[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]


                    TIME'S RUNNING OUT: PROSECUTING
                  FRAUDSTERS FOR STEALING BILLIONS IN
                       UNEMPLOYMENT BENEFITS FROM
                            AMERICAN WORKERS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                             WORK & WELFARE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 6, 2025

                               __________

                          Serial No. 119-WW01

                               __________

         Printed for the use of the Committee on Ways and Means
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
59-658                    WASHINGTON : 2025                  
          
-----------------------------------------------------------------------------------     
                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
                    
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               DANNY DAVIS, Illinois
JODEY ARRINGTON, Texas               LINDA SANCHEZ, California
RON ESTES, Kansas                    TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania          SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma                 JUDY CHU, California
CAROL MILLER, West Virginia          GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina          DON BEYER, Virginia
DAVID KUSTOFF, Tennessee             DWIGHT EVANS, Pennsylvania
BRIAN FITZPATRICK, Pennsylvania      BRAD SCHNEIDER, Illinois
GREG STEUBE, Florida                 JIMMY PANETTA, California
CLAUDIA TENNEY, New York             JIMMY GOMEZ, California
MICHELLE FISCHBACH, Minnesota        STEVEN HORSFORD, Nevada
BLAKE MOORE, Utah                    STACEY PLASKET, Virginia
BETH VAN DUYNE, Texas                TOM SUOZZI, New York
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
RUDY YAKYM, Indiana
MAX MILLER, Ohio
AARON BEAN, Florida
NATHANIEL MORAN, Texas
                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                                 ------                                

                     SUBCOMMITTEE ON WORK & WELFARE

                    DARIN LaHOOD, Illinois, Chairman
MIKE CAREY, Ohio                     DANNY DAVIS, Illinois
RUDY YAKYM, Indiana                  JUDY CHU, California
MAX MILLER, Ohio                     GWEN MOORE, Wisconsin
AARON BEAN, Florida                  DWIGHT EVANS, Pennsylvania
NATHANIEL MORAN, Texas               JIMMY GOMEZ, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Darin LaHood, Illinois, Chairman............................     1
Hon. Danny Davis, Illinois, Ranking Member.......................     2
Advisory of February 6, 2025 announcing the hearing..............     V

                               WITNESSES

Haywood Talcove, Chief Executive Officer, LexisNexis Risk 
  Government
  Solution.......................................................     4
Anna S. Hui, Director, Missouri Department of Labor and 
  Industrial Relations...........................................    17
Jeff Ficke, Chief Executive Officer and Founder, Russell Allen 
  Partners.......................................................    29
Shelbey Meyenburg, Unemployment Insurance Worker, AFSCME Council 
  28 Washington Federation of State Employees....................    41

                    MEMBER QUESTIONS FOR THE RECORD

Member Questions for the Record and Responses from Haywood 
  Talcove, Chief Executive Officer, LexisNexis Risk Government 
  Solution.......................................................    71

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................    75

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


 
                    TIME'S RUNNING OUT: PROSECUTING
                    FRAUDSTERS FOR STEALING BILLIONS
                        IN UNEMPLOYMENT BENEFITS
                         FROM AMERICAN WORKERS

