related issues. We588actually took a new approach to actually engage the big data589corporations, data analytics teams to actually help us to590accelerate that. We did take advantage of programs that were591completed by Innovate Ohio, advanced data analytics platform592supported by then Lieutenant Governor John Husted, who is now a593U.S. senator for Ohio. The P3 team engaged subject matter594experts from the private sector and big tech to help segment595those. Within 90 days of the project starting, Ohio had all596fraud free claims for Ohio citizens had been adjudicated and597proper payments were being sent.598    The third goal was to answer questions from enormous volume599of citizens. Many Ohioians were victims of cybercrime while600others who needed benefits were not being processed because of601the backlog. During this period the service centers were602overwhelmed. Citizens experienced difficulties getting through603and sometimes had up to a six hour hold time. You can see in604the chart that is displayed here that we returned all those to605commercially acceptable standards with call times--call handle606times increased and call times--hold times less than three607minutes.608    The governor's reasoning for seeking this advice and609collaboration, Ohio's sector proved to be an outstanding610decision. I also want to acknowledge that Ohio's ODJFS611employees welcomed the support, worked endless hours to612deliver, and truly cared about every citizen who needed the613support from the organization.614    And the last segment I want to talk about is what I feel is615a partnership that can exist between government and financial616services. Collaboration. One of the key initiatives launched at617the direction of Director Damschroder was to understand that if618there was any funds that would be available and left to be619returned, we did confirm--we started by confirming our620understanding of how this money flowed from initial claims. The621traditional unemployment PUA program solutions required claims622adjudication that--as well as collection of payment history.623Programs checks were focused on claimants payments were sent to624the----625    Mr. LaHOOD. Mr. Ficke, I am just going to interrupt you626there for a second. You are a little bit over. We are going to627ask you to just pause there if you don't mind and we will take628the rest of your statement, for the record, if you don't mind629doing that.630    Mr. FICKE. Sure. I just want to talk about future631recommendations and I will pause. First of all, the banks and632the agencies are both accountable to multiple regulatory633organizations. Aligning them so that we can actually get data634sharing between the banks and the agencies is a very clear635opportunity.636    Secondly, the digital payment networks in this space have637actually introduced new threats, new opportunities, and, for638example, PayPal returned almost $70 million to the State of639Ohio on money that they held. Not all fraud--not all mobile640payment networks had that kind of diligence.641    The third opportunity is that the--excuse me, fourth, the642banks also are a point where they can follow sheet metal law,643which would actually allow the funds to be held for a period of644time and then returned into unclaimed funds. I don't understand645how that is going to actually play out in the long run and646issues that still need to be determined.647    I understand the statute of limitations. I do encourage it648to be passed along with House Bill 1163. We have spoken at649multiple NASWA and UWC conferences on it. We look forward to650answering your questions. Thank you again.651    [The statement of Mr. Ficke follows:]652    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]653654    Mr. LaHOOD. Thank you very much.655    Lastly, we will recognize Mr. Meyenburg. You are recognized656for your opening statement.657658 STATEMENT OF SHELBY MEYENBURG, UNEMPLOYMENT INSURANCE WORKER,659            WASHINGTON FEDERATION OF STATE EMPLOYEES660661    Mr. MEYENBURG. Okay. Good afternoon, Chairman LaHood,662Ranking Member Davis, and members of the subcommittee. My name663is Shelby Meyenburg. I am an employment service worker in the664State of Washington. In this role I also help UI claimants file665their benefits. I am a proud member of AFSCME Council 28 and666the Washington Federation of State Employees Local 443.667    I help Washingtonians file for unemployment insurance and668safeguard the UI system against fraud. My job is to get the669right benefits to the right people on time.670    In 2020 the pandemic hit Washington State quickly. Our671state unemployment rate rose from 5.1 percent in March to over67215 percent in April immediately placing a lot of stress on our673system. Unlike other states, Washington hired non-permanent674staff instead of outsourcing UI work during the pandemic. I was675one of those non-permanent staff. At this time, non-permanent676staff had received less than half of the normal training for677the UI program. It was a chaotic and challenging time where UI678claimants were desperate and the caseloads were enormous.679    In the spring of '22 I was laid off from my non-permanent680position and had to file for unemployment benefits myself. It681was a humbling experience to go from processing UI claims to682applying for UI. After being laid off, I applied for a683permanent position under the state's merit-based personnel684system and was hired in July of '22. My evolution from non-685permanent to permanent staffer showed me the value of being a686highly skilled employment service worker who understands the687complexities of the UI program.688    UI workers are the first line of defense protecting hard-689earned benefits from fraud. We safeguard the system with690identity checks, reviewing and securely transmitting personally691identifiable information. We help jobless workers make sense of692the sometimes confusing language in the UI program. As an693example, we let them know when they should file for an appeal.694    We resolve complex claims, which takes training, a deep695understanding--deep knowledge of the program, persistence and696dedication to our mission. This is important work that highly697skilled and well-trained UI workers do every day for American698workers.699    UI workers hired under a merit-based personnel system as700required under federal law ensures that the services provided701to job seekers and employers across the country are unbiased702and high quality. UI workers cannot have any other interest703that play other than serving the jobless workers and704maintaining the integrity of the UI program.705    There are ways to prepare for future surges in unemployment706without undermining merit staffing. One solution is for states707to cross-train existing merit staff for other programs to708process UI claims. I am a cross-trained employment service709worker, what we call a UI ambassador. If a state experiences a710surge of unemployment claims, these cross-trained merit staff711state employees would receive a brief refresher training and be712able to hit the ground running in order to help workers and713keep our system and communities moving forward.714    As you work together on UI reform, I urge that you talk to715UI workers directly as they are the subject matter experts. We716want to protect the UI system and make sure that it works well717enough for everyone and protect the system from fraud. We can718accomplish these goals with increased funding for staffing, IT719modernization, program improvements, and cooperation between720the state and federal levels, not by outsourcing the work much721skilled merit-based UI staff.722    I would like to thank the chair, ranking member, and723members of the subcommittee for the opportunity to testify724today.725    [The statement of Mr. Meyenburg follows:]726    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]727728    Mr. LaHOOD. Thank you, Mr. Meyenburg, for your testimony729here today.730    I will now move to questions from the committee members to731our panelists today. Again, grateful for your contributions732here today to this important topic. I will now recognize myself733for my questioning.734    I am going to start with you, Mr. Talcove. For years this735committee has been sounding the alarm really on fraud from736organized criminal organizations, particularly from a number of737hostile nations, Russia, China, and others. As you saw in my738opening statement, I referred to a case in Pennsylvania739involving a defendant caught laundering money back to China.740These cases are complex. They are nuanced, involve federal741crimes, but they also raise serious national security concerns.742Mr. Talcove, can you explain the current state of the UI fraud743and how international criminal organizations are continuing to744be associated with fraudulent activity.745    Mr. TALCOVE. Yeah. Thank you very much for the question. It746is interesting in that I was just out in California, in L.A.747this week, and the fires are going there, and you are now748seeing the same groups that stole at scale in California $32.6749billion from the unemployment insurance program, they are now750stealing from the disaster unemployment insurance, the disaster751SNAP program.752    So what these criminal groups do, and in particular China,753Russia, Nigeria, Romania, is they use stolen information. Some754of it they collect it directly. For example, China, when they755had the OPM breach years ago, they have all that information,756and they file claims on behalf of legitimate individuals in the757afflicted areas, and then they use that money for just terrible758things.759    And what I find incredibly frustrating having followed760fraud since Hurricane Katrina in 2006, it is the same groups761doing the same thing. And if you just apply data and analytics,762just as Mr. Ficke was showing on those charts, you can stop it,763but