Inspector general asks for more time, money to probe pandemic unemployment fraud

The Labor Department's inspector general said Tuesday it will soon run out of its infusion of pandemic cash and will have to trim its investigation into the fraudsters who stole tens of billions of dollars from the unemployment benefit system.

The inspector general also said that unless Congress acts to extend the current five-year statute of limitations for what's known as "unemployment insurance" fraud, some fraudsters will be home-free in 2025.

"Even with the OIG's tireless efforts, the current statute of limitations associated with UI fraud means federal law enforcement may still fall short in fully investigating and prosecuting the most egregious cases of UI fraud, especially given the volume and complexity of UI fraud matters we are tasked to investigate," the inspector general said in its new semiannual report.

Officials begged for more time and better data to continue to sniff out wrongdoers. And they said it'll take more money to make sure scofflaws don't get away with it.

Already, the inspector general is starting to shed staffers hired during the pandemic, because the supplemental money has been exhausted.

The government still hasn't come up with an estimate for how much fraud there was in the unemployment system, but the inspector general said the current estimate of "improper" payments — which includes fraud and other bungles — is $191 billion.

Since the start of the pandemic, the Labor Department inspector general has opened more than 200,000 investigations, and 157,000 of them are still open. By contrast, investigators would open just 100 cases a year before the pandemic.

Some 1,300 people have been charged with unemployment fraud since the start of the pandemic.

Experts said the pandemic was the perfect storm for fraud, as Congress shoved money at states and told them to get it out the door quickly, all while expanding eligibility and eliminating the usual checks. Suddenly a bogus unemployment claim could be easily filed and approved, with a lifetime payout in the tens of thousands of dollars.

Soon, videos appeared on social media teaching how to run a scam, and everyone from prisoners to foreign criminal syndicates got in on the act.

"This created multiple high-reward targets where an individual could make a fraudulent claim with relatively low risk of being caught," the inspector general said.

Investigators pointed to one case where more than 90 claims were traced to the same 3-bedroom house, and one email was linked to 145 other claims. That scam earned those fraudsters nearly $1.6 million in bogus unemployment benefits.

The law currently has a five-year statute of limitations for unemployment fraud. The inspector general said that needs to be extended to go after some of the more complicated fraud schemes.

Congress already doubled the statute of limitations for pandemic fraud related to small business loans, from five years to 10 years. But the unemployment time wasn't touched.

The House has passed a bill to increase the statute of limitations, along with other incentives to encourage states to go after fraud and other overpayments.

It cleared on a 230-200 vote, with just 10 Democrats voting with Republicans for the legislation.

Opponents complained that the measure trimmed anti-fraud money at the federal level, and also worried that people who were paid too much in unemployment benefits but didn't intend to engage in fraud could be hassled under the legislation. Some Democrats expressed worry that the focus on fraud might poison Americans' attitudes toward other social safety-net programs.

Support for extending the statute of limitations to 10 years, however, does seem to cross party lines, with many House Democrats saying they would have voted for that kind of limited legislation.

For its part, the White House has proposed a new infusion of cash for the inspectors general who police pandemic programs, including $100 million for the Labor Department's inspector general alone.

President Biden also called for increasing the statute of limitations "for serious, systemic" cases of fraud.

For more information, visit The Washington Times COVID-19 resource page.