                              ----------                              


                       THURSDAY, FEBRUARY 6, 2025

                  House of Representatives,
                  Subcommittee on Work and Welfare,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:00 p.m., in 
Sam Johnson Room, 2020, Rayburn House Office Building, Hon. 
Darin LaHood [chairman of the subcommittee] presiding.
    Mr. LaHOOD. The subcommittee will come to order. I want to 
welcome everybody today to our Work and Welfare Subcommittee 
titled Time's Running Out: Prosecuting Fraudsters for Stealing 
Billions in Unemployment Benefits from American Workers. I want 
to welcome our witnesses here today and thank you for traveling 
to be a part of this hearing.
    And I want to also welcome our new members to the 
subcommittee. A few of them are here. I want to welcome Rudy 
Yakym from Indiana who is a new member of Ways and Means and 
the subcommittee; Aaron Bean from Florida is a new member here, 
too, and welcome back our old members, and he is not new to 
Ways and Means but new to the subcommittee, Randy Feenstra from 
Iowa. Randy, welcome to the Subcommittee on Work and Welfare.
    As the returning chairman of the subcommittee, we have a 
unique opportunity to build on our past bipartisan work and 
look forward to working with all of you. My district that I 
cover is the 16th congressional district, which covers much of 
central and northwestern part of Illinois. The purpose of 
today's hearing is to learn how Congress can hold fraudsters, 
how we can identify fraudsters and other criminal organizations 
accountable by extending the statute of limitations for CARES 
Act-related unemployment insurance fraud, which will expire on 
March 27th of 2025 without congressional action.
    The Ways and Means Committee has conducted considerable 
oversight since the UI program's weaknesses were exposed during 
the COVID-19 pandemic. In February of 2023, the committee held 
a hearing with the government witnesses from the GAO and the 
Pandemic Response Accountability Committee who testified to 
problems with outdated state systems and weak online security 
that made the program vulnerable to fraud.
    Subsequently, in May of 2023, the House passed the 
Protecting Taxpayers and Victims of Unemployment Fraud Act. The 
bill would have extended the statute of limitations for an 
additional five years and incentivized states to go after fraud 
and recover funds. It also included program integrity reforms 
to stop the pay and chase model of benefit delivery. 
Unfortunately, those reforms fell short of becoming law and 
Congressional action is needed now more than ever.
    All told, for the unemployment insurance program alone, GAO 
has estimated between $100 and $135 billion were lost to fraud 
during the pandemic. That number is astounding. Even more 
concerning, the Department of Labor tells us that only $5 
billion has thus far been recovered. Meanwhile, we know law 
enforcement agencies have thousands of cases currently pending. 
The Department of Justice has charged more than 600 criminal UI 
fraud cases with associated losses of over $300 million.
    As of January 28th of this year, DOJ has more than 1,600 
criminal matters that remain open and uncharged. Without an 
extension of the statute of limitations, these instances of 
suspected pandemic UI fraud will go unpunished. First and 
foremost, we need to provide law enforcement with the tools and 
resources to hold fraudsters accountable while pursuing reforms 
that can stop this type of UI fraud from happening again. 
Congress must act to extend the statute of limitations. I hope 
that in the coming weeks we can work together in a bipartisan 
fashion to pass legislation to do just that and get a bill 
across the finish line before the March 27th date.
    In addition, we need to examine how international crime 
rings and hostile nations continue to target the UI program. 
There are countless examples of criminals, foreign and 
domestic, deploying sophisticated schemes to defraud the 
government and UI recipients. For example, my staff recently 
shared with me a press release from the Department of Justice 
shown on the board behind me here announcing that a 
Pennsylvania man pled guilty to obtaining $59 million in public 
benefits, including unemployment and laundering the proceeds to 
China. As a member of the House Select Committee on China, 
cases like this are deeply concerning to me and can confirm our 
worst fears regarding the attacks on our institutions by 
hostile nations such as the CCP, the Communist Chinese Party.
    I strongly believe we have a responsibility to bring 
accountability back to Washington and find out what we can do 
to bring restitution for taxpayers in the face of such 
staggering amounts of fraud. There is a lot more work to be 
done to hold these criminals accountable through the criminal 
justice system, and recoup the billions of dollars on behalf of 
American taxpayers.
    So, again, I want to thank our witnesses for being here 
today, for traveling, their valuable time, and their insight 
that we will hear from a little bit later here. With that, it 
is now my pleasure to recognize the gentleman from Illinois, 
our ranking member Danny Davis.