we continue to allow these groups to steal. They use the764money for horrible things, child trafficking. They use it for765drugs in our communities. They use it for terrorism. So I would766like to tell you that things are better today, but just767watching what is going on in California, seeing what happened768in North Carolina, same groups, same playbook, stealing at769scale.770    Mr. LaHOOD. Thank you for that. Just to follow up, you771know, in terms of criminal prosecutions that have been772successful, are there any that come to mind that have had773somewhat of a deterrent effect on continuing criminal activity?774    Mr. TALCOVE. Yeah. So I would give Washington State credit.775During the pandemic they were the first group to get hit by a776Nigerian fraud organization. They actually did capture the777ringleader in that. But for the most part, these people do not778live in this country. They will never come to this country.779They are protected by their states, and that is why you have to780protect things on the front end. You can't let the money out.781    Now, if it does go out, remember my estimate, $250 billion782was stolen, $5 billion recovered. If it does go out, state and783local law enforcement can't do it. You need the Secret Service784and you need the FBI, because these are complicated785multifaceted criminal enterprises.786    Mr. LaHOOD. Thank you for that. I am going to turn now to787Ms. Hui. In your testimony, you mentioned the Missouri788Department of Labor. They currently have a UI program that's789effective in preventing improper payments and providing high790quality re-employment services. Last Congress Ranking Member791Davis and I worked on a bill called the Bridge to Workers Act792that was passed into law to provide the flexibility states need793to strengthen those connections to employment. Can you talk794about the work with re-employment services and how you see that795growing and developing into a core part of unemployment796programing in the future.797    Ms. HUI. Certainly. Thank you for the opportunity to answer798your question, and thank you, Chairman LaHood and Ranking799Member Davis, for actually getting the Bridge for Workers Act800passed. It has really afforded states a great deal of801flexibility to approach individuals that have potentially more802challenges to actually getting back to work. Missouri was one803of the few states that actually kept our re-employment and804eligibility assessment program, RESEA, going during the805pandemic. And by having this expansion of flexibility to allow806for states to better address what their local workforce needs807are and basically providing targeted professional workforce808development services to individuals, originally it was for809folks who are most likely to exhaust their benefits, but now,810again, it allows states to really be able to better fit what811their local state needs are.812    This program in particular has the built-in component that813when we require somebody to report for these required workforce814services, if they are utilized unemployment benefits, their815benefits are not continued if they don't report for those. So816it builds in that incentive, again, to make sure that workforce817services that are needed are actually being taken and, again,818to stress the re-employment roots of unemployment itself,819right? Because we really see that unemployment and workforce820services as part of the two sides to the same coin. It is821really about making sure that workers have the services and822support needed to get back to sustainable employment.823    Mr. LaHOOD. Thank you for that, Ms. Hui.824    Mr. Ficke, in your testimony, you described how you were825recruited by Governor DeWine in Ohio to help right the ship826recovering over $400 million in fraudulent benefits held by827banks and automated payment networks. I am particularly828interested in that success story, because according to a report829issued by the Illinois Auditor General in my home state, we830lost approximately $5 billion and only $189 million has been831recovered. Can you talk about how you were able to turn that832around in Ohio through your UI program and recoup the funds.833    And then maybe before you answer that, we have heard the834expression ``pay and chase.'' Can you explain for the members835of the Committee what that means, and what that is.836    Mr. FICKE. Well, first of all, with the pay and chase, I837might defer that to----838    Mr. LaHOOD. Well, maybe answer my question on how you did839that, and I will have Mr. Talcove answer the pay and chase.840    Mr. FICKE. Absolutely. Thank you for your question. I think841it is really important to understand how much manual effort and842personnel effort went into actually discovering these funds. At843the very early phases of our opportunities to recover funds, we844partnered very well with the leadership of Ohio Jobs and Family845Services, and we would ask a simple question. Is there still846money out in the networks to be able to do this.847    I think it is really important fundamentally to understand848that in the UI claims environment for approval on adjudication,849there is a lot of work done to identify an individual. In the850banking industry, when payments flow through, especially since8519/11, post that period, there is regulation that is also very852tightly covered by the banking industry, financial services853that actually require them to not allow money to get out of854banks into the hands of fraudsters. The one looks at identity855and the banking system can look at activity within a bank856within specifically a bank account.857    In a very simplistic level, it is looking at multiple858unemployment claims from multiple states going into the same859accounts, unusual spending happening within those financial860service institution accounts, large overseas transactions that861actually are pulling money out of a consolidation to pull them862overseas. That effort has resulted in the U.S. banking industry863setting up multiple advanced analytics programs, case workers,864and processes to actually prevent that from happening.865    The difficult work we had in that is that we are actually866required at that point to work with all the banks who received867funds. They didn't have a specific contractual relationship868with each individual state because they were the receiving869banks. Simplifying it, it basically means that is the bank of870the claimant who was actually getting the information. And in871our case, that required us to go beyond the individual head of872ACH or operations leaders and get to the newly established or873recently established groups within the banks that actually874allowed those fraud measures to be kept in place. We were able875to find the money. We were able to confirm it. We actually876coordinated activities to compare data between fraudulent--877potential fraudulent claims at the state with fraudulent878account activity, identify what was remaining.879    What ended up happening in that case is that we actually880then had to have legal agreements, sometimes referred as hold881harmless agreements, limitations of liability that actually had882to be executed post this whole process happening. Many banks883cooperated.884    I will give credit to ODJFS, because Director Damschroder885made it a clear initiative he wanted those funds back. We886prioritized it. They invested people and time and energy into887it, and we got great cooperation from many financial888institutions.889    Mr. LaHOOD. Thank you for that. Maybe quickly, Mr. Talcove,890you have used the expression ``pay and chase.'' Tell members of891our audience and the committee members what that means.892    Mr. TALCOVE. I believe it is a false paradigm that says893that you can't have speed in security, and I would just894reference that most of you have probably used Amazon. You895placed an order, it gets there quickly, and everything works896out really well for you.897    In government, sometimes what they do is they would rather898just pay it really quickly and then try to get the money back899later. And as you noted in your opening statement, only $5900billion of the $250 billion has been returned.901    The second point I want to make on that, I would encourage902you to try to go and look on your state's UI page and try to903fill out an unemployment insurance form. Sometimes the904overpayments or underpayments are related to the complexities905of the forms, and it really does create a whole set of backlogs906for those that are administering the programs. Those forms are907complicated.908    Mr. LaHOOD. Thank you for that. I will now recognize the909ranking member Mr. Davis for his questions.910    Mr. DAVIS. Thank you, Mr. Chairman, and thanks to all of911our witnesses.912    Mr. Meyenburg, let me ask you, given that Elon Musk and913hackers with no security training, our policy expertise now914have unlimited access to confidential financial and health data915for workers and businesses. I am going to talk a little bit916about how we are supposed to safeguard data. As a front-line UI917worker, you collect confidential identity and banking918information. What kind of training do you have to keep that919data safe and private?920    Mr. MEYENBURG. So during initial UI worker training, there921is a heavy emphasis on how to properly conduct identity922information verification. Throughout the entire process, six to923eight weeks, you are constantly having to do that process.924There is role playing scenarios that covers a lot of topics,925and during all of those you do have to conduct the correct926identification verification.927    There is several reasons why a UI claimant's identity would928be flagged for further review. If I clearly spot fake929information or misdocumented information, I have to send that930up for review. If a claimant's personal information does not931match what is on the