Taxpayers lost more than $100B to COVID unemployment insurance fraud, committee finds

FIRST ON FOX: American taxpayers lost more than $100 billion to fraud and improper payments as a result of temporary unemployment insurance programs created in response to COVID-19, the House Oversight Committee found. 

Fox News Digital obtained the House Oversight Committee's report after its monthslong investigation examining fraud in pandemic unemployment relief programs. 

The report details information, documents and communications obtained by the committee showing how states across the country, including California, New York and Pennsylvania, processed and administered pandemic unemployment insurance claims with "minimal oversight." 

The committee said that lack of oversight led to "billions of taxpayer dollars lost to improper and fraudulent payments that will likely never be recovered." 

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The committee found that 11% to 15% of total benefits paid during the pandemic were fraudulent, totaling between $100 to $135 billion. The Department of Labor’s Office of Inspector General estimated that at least $191 billion in pandemic unemployment insurance payments could have been improperly paid, with a "significant portion attributed to fraud." 

A person passes a storefront with a sign posted that masks are required on Oak Street in Copiague, New York, on May 18, 2022. (Steve Pfost/Newsday RM via Getty Images)

The committee found that states have only recovered approximately $6.8 billion of those funds. 

The committee also found that those receiving the benefits "did not have to provide evidence that they were actively seeking work to continue receiving benefits." 

During the first nine months of the program, claimants did not have to provide any evidence of earnings, which the committee said made the program more susceptible to fraud. In December 2020, when Congress reauthorized the program, states began to require applicants to provide proof of prior employment and wages. 

The Department of Labor reported that the program had a total improper payment rate of 35.9%. 

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House Oversight and Accountability Committee Chairman James Comer, R-Ky., speaks during a hearing with Commissioner of the FDA Dr. Robert Califf in the Rayburn House Office Building on April 11, 2024 in Washington, D.C. (Anna Moneymaker/Getty Images)

In March 2021, the Biden-Harris administration extended the pandemic unemployment insurance programs and benefits for an additional six months, even though states and businesses were open, and the vaccine rollout was underway. 

"Citing labor shortages, 26 states chose to end federal benefits early citing that the exorbitant federal benefits were leading to labor shortages in those states," the committee found. 

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However, the committee also found that organized crime "played a major role" in unemployment insurance fraud by targeting pre-existing system vulnerabilities.

"Foreign nationals, organized criminal gangs, prison inmates, and those acting on their behalf, filed fraudulent claims in multiple states," the report states. "Insiders, including those who worked for state workforce agencies, conspired with organized crime factions and other individuals to defraud state UI programs and the states did little to stop them." 

House Oversight Committee Chairman James Comer, R-Ky., blamed the fraud on Democrats and the Biden-Harris administration, saying they "spent trillions of dollars under the guise of pandemic relief." 

People line up to receive coronavirus tests in Washington, D.C., in December 2021. (Ting Shen/Xinhua via Getty Images)

Comer said his committee’s first hearing on the matter exposed how "unchecked spending left taxpayer funds, including UI programs, vulnerable to significant waste, fraud, and abuse." 

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"While Democrats turned a blind eye to this waste of taxpayer dollars, Republicans were committed to identifying how these taxpayer funds fell prey to fraudsters and criminal organizations," Comer said. 

Comer said his committee’s report includes recommendations to ensure future taxpayer-funded UI programs "don’t suffer a similar fate." 

"Rooting out waste, fraud, abuse, and mismanagement in the federal government remains a top priority for Oversight Republicans, and we will continue to work to protect all American taxpayers," Comer said. 

The committee recommends that for future UI benefits programs, the government must require claimants to provide their proof of work before their claims are reviewed for eligibility. 

"Unemployment insurance should always be tied to work," the report states. 

The committee also recommends that future programs "require state workforce agencies to cross-check" claimants across federal databases – including federal prisoner databases. 

Meanwhile, the committee recommended Congress consider extending the statute of limitations for the fraud programs associated with the pandemic UI programs, which are due to expire in March 2025, so that criminals that defrauded taxpayers may be brought to justice.

Brooke Singman is a political correspondent and reporter for Fox News Digital, Fox News Channel and FOX Business.