    Mr. DAVIS. Thank you, Mr. Chairman, and I, too, want to 
welcome all of our members back of this subcommittee and to our 
witnesses today. For certain, Democrats want to hold criminals 
that stole from workers in our unemployment insurance or UI 
program during the pandemic accountable unequivocally and 
without a doubt. We provided $2 billion in the American Rescue 
Plan Act to strengthen program integrity, access, and equity. 
Democrats want to work on a bipartisan basis to finish the job.
    However, I cannot begin this hearing and pretend that 
business is usual in the face of illegal and unethical actions 
by this administration. I must recognize and criticize the 
firing of the Department of Labor Inspector General whose job 
it was to investigate and prosecute UI fraud and who 
specifically asked our committee to extend the statute of 
limitations for UI fraud.
    Inspector General Larry Turner served with distinction in 
both the Trump and Biden administrations and led the Inspector 
General's Office to 1,400 successful pandemic UI fraud 
prosecutions and over $1 billion in court-ordered restitution 
and payment.
    Mr. Turner was recently fired by President Trump along with 
nearly all of the non-partisan inspectors general. After firing 
these IGs charged with prosecuting fraud and making sure 
agencies followed the law, the Trump administration illegally 
blocked states from accessing essential health, childcare, 
child welfare, and other funding authorized and appropriated by 
Congress and illegally blocked nonprofit organizations from 
accessing already appropriated funds just as they were trying 
to make payroll. The harm done by short delay in payments gave 
us a preview of what might happen if we enacted the cuts being 
pushed by my Republican colleagues.
    In the last few days, President Trump gave Elon Musk, an 
unselected billionaire, and his hackers unfettered access to 
the extremely confidential data regarding payments to workers, 
businesses, seniors, and entities around the world via the 
systems with the Treasury Department centers for Medicaid and 
Medicare, Labor Department, and NIH. These systems include 
private financial information for seniors receiving social 
security or Medicare, workers receiving tax refunds, private 
health information about you and your loved ones, and the 
privileged information of Mr. Musk's business competitors.
    This hearing is about preventing fraud, yet this 
administration appears to be gifting Mr. Musk the unlimited 
ability to defraud individual Americans to access their most 
private financial and health information while inappropriate. 
Will Mr. Musk illegally stop your social security, tax, 
Medicare, Medicaid, or disability payment? Will he claw back 
your tax refund or social security payment if he thinks you 
didn't deserve it? Will he use his unchecked power to sell your 
social security numbers or bank account information to the 
highest bidder or delay government contract payments or grants 
to his competitors or people he dislikes?
    As much as my colleagues and I want to finish the job of 
prosecuting pandemic fraud and ensure that the unemployment 
system is ready for the next recession, I cannot ignore the 
silence of my Republican colleagues in this offensive fraud 
against the American public. And the sad reality is that the 
next recession might be very soon given the President's 
determination to start trade wars with our closest allies that 
will skyrocket prices on nearly everything Americans buy.
    I look forward to hearing from Shelby Meyenburg and getting 
good advice from the workers on the front lines of making sure 
that state UI programs pay the right workers the right amount 
at the right time. Yet I am also extremely concerned that any 
new inspector generals in this current lawless environment 
would not appropriately target true criminal rings and instead 
focus on the workers unemployed during the pandemic who 
received overpayments due to no-fault of their own.
    The first step, the very first step, Mr. Chairman, is for 
our committee to work together to protect the privacy and 
prevent the defrauding of the American people.
    I thank you very much and yield back the balance of my 
time.
    Mr. LaHOOD. Thank you, Mr. Davis, for your opening 
statement. I will now turn to our witnesses here today and I 
will introduce them here in a second. Again, thank you for 
being here today and look forward to your testimony and our 
questions and answers from the committee members.
    I will introduce from my left to right. Our first witness 
is Haywood Talcove, who is the chief executive officer of 
LexisNexis Special Services Incorporated in McLean, Virginia.
    Next we will hear from Ms. Anna Hui, who is the director of 
the Missouri Department of Labor and Industrial Relations in 
Jefferson City, Missouri.
    Thirdly, we will hear from Jeffrey Ficke, who is the CEO 
and founder of Russell Allen Partners in Cincinnati, Ohio.
    And lastly, we will hear from Shelby Meyenburg, who is an 
unemployment insurance worker with the Washington Federation of 
State Employees. Welcome to you all.
    We will begin with you, Mr. Talcove. You are recognized for 
five minutes to deliver your opening statement.