state's driver's license system, that932one's also flagged for review by the fraud team. We work933together to safeguard the UI benefits from fraud and we also934ensure that we are using our training and experience to help935claimants who have challenges accessing benefits because they936are not tech savvy. This is why the role of a UI ambassador who937can see through those challenges to help a worker in need is so938critical.939    Mr. DAVIS. Why is this information safer when we limit940access to public employees like yourself?941    Mr. MEYENBURG. It is safer because we have no ulterior942motive. We are there to help the people of Washington State in943my case. We don't have to worry about those expectations of a944quota system, or anything like that. We meet the people where945they are at and we help them where they are at.946    Mr. DAVIS. Let me just re-emphasize that my democratic947colleagues and I are strongly committed to good service by948workers like yourself and especially people who have no need to949access their earned unemployment benefits. We are committed to950preventing fraud and safeguarding the UI trust fund. I am951grateful to you and your colleagues and especially to AFSCME952Council 31 workers in Illinois for their critical work. Is953there anything that we have to give up in order to do both,954provide the good service and have no other purpose for doing955it, ulterior motives?956    Mr. MEYENBURG. I don't believe so. I believe we can957accomplish both goals at the same time. In fact, this is built958into our process. Before we talked to a UI claimant about their959benefits, we verify their identity every single time we talk960with an individual, no exceptions. After identification, we can961then provide excellent customer service, whether that be filing962an initial claim or reviewing an active claim.963    Mr. DAVIS. Let me again just thank you and your workforce964and your colleagues for the work that you have done and the965faith and trust that we have in what it is that you do.966    Thank you, Mr. Chairman, and I yield back.967    Mr. LaHOOD. Thank you, Mr. Davis. I will now recognize one968of our new numbers, Rudy Yakym, of South Bend, Indiana.969    Mr. YAKYM. Thank you, Mr. Chairman, and thank you to our970witnesses for being here today. Unemployment insurance improper971payments and fraud ran rampant during the COVID-19 pandemic.972The Government Accountability Office, GAO, estimates that973pandemic unemployment fraud totaled $135 billion. That is about97415 percent of total UI benefits paid during the pandemic. But975the Department of Labor's Inspector General says that number is976at least $191 billion.977    Even worse, outside experts estimate that the total could978be upwards of $400 billion. California alone accounts for $20979to $33 billion of fraudulent pandemic UI payments. One estimate980put the state's improper payment rate at nearly 37 percent981during the first six months of the pandemic. No business could982survive allowing for over one third of payments that are made983to be fraudulent. We should expect more of our government and984of our states. We should expect that fraud--and we know that985fraud isn't just money going out the door. It is money that986undermines the faith that the American people have in the987system and the confidence that Congress has in states to manage988federal resources.989    Hardworking measures in my district don't want their990taxpayer dollars going to subsidize California or any other991state with such lax payment controls unless the state992implements reforms, upgrades systems, and demonstrates a993commitment to chasing down fraudsters. Despite these eye-994popping fraud numbers, we have only recovered about $5 billion995of it or less than 4 percent. The statute of limitations to996prosecute these cases expires at the end of March. Congress997must extend that deadline so that we can continue unwinding998these criminal rings and hold the fraudsters accountable.999    One of our most important responsibilities as members of1000Congress is to be good stewards of taxpayer money, because1001after all, the only money that we in the federal government1002have is money that we take from the American people in the form1003of taxes. Allowing this level of fraud to occur and not taking1004every possible step to recover these funds and these fraudulent1005payments would be irresponsible.1006    Mr. Chairman, I ask that this email from the DOJ pertaining1007to uncharged UI fund matters be entered into the record.1008    Mr. LaHOOD. Without objection.1009    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]10101011    Mr. YAKYM. Thank you.1012    Mr. Talcove, as of January 28, 2025, the Department of1013Justice had 1,648 open cases. These are uncharged criminal1014matters relating to COVID-19 fraud. The Department of Labor's1015Inspector General has shown approximately 157,000 open UI fraud1016complaints assigned to its hotline office. Are you surprised1017about the sheer number of unemployment insurance fraud cases1018our federal law enforcement agencies are actively1019investigating?1020    Mr. TALCOVE. Thank you so much for the question. I want to1021start with I really believe in unemployment insurance. The1022number that was lost was approximately $250 billion across the1023country, and California was ground zero for it. Unfortunately,1024because they paid some of the highest benefits in the country1025and their then-Commissioner Julie Su had some of the least1026amount of safeguards in place.1027    I am actually surprised that there are that many open1028cases, because I truly believe a lot of the fraud took place1029and individuals don't even know their information was used. As1030I mentioned in my testimony, a lot of this happened with1031criminal groups, both domestic and transnational, who use the1032stolen PII that went into these eligibility determination1033systems that knew how to manipulate them better than your1034constituents. And to this day, we were talking about it before,1035you had individuals that got a notice from the State of1036California, the State of Ohio, saying you know, you got your1037benefits, and those people threw those notes away because they1038never got benefits. So I am not surprised by that.1039    But I also want to note that it is not just unemployment1040insurance. It is the SNAP program. It is the other programs,1041including rental assistance. Anywhere where the government is1042providing a check, these criminal groups are now working at1043scale.1044    Mr. YAKYM. Thank you. And briefly, Mr. Talcove, do you1045believe that there is still more unemployment fraud carried1046over from the pandemic out there that could result in1047prosecution or recouping funds if we were to extend the statute1048of limitations?1049    Mr. TALCOVE. Yes, I think there is.1050    Mr. YAKYM. Thank you. Mr. Chairman, I yield back.1051    Mr. LaHOOD. Thank you, Mr. Yakym.1052    Recognize Ms. Chu of California.1053    Ms. CHU. Well, first let me say that I can't believe that1054Republicans are holding a hearing purportedly about going after1055pandemic-related fraud in the unemployment insurance program1056without addressing the fact that a few days ago President Trump1057illegally fired the inspector general who is responsible for1058doing that very work. Inspector General Larry Turner was a1059well-respected non-partisan Senate-confirmed professional. His1060leadership investigating UI fraud had already resulted in over10612,000 individuals charged, more than 1,400 convictions and $1.11062billion in taxpayer dollars recovered. And IG Turner even1063testified as a witness for the Republican majority for the1064hearing they held on UI fraud back in 2023 during which time he1065warned that despite the office's successes, insufficient1066funding from Congress was limiting their investigative capacity1067and causing lost opportunities to hold fraudsters accountable.1068The Republican majority still hasn't addressed that funding1069shortfall, and now President Trump has fired the person1070responsible for reducing that fraud.1071    If Republicans want to better combat and prosecute UI1072fraud, we need to push back against President Trump's illegal1073firing of our nation's top UI fraud investigator and get Mr.1074Turner and other independent non-partisan inspector generals1075across government whom the President illegally removed back on1076the job.1077    And then if we have the fraud, who is going to do the work1078of actually deterring it? Well, it would be our federal1079employees. And yet the Trump administration's undermining of1080the federal workforce goes far beyond inspector generals. It is1081part of the systematic attempt to politicize the civil service1082and make services worse for everyday Americans who rely on1083safety net programs like unemployment insurance.1084    Ms. CHU. Those attacks on our Civil Service include mass1085emails to almost all federal employees asking them to resign1086and then threatening layoffs if not enough employees comply1087with this.1088    It includes the administration's proposal to politicize the1089federal workforce by stripping nonpartisan federal employees of1090their job protections to make it easier to fire and replace1091them with Trump loyalists.1092    And it includes putting tens of thousands of employees on1093administrative leave without cause.1094    We have career civil servants for a reason. They are1095professionals with expertise who are essential to the1096successful operation of federal programs and benefits for the1097American people.1098    And that includes the staff responsible for investigating1099UI fraud.1100    In fact, Inspector General Turner led a team of over 3001101federal employees, including criminal investigators, auditors,1102attorneys, and other subject matter experts dedicated to1103combatting waste and fraud in all of the