More Time Needed to Prosecute Pandemic Unemployment Fraud, Government Watchdogs Tell Congress

Department of Justice Inspector General Michael Horowitz addresses a Congressional panel in February 2023. (Anna Moneymaker/Getty Images)

Federal watchdog officials are asking Congress to extend the statute of limitations to prosecute COVID-19 pandemic-era unemployment fraud cases.

During a House Ways and Means Committee hearing on Wednesday, Department of Labor Inspector  General (DOL) Larry Turner testified (pdf) that he expects his department to be busy investigating pandemic-related fraud through at least September 2026 “when the statute of limitations for most pandemic-related violations will have expired.”

“In many cases, the statute of limitations will expire sooner than that,” Turner added.

The statute of limitations for mail and wire fraud is generally about five years, though the statutes extend to about 10 years for mail and wire fraud that affects a financial institution.

“Currently, the statute of limitations for many pandemic-related UI fraud investigations will expire in 2025 as the statutes most often used to prosecute UI fraud have a 5-year limitation,” said Michael Horowitz, the Department of Justice Inspector General and chair of the Pandemic Response Accountability Committee (PRAC).

“Extending the statute of limitations for fraud associated with pandemic-related UI programs will help ensure investigators and prosecutors have time to effectively pursue and hold accountable those groups and individuals that targeted and defrauded the program, and that they do not escape justice,” Horowitz added.

Turner said his department lacks the resources to review and investigate the 162,000 open complaints of Unemployment Insurance (UI) fraud, that they have received since the pandemic hit, before the statute of limitations runs out.

Congress has previously extended the statute of limitations for prosecuting other types of pandemic-era fraud, such as violations of the Paycheck Protection loan program and Covid-19 economic injury disaster loan programs.

Fraud Estimates Growing

One factor that could contribute to the DOL’s calls for an expanded statute of limitations is the fact that they’ve made higher fraud loss estimates as they’ve continued to receive and investigate complaints.

The DOL previously estimated that out of $872.5 billion in federal pandemic UI funding, 18.7 percent or at least $163 billion in pandemic UI payments could have been improper, “with a significant portion attributable to fraud.” In his testimony before the House committee, Turner said the DOL’s latest estimate found that $888 billion had been paid out in pandemic-era UI benefits, of which 21.5 percent or at least $191 billion could have been improper.

Turner said improper UI payments could be even higher than the DOL’s latest 21.5 percent estimate because the department is still waiting on data from the Pandemic Unemployment Assistance (PUA) program.

The DOL has charged more than 1,200 individuals with UI fraud-related crimes, of which it has achieved more than 500 convictions. The department has secured 11,000 months of total incarceration sentences and recovered $905 million in funds. Turner said his agency has referred another 23,000 fraud cases that did not meet federal prosecution guidelines over to the states for further action.

In addition to requesting an extension on the statute of limitations, Horowitz called on Congress to raise the jurisdictional limit for administrative recoveries of “smaller” false or fraudulent claims from $150,000 to $1,000,000. Horowitz said PRAC is aware of at least a million pandemic awards, totaling about $362 billion, that ranged from $150,000 to $1,000,000.

Fraud Prevention Lacking

Government Accountability Office (GAO) Comptroller General Gene Dodaro told the House Committee that the DOL “needs to address substantial pandemic UI fraud and reduce persistent risks.”

Dodaro said, in a prepared statement for the hearing, that the GAO has 19 open recommendations for the DOL, including eight to specifically identify and mitigate risks for potential fraud. Dodaro said the DOL’s work so far in implementing these recommendations has been incomplete.

“While DOL has taken steps to address UI fraud risks, its approach has not been strategically organized and targeted at prioritized risks,” Dodaro said. “Specifically, we found that it has not designed and implemented an antifraud strategy to guide its actions based on a fraud risk profile in alignment with leading practices in our Fraud Risk Framework.”

From NTD News