    STATEMENT OF HAYWOOD TALCOVE, CHIEF EXECUTIVE OFFICER, 
   LEXISNEXIS SPECIAL SERVICES INCORPORATED, McLEAN, VIRGINIA

    Mr. TALCOVE. Chairman Smith, Chairman LaHood, Ranking 
Member Davis, and distinguished members of the committee, thank 
you for the opportunity to speak on fraud and government 
assistance programs. During the pandemic, we witnessed a health 
crisis and then a massive wave of fraud that shockingly 
continues today. Domestic and transnational criminals likely 
stole $1 trillion across all the systems programs meant to help 
needy Americans. The money was used to traffic drugs, traffic 
children, and threaten our democracy.
    COVID-19 was neither the first nor will it be the last 
disaster to test this nation. Just this past year we witnessed 
storms destroying whole communities in North Carolina and 
wildfires that burnt across southern California, and once again 
we are seeing the criminals attack at scale. Fraud is a 
financial problem, fraud is a national security problem, and 
fraud is a human problem.
    I would like to suggest three proven solutions that can 
significantly reduce this transfer of assets to criminal 
organizations. Number one, apply identity verification on the 
front end; number two, end self-certification; and number 
three, continuously authenticate beneficiaries. For too long 
the government has treated identity verification as an 
afterthought. For years we have seen the catastrophic result. 
Criminals from across the globe flooding state and federal 
systems, stealing trillions meant for Americans.
    We must finally understand that pay and chase does not 
work. In fact, of the $250 billion stolen from taxpayers from 
the unemployment insurance program during the pandemic, less 
than $5 billion has been recovered thus far. Criminals do this 
because the pandemic taught them that government programs are 
the mark. They never run out of money and you likely won't be 
arrested. If we fail to act, we are complicit in funding 
fraudsters, organized criminals, nation states, and even 
terrorists who use these programs as their personal checking 
accounts.
    At the beginning of the pandemic, I spoke with a state UI 
director who assured me her program had no fraud. Three short 
weeks later, they had more benefit claims than residents over 
the age of 18. Criminals move faster than government systems. 
But fraud does not stop at the door. It is just not external 
actors gaming the system. Insiders, corrupt employees, and 
contractors steal from the programs taking advantage of their 
access to systems and passwords bilking the very people they 
are supposed to be serving.
    Today the threat is growing exponentially. AI-powered fraud 
networks generate fake identities that pass dated 
misverification standards from 2017. Frauds file thousands of 
applications in seconds. Deep fake technology generates, quote, 
unquote, real people that bypass security safeguards. Criminals 
are evolving in realtime. Our response must be just as fast, 
just as smart, and just as relentless.
    To stop this, we need AI, we need data sharing, and we need 
changes to the 1974 Privacy Act. Fraud is a data problem and 
can be mitigated in today's world. Fraud on this scale is not 
inevitable. It is the result of legacy systems, outdated and 
complex regulations, lack of data, and failure to act. This is 
all achievable today.
    Taxpayers do not want their funds going to criminal groups. 
The funds should go to those in need. I am not suggesting we 
need technological breakthroughs. The solutions are clear 
tested and available now and used by the private sector whose 
fraud rate is less than 3 percent compared to 20 percent in the 
public sector.
    If we do the following: Number one, verify identities; 
number two, eliminate self-certification; and number three, 
continuously authenticate beneficiaries, then we can restore 
integrity to our assistance programs, ensure taxpayer dollars 
reach those who truly need them, and prevent criminals from 
exploiting the American people. I would also urge you to extend 
the statute of limitations related to the CARES Act that 
expires on March 27th.
    We are failing the single mother who relies on food 
assistance, the unemployed worker who genuinely needs support, 
and families. We are also failing the taxpayer by allowing 
around $1 trillion annually to be lost to fraud and improper 
payments.
    Thank you, Chairman Smith, Chairman LaHood, Ranking Member 
Davis, and members of the committee for the opportunity to 
testify today.
    [The statement of Mr. Talcove follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. LaHOOD. Thank you, Mr. Talcove.
    We will now turn to Ms. Hui. You are now recognized for 
five minutes.