Department of Labor's1104programs including UI.1105    The Trump administration's actions put us at risk of losing1106this expertise, and it is jeopardizing our able to successfully1107continue going after this fraud.1108    I am also concerned that the Trump administration's threats1109to fire federal employees will lead to further outsourcing of1110core government responsibilities.1111    We saw during the pandemic what happened when States1112outsourced their UI work to untrained contractors, and that, in1113some cases, actually caused waste and fraud in the program by1114giving employers incorrect information, resulting in1115overpayments, or by exposing workers' sensitive information to1116fraud rings.1117    Now, Mr. Meyenburg, you testified about the risks of1118outsourcing during the pandemic. Can you expand on that and why1119investing in an experienced government workforce leads to1120better outcomes than outsourcing to contractors?1121    Mr. MEYENBURG. Yes, I believe it comes down to two1122different things--it is training and the mission. With1123dedicated staff that have dedicated time for implementing1124robust training programs, this offers the ability to highlight1125those safeguards and make sure that they are utilized in the1126proper way.1127    Ms. CHU. And could you have more waste and fraud happening1128with the contractors?1129    Mr. MEYENBURG. Potentially. I would say potentially.1130    Ms. CHU. Yes. Thank you. I yield back.1131    Mr. LaHOOD. Thank you.1132    Pursuant to committee practice, we will now move to 2-to-11133questioning. I will recognize a new member of the Committee on1134Ways and Means, Max Miller of Ohio.1135    Mr. MILLER. Thank you, Chairman LaHood and Ranking Member1136Davis, and excuse my voice. Thank you for the opportunity to1137hold this important hearing.1138    We must make every effort to equip and empower Americans to1139reenter the workforce and unlock the full potential of our1140Nation's economy.1141    To achieve that, it is imperative that we safeguard the1142integrity of our employment safety net. Since coming to1143Congress, I have been a strong proponent of building our1144Nation's future workforce by providing individuals with1145opportunities to acquire qualifying work skills, and keep the1146United States at the forefront of innovation and productivity.1147    Like many, I am very concerned this view I have heard from1148a lot of our colleagues on this side of aisle on the1149unprecedented fraud that occurred during the pandemic, which1150the GAO has estimated, which we have heard a lot today, that1151anywhere between $100 billion to $135 billion and possibly1152more.1153    Just in northeast Ohio alone, where I am from, the United1154States Attorney for the Northern District of the State1155sentenced perpetrators who stole millions of dollars from the1156program intended to assist the unemployed, which was all over1157our area.1158    This commitment to prosecute and to hold criminals1159responsible demonstrates that we must continue to be vigilant1160of those who try to scam federal leave programs and waste our1161tax dollars, including providing federal investigators with the1162continued authority to prosecute those stealing from American1163workers.1164    It is my understanding that 2,000 individuals have been1165prosecuted with $47 billion--I will say it again--$47 billion1166in potential fraud to date. But there are at least 157,000 open1167cases and much more to be done that are unaccounted for at this1168moment in time to date.1169    Fortunately, efforts such as those undertaken by my home1170State of Ohio and others will help their respective States'1171unemployment system stop unemployment insurance fraud before it1172starts and get resources to eligible workers in a timely and1173accurate fashion. And I believe that is what everyone would1174like regardless of political affiliation.1175    Mr. Ficke, as you testified, the State of Ohio was1176experiencing a high volume of fraudulent claims. In fact, the1177unadjudicated claims backlog was growing exponentially, and as1178you know, Ohio's governor made a decision to engage the private1179sector for support, including the Ohio Business Roundtable's1180members' expertise that you had mentioned earlier, with a goal1181to stop fraudulent claims, reduce the backlog, and reengineer1182the customer experience. I understand the project's results1183exceeded expectations.1184    How can such public and private partnerships be effective1185in reducing fraud, safeguarding public resources, and allowing1186funds to be targeted to those who are truly in need?1187    Mr. FICKE. Thank you for the question. You know, in Ohio's1188case, I think that some of the key factors involved is1189collaboration across agencies, across state and federal1190resources, especially when it comes to, as an example, the1191prosecution of those cases.1192    If you look at the amount of work that Ohio Department of1193Jobs and Family Services did, they focused a lot on advanced1194analytics, taking advantage of Big Data technology programs to1195really segment off the claims that actually were fraud-free, so1196that we could actually get to the point of real citizens in1197need were getting paid.1198    And as we--and the other thing I think that the State did1199an excellent job at is, the claims that were submitted that1200were actually--had significant amount of fraud indicators on1201them, were all processed, and they were all ultimately looked1202at and freed.1203    In the long run, I think the other thing that was really1204important was taking all that advanced analytics and data and1205actually providing it to the law enforcement sides to actually1206enable the actual prosecution with good data and with things1207that go with it.1208    I think it is very important, and it is a core part of my1209testimony, is the collaboration between the financial services1210industry and the unemployment agencies.1211    There is lots of really important analytics work that has1212been done in both of those worlds that actually required the--1213and can provide a collaborative effort to go between those.1214    The work that NASWA has done around the Integrity Center, I1215think, is very important, and Lieutenant Governor Husted's1216focus on advanced analytics for the State of Ohio clearly put1217Ohio in a very good position coming into this at a time when in1218Ohio's case, they had to stand up a brand-new system for the1219pandemic unemployment assistance programs that went with it.1220    So collaboration, advanced analytics, and really working1221with some of the key private sector organizations to enable1222that, I think, is critical. Thank you.1223    Mr. MILLER. Thank you, Mr. Ficke, and I just want to thank1224you again for all the work you do in my home state, in our home1225state. It is very much needed, and just thank you again from an1226Ohioan to another Ohioan.1227    Mr. Chairman, I yield back.1228    Mr. LaHOOD. Thank you, Mr. Miller.1229    I now recognize Mr. Bean of northern Florida. Welcome.1230    Mr. BEAN. Thank you very much, Mr. Chairman. Good afternoon1231to you, and good afternoon to you Work and Welfare Committee1232family. I am one of the new guys. It is an honor to be here.1233    I was sent to Congress. I believe one of the reasons that1234northeast Florida sent me to Congress was, I want to go after1235spending. I think we have an out-of-control government that1236just spends far more money than it has.1237    And so I am a man on a mission, a man on a mission, to1238fight fraud, abuse, waste, and to get spending under control.1239    So, Mr. Chairman, I want to thank you for your draft1240selection in allowing me to serve.1241    Ranking Member Davis, it is an honor to be with you as1242well.1243    My first question--well, first of all, Mr. Talcove, I1244appreciate you. You have actually mentioned, anywhere1245government is giving away checks, you will find fraud, and,1246indeed, we did that.1247    I come from the Small Business Committee, where we did the1248PPP program and the EIDL loan program, and we have reports that124923 percent--over 1 in 5 loans that we made back then are pure1250fraud, not somebody making a mistake on an application, not1251somebody checking the wrong box, but fraudsters that had the1252sole intent of stealing our money.1253    We actually had an administrator come before us with the1254Biden administration and said, you know, it might be too much,1255maybe we just need to all let it go.1256    I say no, the American people say no, and so we want our1257money back. I actually filed the bill ``We Want Our Money1258Back'' to not let anything go. We want all of our money back.1259    We heard from fraudsters that used Barbie dolls to take a1260picture. We had a program, a FinTech that administered the1261program that would take a picture of you just to make sure you1262are an individual person, and the program fraudsters could take1263a Barbie doll and stick it in front of a webcam and the program1264said approved, you are approved for a loan.1265    So we called it Swindler Barbie. A new Barbie is in town,1266Swindler Barbie. Ken got in on it too by the way, of people1267stealing money.1268    So the first question goes to you, Mr. Chairman. Where are1269we on the statute of limitations? How can we make sure that we1270don't let it go, that we want our money back, and we are going1271after fraudsters? Where does that stand? Who is running it? Who1272is in the lead? What is going on?1273    Mr. LaHOOD. Well, thanks for the question, Congressman1274Bean. So as was alluded to by the witnesses and a number of us1275today, we are coming up on the March 26th date where the1276statute of limitations will expire. So we have legislation that1277has been introduced that will be marked up to extend that1278statute of limitations, so we can go after the fraudsters