Letter to Martin Walsh, Secretary of Labor - Brady, Wenstrup Demand Accountability For Greatest Theft of Taxpayer Dollars


Date: Nov. 3, 2022

Dear Secretary Walsh,

Since the Summer of 2020, repeated alerts from federal law enforcement agencies warned of targeted efforts involving organized cybercrime, foreign actors, and international crime rings using stolen identities of American citizens to obtain fraudulent unemployment benefits. Fraud estimates range from $80 billion to as much as $400 billion, which is nearly half of all the COVID-19 unemployment aid.

We write to reiterate prior requests for information and to request that you preserve all documents and communications in your custody relating to the Administration's knowledge of pandemic unemployment insurance (UI) fraud.

Moreover, the U.S. Department of Labor Office of Inspector General (DOL OIG) recently released an audit that examines whether the Employment and Training Administration and states ensured UI benefits were paid only to eligible individuals, and whether they were paid promptly. The audit found that of the four states DOL OIG tested, from March 28, 2020, to September 30, 2020, an estimated $30.4 billion of the $71.7 billion (42.4 percent) in Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation benefits were paid improperly. Of that, DOL OIG estimates that $9.9 billion (13.8 percent) was paid to likely fraudsters. This means that in the sample of four states DOL OIG included in its audit, "1 in 5 dollars initially paid in PUA benefits went to likely fraudsters."

The amount of UI fraud is staggering, which is why congressional Republicans have repeatedly sought information about the billions of taxpayer dollars stolen due to fraud and worked to stop the "pay and chase" model and improve accountability in pandemic unemployment programs. Today we reiterate our requests for information about the Administration's knowledge of UI fraud and what is being done to recover stolen dollars.

Specifically, in December 2020, Ways and Means Republicans passed the bipartisan Consolidated Appropriations Act (P.L. 116-260) and worked hard to include improvements to the pandemic unemployment assistance program by requiring documentation of prior employment and earnings within 21 days of application. The bill also included a phase-out period.

On May 10, 2021, House Ways and Means Committee Ranking Member Brady and Senate Finance Committee Ranking Member Crapo sent a letter to DOL with a series of questions related to outlays of the $2 billion in funding the Department received through the American Rescue Plan Act (ARPA) (P.L. 117-2). This funding was provided specifically to "detect fraud and prevent fraud, promote equitable access, and ensure timely payment of benefits with respect to unemployment compensation programs…" DOL has not provided a written response to this letter, despite multiple follow-ups.

On August 31, 2021, Ranking Member Brady, Ranking Member Crapo, and then- Ranking Member of the Ways and Means Subcommittee on Worker and Family Support Walorski sent a letter to the U.S. Government Accountability Office (GAO) requesting that GAO, as part of its mission and ongoing work to reduce improper payments and safeguard federal funds, investigate, and provide a national estimate of funds lost because of fraudulent activity.

On February 18, 2022, House Ways and Means Ranking Member Brady, House Oversight and Reform Ranking Member Comer, Senate Finance Committee Ranking Member Crapo, Senate Health, Education, Labor and Pensions Committee Ranking Member Burr, and Senate Homeland Security and Governmental Affairs Ranking Member Portman sent a letter to Secretary Walsh urging DOL to hold off on its guidance that would allow states to forgo recovery of overpayments in pandemic unemployment programs, and asked that the Department justify the legal basis for the guidance.10 DOL responded to the February 18, 2022, letter on April 29, 2022, but the response was incomplete. The Members also sent a letter to DOL OIG asking how blanket waivers of overpayments could impact ongoing unemployment fraud investigations.DOL OIG provided a response on March 16, 2022.

Lastly, on May 31, 2022, House Ways and Means Ranking Member Brady, House Budget Committee Ranking Member Smith, House Judiciary Committee Ranking Member Jordan, and House Small Business Committee Ranking Member Luetkemeyer sent a letter to Attorney General Garland demanding answers on the progress of the Biden Administration's investigation into the billions of taxpayer dollars that have been stolen or improperly paid.12 DOJ responded to the May 21, 2022, letter on August 16, 2022, but the response was insufficient.

In an effort to obtain information from the Administration about DOL's knowledge of UI dollars flowing to international crime syndicates, Ways and Means Ranking Member Brady and Worker and Family Support then-Subcommittee Ranking Member Walorski filed a Resolution of Inquiry on July 26, 2022, directing the Secretary of DOL to provide to the House of Representatives certain documents in the Secretary's possession relating to UI fraud during the COVID-19 pandemic. Unfortunately, on September 20, 2022, the Committee on Ways and Means unfavorably reported H. Res. 1288.

The lack of a sufficient response and action from the Administration to date is disappointing and unacceptable. According to an article in The Washington Post, only 2.4 percent of wrongful payments have been recovered. Transparency is essential because it promotes accountability and provides information for the Congress and Americans about what the federal government is doing. The American people deserve a government that is accountable, which is especially critical when such a staggering amount of fraud has occurred.

Despite the Administration's inadequate response to our initial request and its actions-- or lack thereof--to recover billions of dollars, we continue to expect that the Department provide the documents and information requested in the May 10, 2021, and February 18, 2022, letters, which are attached here for your reference.

Moreover, we write to insist that you take all appropriate measures to collect and preserve all documents, communications, and other records that are relevant to the Administration's knowledge of UI fraud. Please provide a response to the May 10, 2021, and February 18, 2022, letters and confirm that you have taken actions to preserve documents related to this matter by November 17, 2022.