 STATEMENT OF ANNA HUI, DIRECTOR, MISSOURI DEPARTMENT OF LABOR 
       AND INDUSTRIAL RELATIONS, JEFFERSON CITY, MISSOURI

    Ms. HUI. Chairman LaHood, Ranking Member Davis, and 
distinguished committee members, my name is Anna Hui and I am 
the director of the Missouri Department of Labor and Industrial 
Relations and have served in that position since 2017. I thank 
you and Chairman Smith for the invitation to come today and 
testify before you all.
    Our division of employment security administers our state's 
unemployment insurance or UI program and was responsible for 
administering pandemic unemployment programs. I am proud that 
Missouri is consistently among the nation's leaders in 
preventing improper UI payments, providing benefits to the 
rightful recipients, and along with state agency partners, 
providing high quality reemployment services to unemployed 
Missourians.
    But first let me explain the basics of regular unemployment 
insurance. Imagine you are purchasing car insurance. You pay 
premiums. In turn, the insurance company covers potential 
losses like car accidents. The more accidents you have, the 
higher your premiums. Conversely, a clean driving record can 
lead to lower premiums.
    The UI program operates similarly. Employers pay taxes and 
those funds provide temporary partial income support to 
eligible workers who lose their jobs through no fault of their 
own. The system encourages employers to maintain a stable 
workforce, minimize layoffs, and reduce the number of claims 
filed against their accounts. Just as your car insurance 
premiums will increase with accidents, an employer's UI tax 
rate increases with frequent valid claims. This built-in 
incentive motivates employers to actively participate in the 
claims process and creates a greater likelihood that only 
legitimate claims are paid out. Additionally, individuals 
filing for unemployment insurance not only have to meet 
eligibility requirements for the initial claim, but also every 
week they make a request for benefits.
    Prior to the pandemic, UI fraud typically involved 
claimants failing to meet work search requirements or receiving 
benefits while employed. That was essentially what traditional 
improper payments were. However, the pandemic dramatically 
shifted the landscape. Fraud evolved to encompass large scale 
identity theft with criminals stealing personally identifiable 
information, PII, to file fraudulent claims. This shift was 
driven by the massive influx of money into the system and the 
rush to distribute it making traditional safeguards less 
effective.
    In Missouri, we are fortunate to have already put in place 
in 2016 a modernized information technology system, advanced 
fraud detection methods, and tools and partnerships with third-
party vendors specializing in fraud prevention. Additionally 
for years, Missouri has been a member of the National 
Association of State Workforce Agencies, NASWA, Integrity 
Center and has actively participated in the integrity data hub. 
This multifaceted approach was and is still critical to our 
success, to the integrity of Missouri's UI system, and to the 
value of every tax dollar.
    With the right systems, tool, and partnerships, stopping UI 
fraud is not impossible, but extending the statute of 
limitations for CARES Act related UI fraud and overpayment 
recovery is crucial. The current deadline is March 27 of 2025 
and it looms large. Without an extension, prosecutions will be 
impossible after that date allowing criminals to escape justice 
and potentially leaving billions of dollars in overpayments due 
to fraud unrecovered. This is unacceptable.
    Beyond extending the statute of limitations, broader UI 
program reforms are essential as proposed in H.R. 1163, the 
Protecting Taxpayers and Victims of Unemployment Fraud Act. We 
must move away from the pay and chase model, which is 
inherently vulnerable to fraud, and implement more robust 
preventative measures.
    The current Department of Labor administrative funding 
model often penalizes efficient states. Its heavy reliance on 
workload is a means to redistribute funds can serve as a 
deterrent for states to pursue transformative efficiencies. 
This disincentivizes efficiency and perpetuates systemic 
problems. The current funding model plays catch up to actual 
program needs, especially during economic downturns. It is also 
a disincentive to long-term investment as a short-term nature 
of some funding sources discourages the state from making 
critical investments in technology and cybersecurity that incur 
ongoing costs for licensing, maintenance, and support.
    In 2023, Missouri businesses paid approximately $130 
million in federal unemployment tax act, food to taxes, to the 
U.S. Treasury, yet Missouri only received $38.5 million in UI 
program administrative funding from DOL. This chronic 
underfunding forced us to lobby for state funds in the Missouri 
legislature to shore up funding for our UI program and create a 
long-term modernization plan. For every state UI administrator 
in the U.S., this situation is unsustainable. In line with 
NASWA'S 2025 legislative priorities, dedicated technology 
funding should be a separate consistent stream for 
modernization, including cybersecurity AI and data analytics.
    Finally, adequate funding investments in modernization 
remain relevant and secure and we must make sure that ongoing 
maintenance and support are there. The pandemic underscored the 
need for modern resilient secure UI system. By prioritizing 
accuracy, investing in technology, and reforming the funding 
model, we can ensure that the UI program continues to serve its 
vital function providing a safety net to workers during times 
of economic hardship while safeguarding the integrity of the 
system and the trust of the American people.
    Thank you. I am happy to answer any questions you may have, 
and as this is a public forum, I cannot provide any specific 
details to the fraud measures that we have in place in 
Missouri.
    [The statement of Ms. Hui follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. LaHOOD. Thank you Ms. Hui.
    We will now turn to Mr. Ficke. You are recognized for five 
minutes.