and1279get to the criminal elements of this and make sure that we get1280that money recouped for taxpayers.1281    Mr. BEAN. Amen, amen, we are on schedule, we are on flight.1282It is a very tricky thing.1283    So you and Mr. Davis last year did a program that is called1284the Reemployment Services and Eligibility Assessment, the1285RESEA, which really was to help prevent fraud and designate1286support to those who need it.1287    Does anybody know about that?1288    Mr. Talcove, are you aware of that? Did that program work,1289did it work with the intent of delivering help to people that1290needed it but not the fraudsters? Good program?1291    Mr. TALCOVE. Unfortunately, I am not aware of that program.1292    Mr. BEAN. Ms. Hui.1293    Ms. HUI. Yeah, so that program really allows for local1294workforce boards and other professionals who are working with1295individuals who are currently getting unemployment benefits to1296really----1297    Mr. BEAN. Did it prevent fraud or help fraud? Did it help1298or not?1299    Ms. HUI. I think it does help with fraud because you1300actually have to show up in person or virtually to actually do1301an employment about workforce development. So there is that1302verification and engagement, and we feel that those more1303personalized service will result in better workforce outcomes,1304more sustained employment for those individuals.1305    Mr. BEAN. Great.1306    Ms. HUI. So there is that that individual touch to that. So1307if someone is getting that benefit, they are also then required1308to either report in person or do the virtual visit.1309    Mr. BEAN. So it has given some benefits.1310    Mr. Talcove, I know we got time. Everything is in a hurry1311here. We got to boogie.1312    What do we need to do? I helped launch a DOGE. I think some1313of us up here are part of the DOGE caucus, to say, we have got1314to--enough, enough with the stealing of our money, enough with1315the fraud, waste, and abuse.1316    I think American taxpayers are celebrating some of the1317early wins that we have discovered, fraud and abuse.1318    Where should we start? Where should this committee start to1319say enough with the waste, fraud, and abuse?1320    Mr. TALCOVE. It is three things. It is front-end identity1321verification, it is no more self-reported information, and it1322is managing the back-end to beneficiaries.1323    Mr. BEAN. Three small hurdles. It doesn't sound like it is1324that hard. It shouldn't be that----1325    Mr. TALCOVE. The private sector does it every day. Their1326fraud rate is 3 percent. The public sector is 20 percent.1327    Mr. BEAN. Thank you. Thank you very much.1328    Witnesses, thank you so much.1329    Mr. Chairman, I yield back.1330    Mr. LaHOOD. Thank you. I will now recognize Ms. Moore of1331Wisconsin.1332    Ms. MOORE. Thank you so much, Mr. Chairman, and I want to1333thank our ranking member and all of our witnesses for being1334here today.1335    I did have a conflict in my schedule, so I was unable to be1336here an hour ago, but I did have an opportunity to review your1337testimony, and I appreciate your appearance here today.1338    I want to welcome particularly Mr. Talcove to the Ways and1339Means Committee. Are you a member? Is he a member of the Ways1340and Means Committee now.1341    I am talking about my new colleague here.1342    Mr. LaHOOD. Oh, Mr. Bean?1343    Ms. MOORE. Mr. Bean.1344    Mr. BEAN. Hey there.1345    Ms. MOORE. Hi. Welcome to the Ways and Means Committee.1346Your enthusiasm, of course, is very welcome. And I am learning1347now about the DOGE caucus and your efforts to reduce waste,1348abuse, and fraud.1349    So I guess what I am concerned about, Mr. Talcove, is, if1350we are indeed going to combat fraud and waste, how does firing1351the Inspector General of the Department of Labor contributing1352to this?1353    I mean, this is a person who successfully prosecuted 1,4001354cases, and, of course everybody on the committee would like to1355see fraud reduced. So how can we expect to do that without an1356Inspector General on board?1357    Mr. TALCOVE. If you go back to--and hopefully you read my1358opening statement--I think the biggest challenge we have is, we1359don't want to pay and chase. What we want to do is, we want to1360prevent this at the front end. We want to use----1361    Ms. MOORE. Okay. Okay. Thank you for that. I don't have a1362lot of time. So, your notion is that this DOGE caucus and Mr.1363Musk, the billionaire, going in, is an effective strategy for1364start--we don't know exactly what he is doing. And I checked1365with the Speaker of the House. He also has no idea what they1366are doing.1367    So, what information do you have to provide the1368subcommittee to demonstrate that this is indeed a better1369strategy than having an Inspector General on the back end? What1370are they doing that is making them more effective?1371    Mr. TALCOVE. I have nothing to do with the DOGE. I don't1372know what they are doing.1373    Ms. MOORE. So, you don't know what they are doing?1374    Mr. TALCOVE. No, ma'am.1375    Ms. MOORE. Okay. But somehow you feel like the inspectors1376general is not a good strategy. Okay.1377    Mr. Talcove, you also recommended eliminating broad-based1378categorical eligibility. You know, just like an infant born at13791 pound, 2 ounces, for example, is categorically eligible for1380Medicaid because they are disabled. Their mother might also be1381eligible for WIC or for SNAP.1382    Why do you think disconnecting and making it inconvenient1383for them would be helpful, particularly since our having1384disconnected these benefits has cost $2.3 billion in1385administrative expenses over 5 years?1386    Mr. TALCOVE. So during the pandemic, I saw over a trillion1387dollars of taxpayer money get stolen, and unfortunately, by1388having broad-based eligibility determination in place, the1389criminals were stealing at scale, and they were impacting1390legitimate individuals that live in Wisconsin, that live in1391Illinois. It created a huge opportunity for them to exploit the1392system.1393    Ms. MOORE. So, you just punish the eligible people, like1394the 99 percent who are eligible, having them run all over the1395place? You got your 1 pound, 2 ounce baby, and you got to go to1396five offices to get your benefit so that you can--okay, I get1397it.1398    Mr. Meyenburg, we are talking about accountability a lot.1399Can you explain to me how an unelected, unaccountable1400billionaire who has accessed this personal information with, I1401guess, microwave security clearances for his team, how is--and,1402you know, sticking thumb drives in the sensitive information--1403how is this appropriate?1404    Mr. MEYENBURG. I honestly have no idea. I am not even1405allowed to stick a thumb drive into my own computer to copy any1406data over. So I don't know why they would have access to that.1407    Ms. MOORE. Mr. Chairman, my time is winding down, but I do1408appreciate your hearing from me.1409    Mr. Ranking Member, I thank you for your leadership as1410well, and I thank the witnesses, and I yield back.1411    Mr. LaHOOD. Thank you, Ms. Moore.1412    I will now recognize Nathaniel Moran, a new member of the1413Ways and Means Committee, a new member of the subcommittee,1414from east Texas. Welcome.1415    Mr. MORAN. Thank you, Mr. Chairman. I look forward to being1416part of the subcommittee and the full Ways and Means Committee1417this next session.1418    I have got a number of questions based on the testimony1419that has been given here today. I wanted to, and I am prepared1420to, talk about foreign adversaries and their role in the1421unemployment insurance fraud issue, but let me start with this.1422    Mr. Talcove, I think you said this earlier. Your quote was,1423``It is the same groups running the same playbook, stealing at1424scale.'' And you even gave some examples of after certain1425disasters and you said, ``We need to use data and analytics to1426effectively prevent some of this.''1427    I want you to go back though because your three1428recommendations were: apply ID verification at the front end,1429end self-certification, and continuously authenticate1430beneficiaries.1431    And I love that because it really is front-end oriented,1432but be more specific when you talk about applying ID1433verification. I mean, how onerous would this be, or what kind1434of verification are we talking about, to be able to make sure1435that before the money goes out--because I agree with you and I1436will come back around to this in a second. Once it goes out, it1437is so hard to get back. So we need to make sure that every1438dollar that goes out is the appropriate dollar. How do we just1439do some simply ID verification on the front end?1440    Mr. TALCOVE. It happens every single day. Every single one1441of you goes through that identity-verification process when you1442go to your bank, when you use Amazon, when you go online to do1443e-commerce.1444    And the great thing about the technology today is, you1445don't even know it is happening, right? Think about it. You are1446at the gas station, you put your credit card in, and all of a1447sudden you get a text on your phone, and it says, Congressman,1448are you really in Washington, D.C.?1449    So that technology is used in the private sector every1450single day.1451    One of my frustrations is, government seems to use this1452thing called NIST 863-2, I think. It was created in 2017. It is1453complicated. It is hard. Nobody in the private sector uses it.1454    So the technology is out there every single day, and we all1455use it. It is just different in government.1456    Mr. MORAN. And you are making the exact point that I was1457hoping would be brought out here, that it is easy. It is not1458that difficult. In fact, today I got one of those texts from my1459bank, asking me if a particular charge, an $85 charge, was, in1460fact, me using