Rep. Molinaro Sounds Alarm On NY's COVID-19 Unemployment Fraud Scandal, Calls For Comprehensive Investigation To Help Prevent Future Failures

WASHINGTON, Jan. 31 -- Rep. Marc Molinaro, R-New York, issued the following news release on Jan. 30, 2023, and letter:

U.S. Rep. Marc Molinaro (NY-19) today sent a letter to James Comer, Chairman of the House Oversight Committee, urging the Committee to conduct robust oversight over New York's COVID-19 unemployment insurance fraud scandal. Rep. Molinaro was joined in this effort by Republicans in New York's Congressional Delegation.

Rep. Molinaro's effort follows a recent audit from the New York State Comptroller's office, which revealed gross negligence within the New York State Department of Labor (NYSDOL) resulted in an estimated $11 billion in fraudulent and improper unemployment insurance (UI) payments during the COVID-19 pandemic. In the audit, the Comptroller's office reported that since 2010, NYSDOL ignored numerous warnings that its UI system was outdated and lacked the resources to handle workload surges. When demand for UI rose during the COVID-19 pandemic, the system became overwhelmed and led to countless fraudulent payments.

In the letter to Chairman Comer, Rep. Molinaro and the New York lawmakers called for a comprehensive investigation and offered to serve as a resource to help advance the inquiry.

Rep. Molinaro said, "I am pushing for a comprehensive investigation into New York State's COVID-19 unemployment insurance fraud scandal. Taxpayers were cheated due to gross negligence by the New York State Department of Labor. We have to take a hard look at the facts so we can prevent similar failures down the road."

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01/27/2023

To: The Honorable James Comer, Chairman, Committee on Oversight and Accountability, 2157 Rayburn House Office Building, Washington, D.C. 20515

Dear Chairman Comer,

As members of the New York delegation, we applaud your recent announcement to investigate unemployment insurance (UI) fraud in New York State and wish to offer any assistance we can provide. With billions of defrauded taxpayer dollars at stake, it is critical that Congress takes action to ensure accountability and transparency within the New York State Department of Labor (NYSDOL).

The audit of NYSDOL from the New York State Comptroller reveals gross negligence within the agency at a level that is hard to comprehend. The agency did not heed warnings going back as far as 2010 that its UI system was out of date and, "lacked the resources necessary to adjust to new laws or handle workload surges"./i NYSDOL once again ignored similar recommendations to update its system in 2015./ii As a result, the system was predictably overwhelmed during the COVID-19 pandemic and led to an estimated $11 billion in fraudulent and improper payments being made./iii This figure is likely higher, but, as the Comptroller notes, "(NYS)DOL refused to provide the data that would have enabled auditors to calculate the precise amount of improper payments"./iv

The refusal to provide data is part of a deeply disturbing pattern of unaccountability within NYSDOL that must be addressed through rigorous oversight. The agency has continually failed to provide basic information on their procedures for detecting fraudulent claims or insight on the methods by which funds were stolen./v Likewise, NYSDOL has not provided adequate answers as to why they did not respond to reports of ID theft sooner or why they failed to implement basic cybersecurity features until nearly a year into the pandemic./vi NYSDOL's refusal to cooperate with auditors jeopardizes efforts to prevent future fraud, and displays a stunning disregard for the New York businesses that have been left to pay for their incompetence.

Government officials across the country have experienced unprecedented uncertainty in responding to the COVID-19 pandemic, however that uncertainty is no excuse for the magnitude of fraud or lack of transparency that NYSDOL has displayed to this point. For these reasons, we are grateful for the Committee's willingness, under your leadership, to step in and uncover much needed answers to shed light on the failures by NYSDOL and to prevent similar failures down the road. As your investigation continues, we are more than happy to serve as a resource to you and your staff.

View co-signers and footnotes here: https://molinaro.house.gov/uploadedfiles/ui_fraud_letter.pdf

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Original text here: https://molinaro.house.gov/news/documentsingle.aspx?DocumentID=44