 STATEMENT OF JEFFREY FICKE, CEO AND FOUNDER OF RUSSELL ALLEN 
                   PARTNERS, CINCINNATI, OHIO

    Mr. FICKE. Thank you, Chairman LaHood, Ranking Member 
Davis, and members of the subcommittee. I want to thank you for 
the opportunity to present. My name is Jeff Ficke and I am the 
CEO of Russell Allen Partners located in Cincinnati, Ohio. My 
entire career is focused on technology, innovation, and 
operations around payments. I will give you a little background 
about that, because it covers government and financial 
services.
    In the '90s I was a founding member of a payments company 
that supported government service organizations, several 
federally funded state-operated programs including 
unemployment. After that company was sold, I moved to the 
financial services industry working for Fifth Third Bank. I led 
central operations which transferred approximately $14 trillion 
a year in funds using ACH wire card and check. After that I 
moved on to run Fifth Third's commercial payments line of 
business for the last six years of my career in banking.
    Before I present about the opportunities I see exist 
between these agencies and financial services, I want to 
discuss my role in the pandemic and the unemployment. At that 
time, early phase of the pandemic, the pandemic unemployment 
assistance program was being deployed to those not eligible for 
traditional unemployment. Ohio was experiencing cybercrime 
attacks that resulted in Ohio reporting about $1.8 billion in 
fraudulent overpayments. $1.4 billion was for PUA and about 
$400 million were about traditional unemployment. I do 
understand that today the COVID-era pandemic unemployment 
support is due to expire. I would encourage that to be 
extended.
    I want to start by explaining my involvement in Ohio. It 
started in 2021. My expertise in government services and 
banking aligned well with Ohio's needs. I was named to run 
Ohio's public private partnership. The volume of claims were 
skyrocketing, the unadjudicated claims and backlog was growing 
out of control, and citizens in crisis to the agency were 
overwhelming.
    Governor DeWine made the decision to engage the private 
sector. He worked directly with the Ohio Business Roundtable, a 
group of about a hundred of Ohio's largest public sector CEOs 
to engage their membership for expertise. The Ohio Business 
Roundtable is run by former U.S. Congressman Pat Tiberi. 
Governor DeWine recognized that the private sector had 
experience in these crisis situations. My role was to lead the 
coordination of all these activities between Ohio's Department 
of Jobs and Family Services and the private sector.
    We provided advice and guidance during the execution of 
these recommendations. We had access to senior leaders in 
these--from places like Fifth Third Bank, Western Southern, 
KeyBank, Nationwide Insurance, and others. As I had testified 
multiple times that I had to testify, had the opportunity to 
testify multiple times in front of the state's legislative 
subcommittees. Governor DeWine and ODJFS's director Matt 
Damschroder gave three clear objectives at that phase. The 
first goal was to stop the fraudulent claims from being 
submitted. In early 2021, the state was receiving over a 
million claims a month for new unemployment claims and POA 
claims.
    With advice from the private sector and ODJFS team, we were 
able to deploy a new fraud stack, and that happened within the 
first 60 days of our engagement. The results were overwhelming. 
New fraud claims--new unemployment claims dropped in two months 
to less than 25,000 a month. Over a 97 percent reduction in 
fraud with a new set of technology that was deployed. 
LexisNexis was a key partner for us at that point in the 
process. And you can see on the graphic some of the reductions 
that took place as a part of the PUA.
    The second objective was really clear. There was 
approaching 5 million unadjudicated claims-related issues. We 
actually took a new approach to actually engage the big data 
corporations, data analytics teams to actually help us to 
accelerate that. We did take advantage of programs that were 
completed by Innovate Ohio, advanced data analytics platform 
supported by then Lieutenant Governor John Husted, who is now a 
U.S. senator for Ohio. The P3 team engaged subject matter 
experts from the private sector and big tech to help segment 
those. Within 90 days of the project starting, Ohio had all 
fraud free claims for Ohio citizens had been adjudicated and 
proper payments were being sent.
    The third goal was to answer questions from enormous volume 
of citizens. Many Ohioians were victims of cybercrime while 
others who needed benefits were not being processed because of 
the backlog. During this period the service centers were 
overwhelmed. Citizens experienced difficulties getting through 
and sometimes had up to a six hour hold time. You can see in 
the chart that is displayed here that we returned all those to 
commercially acceptable standards with call times--call handle 
times increased and call times--hold times less than three 
minutes.
    The governor's reasoning for seeking this advice and 
collaboration, Ohio's sector proved to be an outstanding 
decision. I also want to acknowledge that Ohio's ODJFS 
employees welcomed the support, worked endless hours to 
deliver, and truly cared about every citizen who needed the 
support from the organization.
    And the last segment I want to talk about is what I feel is 
a partnership that can exist between government and financial 
services. Collaboration. One of the key initiatives launched at 
the direction of Director Damschroder was to understand that if 
there was any funds that would be available and left to be 
returned, we did confirm--we started by confirming our 
understanding of how this money flowed from initial claims. The 
traditional unemployment PUA program solutions required claims 
adjudication that--as well as collection of payment history. 
Programs checks were focused on claimants payments were sent to 
the----
    Mr. LaHOOD. Mr. Ficke, I am just going to interrupt you 
there for a second. You are a little bit over. We are going to 
ask you to just pause there if you don't mind and we will take 
the rest of your statement, for the record, if you don't mind 
doing that.
    Mr. FICKE. Sure. I just want to talk about future 
recommendations and I will pause. First of all, the banks and 
the agencies are both accountable to multiple regulatory 
organizations. Aligning them so that we can actually get data 
sharing between the banks and the agencies is a very clear 
opportunity.
    Secondly, the digital payment networks in this space have 
actually introduced new threats, new opportunities, and, for 
example, PayPal returned almost $70 million to the State of 
Ohio on money that they held. Not all fraud--not all mobile 
payment networks had that kind of diligence.
    The third opportunity is that the--excuse me, fourth, the 
banks also are a point where they can follow sheet metal law, 
which would actually allow the funds to be held for a period of 
time and then returned into unclaimed funds. I don't understand 
how that is going to actually play out in the long run and 
issues that still need to be determined.
    I understand the statute of limitations. I do encourage it 
to be passed along with House Bill 1163. We have spoken at 
multiple NASWA and UWC conferences on it. We look forward to 
answering your questions. Thank you again.
    [The statement of Mr. Ficke follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. LaHOOD. Thank you very much.
    Lastly, we will recognize Mr. Meyenburg. You are recognized 
for your opening statement.