that charge. All I had to do was respond yes,1461and we are good to go.1462    So I think there is an easier way, a more effective way for1463us to stop the fraud on the front end, and certainly it is1464going to benefit us on the back end because we have got a1465number of those cases that are out there, that we need to1466prosecute.1467    But I am a little bit concerned, I will just tell you,1468about the return on investment, the cost-benefit analysis of1469doing that.1470    What are the size of the claims, and I will give this to1471all three of the witnesses--Ms. Hui, Mr. Ficke, and Mr.1472Talcove--what is the average size of the claim that we are1473dealing with once we extend this statute of limitations if we1474are able to do that? And what is the cost for actually moving1475forward to prosecute those claims?1476    Mr. TALCOVE. So what I would say is, I wouldn't look at the1477average size of the claims. I would look at the criminal1478groups. Some of the groups, the China group, APT41, Scattered1479Canary, you are talking literally hundreds of millions of1480dollars, but you need sophisticated law enforcement at the1481federal level, agencies like the Secret Service, who have been1482outstanding in this area.1483    So it is worth it, but you have to get to these large fraud1484rings, primarily located overseas.1485    Mr. MORAN. Yeah, I have got a financial crimes1486investigation center for the State of Texas located in my1487hometown of Tyler, and they chase after these groups that do1488this, and it is, it is the same groups moving about, but using1489the same technologies and the same methodology.1490    Ms. Hui, you were talking about the stealing of personal1491identification information on the front end which gives them1492the gateway to steal and to create fraud. How are they doing1493that? How are they obtaining the personal identification1494information of American citizens?1495    Ms. HUI. They just buy it off the dark web. I mean, with1496all these different data breaches that have happened, it is1497really kind of open season on the dark web and purchasing1498legitimate personally identifiable information, and therefore,1499you know, you can--at least in Missouri, you can get in perhaps1500and file a claim, but we do have flags within the application1501that then clue us into there is something not quite right,1502right?1503    And the partnerships, both between government agencies and1504private sector, whether it is a vendor like Mr. Talcove's or1505association like Mr. Ficke's, it is really important that all1506the partnerships across the board work together and understand1507what may be some limitations but also challenges and1508opportunities.1509    I think the biggest thing for us to realize, though, is1510that it is not a one-and-done situation, like, this, if you1511don't accept that update on your operating system, it is a1512paper weight, an expensive paper weight, right.1513    So we have to adopt that mentality when it comes to1514protecting taxpayer dollars that are invested, whether it is a1515UI trust fund or any other beneficiary fund. We want to make1516sure the eligible people are getting the benefit.1517    Mr. MORAN. Yeah, I agree.1518    And, Mr. Chairman, I see my time is over. I didn't even get1519to my foreign adversary questions. I am part the China Select1520Committee, and I will tell you, it is really concerning to me1521that China is at the forefront of this, of stealing our1522personal information and then being part of obtaining these1523dollars from American taxpayers, using it against us. It is a1524national security issue in my opinion.1525    Mr. Chairman, I yield back.1526    Mr. LaHOOD. Thank you, Mr. Moran.1527    I recognize Mr. Evans of Pennsylvania.1528    Mr. EVANS. Thank you, Mr. Chairman and Ranking Member1529Davis. Today I want to discuss improving our unemployment1530insurance for the betterment.1531    Unemployment insurance is a critical benefit for American1532workers. During the pandemic, unemployment insurance was a1533lifeline for Pennsylvanians in getting fast emergency1534assistance.1535    I support increasing the funding for the State unemployment1536operations so that the workers can get more resources. They1537need help.1538    I specifically want to discuss the important work that1539merit-based staff do the U.S. The best way that we can fight1540and prevent unemployment insurance fraud is to hire well-1541trained merit-based staff.1542    We know that certain States during the pandemic hired1543untrained contractors in staff roles which only led directly to1544more fraud in errors in the system. It is interesting that the1545Musk administration is trying to do the same thing right now,1546inside certain federal agencies, replacing employees with their1547own outside contractors.1548    Right now, the last thing we need is someone unqualified1549scooping our constituents' private data, including our1550unemployment system.1551    Mr. Meyenburg, I would like to ask you a question. In your1552testimony, you highlighted the importance of merit-based1553staffing in the UI system as opposed to States who are1554outsourcing work through untrained contractors.1555    Mr. MEYENBURG. Yes. I believe that merit staff UI workers1556are key and ideal for helping prevent fraud because there is1557no, like, third-party system. It is, you know, State workers1558performing the work of the State and making sure that it stays1559within the State. It is not a third-party by any means.1560    Mr. EVANS. Can you speak more about experience under merit-1561based systems and the advantage it has in preventing fraud.1562    Mr. MEYENBURG. Yes. When you, say, are a trainer, training1563folks that are unfamiliar with the system, after years of1564experience, you understand the complexities within the system1565and how to get from A to B to C in a timelier fashion.1566    This allows you to conduct the training at a faster level1567but still maintain that high level of training that is required1568in order to do the position.1569    Mr. EVANS. Can you please explain the level of job training1570that State worker agencies, employees, go through to provide1571the highly qualified servicing of the UI system and how this1572training differs from non-merit staffing training?1573    Mr. MEYENBURG. I will say, during the pandemic, I received1574a minimal amount of training. It was enough to allow me to1575process claims.1576    Now, with regular merit-based staff, they receive, at a1577minimum, 6 to 8 weeks of training, so that way, they are1578sufficient when they hit the floor and talk with claimants on1579the phones.1580    Mr. EVANS. I want to, one, thank the chairman and thank the1581ranking member for the conduct leaders here.1582    Mr. LaHOOD. Thank you. Appreciate it, Mr. Evans.1583    Now, I will turn to Ms. Van Duyne who is a new member of1584our subcommittee. Welcome, Ms. Van Duyne, and you are1585recognized.1586    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.1587    It is egregious and actually disheartening that in the wake1588of a global pandemic that disrupted the lives of millions--we1589all saw it--that forced thousands of small businesses to close1590their doors and robbed millions of Americans of their loved1591ones, bad actors and international criminal gangs that would1592seek to take advantage of good-faith efforts to help those1593negatively impacted by a once-in-a-lifetime tragedy.1594    The GAO estimates that pandemic unemployment fraud may be1595as much as $135 billion, with some estimates even higher.1596    And I think it is vital that Congress act so that1597prosecutors have the opportunity to track down and to hold1598these criminals accountable.1599    But this committee also has a responsibility to ensure1600proper oversight in the administration of the UI program as a1601whole.1602    Mr. Talcove, government officials, state employees, and1603contractors routinely participate in insider UI fraud, and1604states either ignore the problem, or they try to infer that1605embezzlement is not an issue with state employees.1606    This problem is often overlooked by government officials as1607in Delaware, for example, where the Public Integrity Commission1608refused to investigate a Delaware Department of Labor employee1609who was embezzling money directly from the state's Unemployment1610Trust Fund.1611    Can you please speak about your experience regarding1612insider UI fraud, and is it being taken seriously by government1613officials?1614    Mr. TALCOVE. Yeah. I would say, of the $250 billion that1615was stolen from unemployment insurance, I would say1616approximately 10 percent, or $25 billion, was insiders.1617    Ms. VAN DUYNE. Wow.1618    Mr. TALCOVE. And what the insiders were doing was, they1619were, in some cases, selling their access to some of these same1620criminal groups that you mentioned, from China, Russia,1621Nigeria, and Romania, they were selling their access to gangs,1622or--which I think is worse--is, they were stealing from the1623very people that they were trying to serve.1624    And you have to have oversight, and you have to have1625auditing in those programs. And it wasn't just in Delaware. I1626mean, I think it happened in 20-plus States.1627    The other point that I would make is, unfortunately, it is1628still happening today, and it is just not in the unemployment1629insurance program. It is in the SNAP program, it is in1630virtually all the programs across the country.1631    Now, last point, 99.9 percent of those workers, they are1632really good people. They show up every day and they do the1633right thing. It is a very small percent, but they give1634everybody a bad name.1635    Ms. VAN DUYNE. And I appreciate that. I am also with Aaron1636Bean on the Small Business Committee, and this is my fifth year1637on that committee. And we have talked to small businesses who1638during this time have seen, you know, benefits that they should1639have received, not delivered, because that was given out to1640fraudsters and criminals, and the complete lack, during the1641last administration, of holding these people accountable or1642providing oversight.1643    Ms. Hui, in your written testimony, you quoted a national1644study published in August of 2020, by the University of1645Chicago, entitled ``U.S. Unemployment Insurance Replacement1646Rates During the Pandemic.''1647    You say that the median percentage of salary replacement1648unemployment during the pandemic was 145 percent. It was more1649than 200 percent for workers in the bottom 20 percent of the1650U.S. income spectrum and more than 300 percent for workers in1651the bottom 10 percent.1652    This compares to the typical pre-CARES Act salary1653replacement rate of only 40 to 50 percent of lost income.1654    In plain English, we are paying a lot of money to stay home1655rather than to go to work, and the disaster effects of this1656policy are still being felt today.1657    And according to the U.S. Chamber of Commerce, workforce1658population remains below pre-pandemic levels, and we are1659missing 1.7 million Americans from the workforce, compared to1660February of 2020.1661    Can you please speak on the disastrous effects of paying1662people unemployment benefits that were double or triple their1663salary before the COVID-19 pandemic and why this must never1664happen again during any type of economic downtown in the1665future?1666    Ms. HUI. Certainly, you know, the American people are so1667generous in making sure that their fellow Americans get support1668during these times of emergencies, right? And so I think one of1669the things that we saw that was a major motivation for this1670type of fraud was the federal pandemic unemployment1671compensation plus-up.1672    So most states have a regular weekly benefit amount. In1673Missouri, the maximum benefit that you can get is $320 a week,1674and, again, that is based on what your income was and what your1675credits are into the trust fund from the employers that have1676paid in.1677    Now, when you then add $600 on top of that, you are1678definitely putting a huge multiplier on it, right? And during1679the 2008/2009 crisis, that plus-up actually was $25.1680    So you would have your weekly benefit at the state level1681and then a $25 plus-up. But in 2020 we raised it to $600.1682    And we needed a flat number. There were a lot of states1683that had legacy systems, and they could replace that $25 number1684with another flat number. But they couldn't prorate it.1685    So that was one thing, but the choice of $600 absolutely1686was, like, the spark that really generated the attention of1687fraudsters to get in. You just had to have some successful hits1688to--in each state, you could have multiple states that you file1689in, just a few weeks, and you can get, you know, quite a few1690thousands of dollars. So, again----1691    Ms. VAN DUYNE. My time is expired. I appreciate your1692answer.1693    Ms. HUI. No problem.1694    Ms. VAN DUYNE. I need to yield back, but thank you all very1695much for your testimony.1696    Mr. LaHOOD. Thank you, Ms. Van Duyne.1697    I now recognize Mr. Gomez of California.1698    Mr. GOMEZ. Thank you, Mr. Chairman. Congratulations on1699being the new chairman of this committee.1700    Let me be clear. Democrats and Republicans both say that1701there is no place for fraud. Democrats, it is because it1702undermines people's faith that government is actually doing the1703job that they are supposed to do. And I think that is a big1704deal.1705    And also, I appreciate the gentleman from Florida1706mentioning that there was fraud in a Republican-run State, and1707it is not just the Democratic states have the problem.1708    And also, one of the biggest ways that fraud happens is1709through weak security measures that leave people's personal1710information vulnerable.1711    Mr. Meyenburg, what kind of training do State worker agency1712employees receive to ensure they are protecting personal1713information?1714    Mr. MEYENBURG. Yes. It is at least 6 to 8 weeks' worth of1715training with a heavy emphasis on protecting identity1716information and all personally identifiable information.1717    Mr. GOMEZ. Social Security numbers, birthdays----1718    Mr. MEYENBURG. Yes.1719    Mr. GOMEZ [continuing]. Accounts, anything that can say1720this person is associated with this--or this information is1721associated with that individual?1722    Mr. MEYENBURG. Absolutely.1723    Mr. GOMEZ. Yeah. And that is--you know, I want a bureaucrat1724to be just a pain in the ass. I want them to, like, Oh, u don't1725have the proper information? You know, reject it.1726    Oh, you want to access this information? You need this1727form. You need this clearance. You need this kind of training.1728You don't? Too bad. You can't have it.1729    But something that is going on now at the Federal level is1730when it comes to Secretary Bessent and President Trump. I don't1731think Secretary or President--or President Trump made sure Elon1732Musk got that kind of training, or any training for that matter1733before all of our personal data was turned over to him.1734    I want my friends on the other side of the aisle to see1735this as a big, big issue, because if there is nothing there1736being a check, this is becoming the largest fraud and scam of1737our government when it comes to personal information in our1738history.1739    This is at a time when people are struggling with1740skyrocketing rent, when grocery prices are through the roof,1741and when childcare costs are out of control.1742    What are Donald Trump and Secretary Bessent doing? They1743gave Elon Musk, an unelected, unconfirmed, untrained, special,1744quote/unquote, special government employee, and the rest of his1745tech bros, access to every Americans' sensitive and personal1746financial information.1747    They have access to our bank accounts, to your bank1748accounts. If you filed taxes electronically, you paid your1749taxes, you received payments, they have access to all your1750accounts. You know, we need to do something to address that.1751    And it doesn't matter where this--like, they have access to1752everybody's information, if you live in Indiana, Illinois,1753Ohio, California, and that is risking a massive personal data1754leak that can lead to identity theft on an unprecedented scale.1755    I had my identity stolen so I know how painful it is to1756have to prove who you are and to get your money back and to1757make sure that you are not going into debt.1758    Improper disclosure of taxpayer information is considered a1759felony under section 6103, punishable up to 5 years in prison,1760as well as $5,000 fine, and that is just for one instance of1761improper tax disclosure.1762    What is the punishment for every single American? That is1763the scale of this potential fraud and breach of information.1764    Is Secretary Bessent's careless disregard for most1765sensitive personal information worthy of Articles of1766Impeachment? I don't know yet because they refuse to hand over1767any information of what occurred in the last several days.1768    But this is a serious, unprecedented situation. Secretary1769Bessent needs to come before this committee and answer1770questions on violating the people's trust but also when it1771comes to their personal information.1772    We can't stand for it. Fraud is fraud, no matter who does1773it. Is it a public employee? Is it a criminal enterprise? Or1774even if it is the Secretary of the Treasury himself, we need to1775stop it, and we need the answers now.1776    With that, I yield back.1777    Mr. LaHOOD. Thank you, Mr. Gomez.1778    I now recognize the gentleman from northwest Iowa, Mr.1779Feenstra.1780    Mr. FEENSTRA. Thank you, Chairman, and I want to thank the1781witnesses for being here. I enjoyed reading your testimony and1782also listening to it.1783    I just want to remind everybody that all bureaucrats are1784not elected. This is just common sense.1785    We are here to create solutions. We are here to understand1786the problems and then create solutions, and, Mr. Ficke, that is1787what I want to talk about.1788    I was impressed by reading your testimony. I know you are1789not a law enforcement officer, but you have 30 years of1790experience in the financial services industry. And generally1791unemployment insurance is prosecuted using federal banking1792laws, including mail fraud, wire fraud, conspiracy, aggravated1793identity--identity theft, money laundering.1794    So considering your time in financial services and working1795with the State of Ohio, are these banking offenses the right1796charges for individuals with unemployment insurance fraud? What1797is your thoughts there?1798    Mr. FICKE. Well, first of all, thank you for your question.1799You know, in my previous testimony, I have actually stated a1800few times that I think it is very important to look at1801collaboration of data and information between--between what is1802available in the private sector and what is available in the1803benefits applications and submissions and those types of things1804that are going with it.1805    I think the prosecution of those criminals is extremely1806important. We have talked about the number of cases. I think it1807is really important to focus on the magnitude of individual1808cases and looking at the impact that those can have on the1809overall collection and recovery of those funds.1810    Mr. FEENSTRA. Do you think we should figure out better1811ways, though? Instead of using the, you know, the financial1812services industry, is there a better way to prosecute these1813claims under something different than banking regulations?1814    Mr. FICKE. Well, I think in my experience, especially with1815the Attorney General's offices and the collaboration