 STATEMENT OF SHELBY MEYENBURG, UNEMPLOYMENT INSURANCE WORKER, 
            WASHINGTON FEDERATION OF STATE EMPLOYEES

    Mr. MEYENBURG. Okay. Good afternoon, Chairman LaHood, 
Ranking Member Davis, and members of the subcommittee. My name 
is Shelby Meyenburg. I am an employment service worker in the 
State of Washington. In this role I also help UI claimants file 
their benefits. I am a proud member of AFSCME Council 28 and 
the Washington Federation of State Employees Local 443.
    I help Washingtonians file for unemployment insurance and 
safeguard the UI system against fraud. My job is to get the 
right benefits to the right people on time.
    In 2020 the pandemic hit Washington State quickly. Our 
state unemployment rate rose from 5.1 percent in March to over 
15 percent in April immediately placing a lot of stress on our 
system. Unlike other states, Washington hired non-permanent 
staff instead of outsourcing UI work during the pandemic. I was 
one of those non-permanent staff. At this time, non-permanent 
staff had received less than half of the normal training for 
the UI program. It was a chaotic and challenging time where UI 
claimants were desperate and the caseloads were enormous.
    In the spring of '22 I was laid off from my non-permanent 
position and had to file for unemployment benefits myself. It 
was a humbling experience to go from processing UI claims to 
applying for UI. After being laid off, I applied for a 
permanent position under the state's merit-based personnel 
system and was hired in July of '22. My evolution from non-
permanent to permanent staffer showed me the value of being a 
highly skilled employment service worker who understands the 
complexities of the UI program.
    UI workers are the first line of defense protecting hard-
earned benefits from fraud. We safeguard the system with 
identity checks, reviewing and securely transmitting personally 
identifiable information. We help jobless workers make sense of 
the sometimes confusing language in the UI program. As an 
example, we let them know when they should file for an appeal.
    We resolve complex claims, which takes training, a deep 
understanding--deep knowledge of the program, persistence and 
dedication to our mission. This is important work that highly 
skilled and well-trained UI workers do every day for American 
workers.
    UI workers hired under a merit-based personnel system as 
required under federal law ensures that the services provided 
to job seekers and employers across the country are unbiased 
and high quality. UI workers cannot have any other interest 
that play other than serving the jobless workers and 
maintaining the integrity of the UI program.
    There are ways to prepare for future surges in unemployment 
without undermining merit staffing. One solution is for states 
to cross-train existing merit staff for other programs to 
process UI claims. I am a cross-trained employment service 
worker, what we call a UI ambassador. If a state experiences a 
surge of unemployment claims, these cross-trained merit staff 
state employees would receive a brief refresher training and be 
able to hit the ground running in order to help workers and 
keep our system and communities moving forward.
    As you work together on UI reform, I urge that you talk to 
UI workers directly as they are the subject matter experts. We 
want to protect the UI system and make sure that it works well 
enough for everyone and protect the system from fraud. We can 
accomplish these goals with increased funding for staffing, IT 
modernization, program improvements, and cooperation between 
the state and federal levels, not by outsourcing the work much 
skilled merit-based UI staff.
    I would like to thank the chair, ranking member, and 
members of the subcommittee for the opportunity to testify 
today.
    [The statement of Mr. Meyenburg follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. LaHOOD. Thank you, Mr. Meyenburg, for your testimony 
here today.
    I will now move to questions from the committee members to 
our panelists today. Again, grateful for your contributions 
here today to this important topic. I will now recognize myself 
for my questioning.
    I am going to start with you, Mr. Talcove. For years this 
committee has been sounding the alarm really on fraud from 
organized criminal organizations, particularly from a number of 
hostile nations, Russia, China, and others. As you saw in my 
opening statement, I referred to a case in Pennsylvania 
involving a defendant caught laundering money back to China. 
These cases are complex. They are nuanced, involve federal 
crimes, but they also raise serious national security concerns. 
Mr. Talcove, can you explain the current state of the UI fraud 
and how international criminal organizations are continuing to 
be associated with fraudulent activity.
    Mr. TALCOVE. Yeah. Thank you very much for the question. It 
is interesting in that I was just out in California, in L.A. 
this week, and the fires are going there, and you are now 
seeing the same groups that stole at scale in California $32.6 
billion from the unemployment insurance program, they are now 
stealing from the disaster unemployment insurance, the disaster 
SNAP program.
    So what these criminal groups do, and in particular China, 
Russia, Nigeria, Romania, is they use stolen information. Some 
of it they collect it directly. For example, China, when they 
had the OPM breach years ago, they have all that information, 
and they file claims on behalf of legitimate individuals in the 
afflicted areas, and then they use that money for just terrible 
things.
    And what I find incredibly frustrating having followed 
fraud since Hurricane Katrina in 2006, it is the same groups 
doing the same thing. And if you just apply data and analytics, 
just as Mr. Ficke was showing on those charts, you can stop it, 
but we continue to allow these groups to steal. They use the 
money for horrible things, child trafficking. They use it for 
drugs in our communities. They use it for terrorism. So I would 
like to tell you that things are better today, but just 
watching what is going on in California, seeing what happened 
in North Carolina, same groups, same playbook, stealing at 
scale.
    Mr. LaHOOD. Thank you for that. Just to follow up, you 
know, in terms of criminal prosecutions that have been 
successful, are there any that come to mind that have had 
somewhat of a deterrent effect on continuing criminal activity?
    Mr. TALCOVE. Yeah. So I would give Washington State credit. 
During the pandemic they were the first group to get hit by a 
Nigerian fraud organization. They actually did capture the 
ringleader in that. But for the most part, these people do not 
live in this country. They will never come to this country. 
They are protected by their states, and that is why you have to 
protect things on the front end. You can't let the money out.
    Now, if it does go out, remember my estimate, $250 billion 
was stolen, $5 billion recovered. If it does go out, state and 
local law enforcement can't do it. You need the Secret Service 
and you need the FBI, because these are complicated 
multifaceted criminal enterprises.
    Mr. LaHOOD. Thank you for that. I am going to turn now to 
Ms. Hui. In your testimony, you mentioned the Missouri 
Department of Labor. They currently have a UI program that's 
effective in preventing improper payments and providing high 
quality re-employment services. Last Congress Ranking Member 
Davis and I worked on a bill called the Bridge to Workers Act 
that was passed into law to provide the flexibility states need 
to strengthen those connections to employment. Can you talk 
about the work with re-employment services and how you see that 
growing and developing into a core part of unemployment 
programing in the future.
    Ms. HUI. Certainly. Thank you for the opportunity to answer 
your question, and thank you, Chairman LaHood and Ranking 
Member Davis, for actually getting the Bridge for Workers Act 
passed. It has really afforded states a great deal of 
flexibility to approach individuals that have potentially more 
challenges to actually getting back to work. Missouri was one 
of the few states that actually kept our re-employment and 
eligibility assessment program, RESEA, going during the 
pandemic. And by having this expansion of flexibility to allow 
for states to better address what their local workforce needs 
are and basically providing targeted professional workforce 
development services to individuals, originally it was for 
folks who are most likely to exhaust their benefits, but now, 