that1816happened in Ohio, a lot of it was driven and supported by the1817amount of information-sharing that happened between.1818    And as Mr. Talcove has pointed out a few times, this is not1819limited to unemployment insurance. This goes across SNAP and1820multiple other programs.1821    I think it is important, when we looked at the guidelines1822from a private supporter of our State, when we looked at the1823guidelines, what we were able to do, it was our role, as the1824agency's role to actually identify----1825    Mr. FEENSTRA. Yep.1826    Mr. FICKE [continuing]. That a case had to be prosecuted1827but then to turn that over to the appropriate organizations at1828that time.1829    Mr. FEENSTRA. So you are in the State of Ohio. I was in the1830State of Iowa. I was a state senator, head chair of Ways and1831Means at that point. And really the states are the ones that1832handle all the unemployment insurance issues, and here is the1833situation.1834    Obviously, through COVID we gave a lot of dollars and stuff1835like that. How can us, as the states, what can the federal1836government do to help the states with fraud issues?1837    And then I think moving forward and saying, all right, what1838happens if we have a situation like this again? How can we be1839proactive in trying to find solutions to mitigate some of these1840issues?1841    Mr. FICKE. Well, thank you for the question. I think the1842first thing that comes to mind for me is sustainability. There1843have been very strong measures put in place during the crisis.1844The support to actually encourage and enable the states to1845actually keep those in place, I think, are going to be a really1846important part in the overall success.1847    Another one is--and I say this a few times--is1848collaboration, not only from a data perspective but best1849practices that have taken place in multiple private sector1850organizations.1851    Mr. FEENSTRA. And using each state. So Ohio might have a1852great way of doing it. I mean, we should be collaborative1853across State lines, figuring out what are the best practices.1854    Mr. FICKE. Yeah. A very good example of that is the reality1855that one false account in a financial institution could be used1856across multiple states----1857    Mr. FEENSTRA. Yeah.1858    Mr. FICKE [continuing]. And today the individual state has1859a harder time recognizing some of those trends.1860    Mr. FEENSTRA. Mr. Talcove, can you talk about that a little1861bit, making sure that, moving forward, our state systems are1862prepared for these unemployment spikes, and, you know, this1863stealing of billions of dollars, and what the States can do1864collaboratively with the federal government?1865    Mr. TALCOVE. Yeah. So I mean, I want to make the first1866point. I was out in California this week, L.A., and the same1867criminal groups----1868    Mr. FEENSTRA. I heard that, yes.1869    Mr. TALCOVE [continuing]. That stole from the unemployment1870insurance----1871    Mr. FEENSTRA. Are doing the same thing with fire.1872    Mr. TALCOVE [continuing]. Are now stealing from the1873disaster unemployment----1874    Mr. FEENSTRA. So that should be a clue to us, right?1875    Mr. TALCOVE. Right. We haven't fixed it----1876    Mr. FEENSTRA. Yes.1877    Mr. TALCOVE [continuing]. Right? And it really starts with1878those three things that I talked about, right? It is the front-1879end identity verification----1880    Mr. FEENSTRA. Yep.1881    Mr. TALCOVE [continuing]. It is no self-reporting, and it1882is managing that back-end population. And it is frustrating1883because there are people in California who need those benefits1884that are going to wake up one day----1885    Mr. FEENSTRA. And not have them, yep.1886    Mr. TALCOVE [continuing]. And they are going to see that1887someone put a loan against their house because they got an SBA1888loan for a half a million dollars.1889    Mr. FEENSTRA. Great point. My time is up, but thank you. We1890are in this together. As states and as the federal government,1891we are in this together to try to figure out solutions.1892    Thank you, Chairman. I yield back.1893    Mr. LaHOOD. Thank you, Mr. Feenstra.1894    I recognize Mr. Horsford of Nevada.1895    Mr. HORSFORD. Thank you, Chairman LaHood and to Ranking1896Member Davis for holding this hearing and for the courtesy of1897allowing Members to wave on.1898    I would also like to just talk about the importance, as we1899are, about rooting out waste, fraud, and abuse, and protecting1900American taxpayers, but also, we really need to provide some1901answers to our constituents based on the immediate issue that1902they are facing.1903    The largest illegal data breach is happening right now in1904U.S. history, at this administration's direction, and we still1905don't know who is in charge or what they are up to, where this1906information is being used or how widespread it is.1907    So, I really wish that this was the focus of today's1908hearing since this is what the majority of my constituents are1909calling me about today.1910    I would also like to talk about what we are doing to1911prevent Elon Musk, and the hackers who are involved with1912potentially slowing down people's tax refunds, their Federal1913payments, and their hard-earned benefits. That is what people1914want to know.1915    Less than a year ago, Chairman Smith introduced legislation1916meant to increase the maximum penalty for the unauthorized1917disclosure of returns and return information, and I agree with1918Chairman Smith when he stated that Congress must not tolerate1919the theft and leak of taxpayer information.1920    So why aren't we doing something about it, since we have1921the largest illegal data breach in U.S. history taking place1922right now under this administration's watch?1923    Now, turning back to the issue of this hearing, I actually1924introduced, back in August of 2022, the GUARD Act, the1925Guaranteeing Unemployment Assistance and Reducing Deception1926Act.1927    My bill enables aggressive action to recover pandemic1928unemployment benefits that were paid to criminal cartels by1929supporting prosecution of ring leaders and helping victims of1930fraud.1931    The bill would also seek to provide workers who were1932victims of identity theft with help to quickly resolve any1933remaining issues.1934    My district has no shortage of identity theft cases. That1935is why I am concerned with this illegal data breach that is1936happening right now.1937    But between 2020 and 2023, we saw a 63 percent increase in1938the Metro Las Vegas area alone of identity theft cases. I know1939this issue because my constituents know this issue.1940    So, I was pleased to see that we would be addressing a1941recommendation by the Department of Labor Inspector General to1942extend the statute of limitations for pandemic unemployment1943insurance fraud.1944    Unfortunately, last week, President Trump fired that IG,1945the one who made the recommendation that we are all discussing1946in this hearing, the one who makes this hearing relevant.1947    So, now the IG is gone, the majority is holding this1948hearing anyway with two contractors, but not one single public1949employee who investigates and prosecutes fraud.1950    My constituents want to know what we are doing about these1951issues, Mr. Chairman. So I suggest that as a committee, we1952focus on those priorities and to make sure that they are being1953addressed.1954    If I could go to the witness, the minority witness, to1955understand, would providing measures like the Guaranteeing1956Unemployment Assistance and Reducing Deception Act, the GUARD1957Act, help address protecting the victims of fraud from identity1958theft?1959    Mr. MEYENBURG. I don't know all of the details that go in1960with the GUARD Act, but I do think that there is--there is1961always more we can do to protect not only ourselves, our loved1962ones, our neighbors, our families, all of that. So I do believe1963there is more that we can do, absolutely.1964    Mr. HORSFORD. Do you agree that having an Inspector General1965who oversees protecting taxpayers is an important function?1966    Mr. MEYENBURG. Absolutely.1967    Mr. HORSFORD. And that person being fired is preventing1968that protection being in place at this time?1969    Mr. MEYENBURG. Absolutely.1970    Mr. HORSFORD. So, Mr. Chairman, why aren't we addressing1971that today?1972    I yield back.1973    Mr. LaHOOD. Thank you, Mr. Horsford, for your questions.1974    That concludes our questions from committee members here1975today. Let me just, again, acknowledge your statements today,1976your testimony today, answering our questions.1977    We appreciate your expertise, your experiences, your1978suggestions, very, very helpful here today, and to lay the1979context for what we need to do between now and March 27th,1980which is to extend the statute of limitations on this, for1981taxpayers and for this particular program.1982    And so I look forward to working collaboratively, look1983forward to working in a bipartisan way with my colleagues to1984get that done on behalf of the taxpayers of the United States.1985    So with that, I will advise members that they have two1986weeks to submit written questions to be answered later in1987writing. Those questions and your answers will be made part of1988the formal record.1989    With that, the committee stands adjourned. Thank you.1990    [Whereupon, at 3:48 p.m., the subcommittee was adjourned.]19911992                    MEMBER QUESTIONS FOR THE RECORD19931994=======================================================================19951996    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]19971998                   PUBLIC SUBMISSIONS FOR THE RECORD19992000=======================================================================20012002   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]20032004                           [all]