again, it allows states to really be able to better fit what 
their local state needs are.
    This program in particular has the built-in component that 
when we require somebody to report for these required workforce 
services, if they are utilized unemployment benefits, their 
benefits are not continued if they don't report for those. So 
it builds in that incentive, again, to make sure that workforce 
services that are needed are actually being taken and, again, 
to stress the re-employment roots of unemployment itself, 
right? Because we really see that unemployment and workforce 
services as part of the two sides to the same coin. It is 
really about making sure that workers have the services and 
support needed to get back to sustainable employment.
    Mr. LaHOOD. Thank you for that, Ms. Hui.
    Mr. Ficke, in your testimony, you described how you were 
recruited by Governor DeWine in Ohio to help right the ship 
recovering over $400 million in fraudulent benefits held by 
banks and automated payment networks. I am particularly 
interested in that success story, because according to a report 
issued by the Illinois Auditor General in my home state, we 
lost approximately $5 billion and only $189 million has been 
recovered. Can you talk about how you were able to turn that 
around in Ohio through your UI program and recoup the funds.
    And then maybe before you answer that, we have heard the 
expression ``pay and chase.'' Can you explain for the members 
of the Committee what that means, and what that is.
    Mr. FICKE. Well, first of all, with the pay and chase, I 
might defer that to----
    Mr. LaHOOD. Well, maybe answer my question on how you did 
that, and I will have Mr. Talcove answer the pay and chase.
    Mr. FICKE. Absolutely. Thank you for your question. I think 
it is really important to understand how much manual effort and 
personnel effort went into actually discovering these funds. At 
the very early phases of our opportunities to recover funds, we 
partnered very well with the leadership of Ohio Jobs and Family 
Services, and we would ask a simple question. Is there still 
money out in the networks to be able to do this.
    I think it is really important fundamentally to understand 
that in the UI claims environment for approval on adjudication, 
there is a lot of work done to identify an individual. In the 
banking industry, when payments flow through, especially since 
9/11, post that period, there is regulation that is also very 
tightly covered by the banking industry, financial services 
that actually require them to not allow money to get out of 
banks into the hands of fraudsters. The one looks at identity 
and the banking system can look at activity within a bank 
within specifically a bank account.
    In a very simplistic level, it is looking at multiple 
unemployment claims from multiple states going into the same 
accounts, unusual spending happening within those financial 
service institution accounts, large overseas transactions that 
actually are pulling money out of a consolidation to pull them 
overseas. That effort has resulted in the U.S. banking industry 
setting up multiple advanced analytics programs, case workers, 
and processes to actually prevent that from happening.
    The difficult work we had in that is that we are actually 
required at that point to work with all the banks who received 
funds. They didn't have a specific contractual relationship 
with each individual state because they were the receiving 
banks. Simplifying it, it basically means that is the bank of 
the claimant who was actually getting the information. And in 
our case, that required us to go beyond the individual head of 
ACH or operations leaders and get to the newly established or 
recently established groups within the banks that actually 
allowed those fraud measures to be kept in place. We were able 
to find the money. We were able to confirm it. We actually 
coordinated activities to compare data between fraudulent--
potential fraudulent claims at the state with fraudulent 
account activity, identify what was remaining.
    What ended up happening in that case is that we actually 
then had to have legal agreements, sometimes referred as hold 
harmless agreements, limitations of liability that actually had 
to be executed post this whole process happening. Many banks 
cooperated.
    I will give credit to ODJFS, because Director Damschroder 
made it a clear initiative he wanted those funds back. We 
prioritized it. They invested people and time and energy into 
it, and we got great cooperation from many financial 
institutions.
    Mr. LaHOOD. Thank you for that. Maybe quickly, Mr. Talcove, 
you have used the expression ``pay and chase.'' Tell members of 
our audience and the committee members what that means.
    Mr. TALCOVE. I believe it is a false paradigm that says 
that you can't have speed in security, and I would just 
reference that most of you have probably used Amazon. You 
placed an order, it gets there quickly, and everything works 
out really well for you.
    In government, sometimes what they do is they would rather 
just pay it really quickly and then try to get the money back 
later. And as you noted in your opening statement, only $5 
billion of the $250 billion has been returned.
    The second point I want to make on that, I would encourage 
you to try to go and look on your state's UI page and try to 
fill out an unemployment insurance form. Sometimes the 
overpayments or underpayments are related to the complexities 
of the forms, and it really does create a whole set of backlogs 
for those that are administering the programs. Those forms are 
complicated.
    Mr. LaHOOD. Thank you for that. I will now recognize the 
ranking member Mr. Davis for his questions.
    Mr. DAVIS. Thank you, Mr. Chairman, and thanks to all of 
our witnesses.
    Mr. Meyenburg, let me ask you, given that Elon Musk and 
hackers with no security training, our policy expertise now 
have unlimited access to confidential financial and health data 
for workers and businesses. I am going to talk a little bit 
about how we are supposed to safeguard data. As a front-line UI 
worker, you collect confidential identity and banking 
information. What kind of training do you have to keep that 
data safe and private?
    Mr. MEYENBURG. So during initial UI worker training, there 
is a heavy emphasis on how to properly conduct identity 
information verification. Throughout the entire process, six to 
eight weeks, you are constantly having to do that process. 
There is role playing scenarios that covers a lot of topics, 
and during all of those you do have to conduct the correct 
identification verification.
    There is several reasons why a UI claimant's identity would 
be flagged for further review. If I clearly spot fake 
information or misdocumented information, I have to send that 
up for review. If a claimant's personal information does not 
match what is on the state's driver's license system, that 
one's also flagged for review by the fraud team. We work 
together to safeguard the UI benefits from fraud and we also 
ensure that we are using our training and experience to help 
claimants who have challenges accessing benefits because they 
are not tech savvy. This is why the role of a UI ambassador who 
can see through those challenges to help a worker in need is so 
critical.
    Mr. DAVIS. Why is this information safer when we limit 
access to public employees like yourself?
    Mr. MEYENBURG. It is safer because we have no ulterior 
motive. We are there to help the people of Washington State in 
my case. We don't have to worry about those expectations of a 
quota system, or anything like that. We meet the people where 
they are at and we help them where they are at.
    Mr. DAVIS. Let me just re-emphasize that my democratic 
colleagues and I are strongly committed to good service by 
workers like yourself and especially people who have no need to 
access their earned unemployment benefits. We are committed to 
preventing fraud and safeguarding the UI trust fund. I am 
grateful to you and your colleagues and especially to AFSCME 
Council 31 workers in Illinois for their critical work. Is 
there anything that we have to give up in order to do both, 
provide the good service and have no other purpose for doing 
it, ulterior motives?
    Mr. MEYENBURG. I don't believe so. I believe we can 
accomplish both goals at the same time. In fact, this is built 
into our process. Before we talked to a UI claimant about their 
benefits, we verify their identity every single time we talk 
with an individual, no exceptions. After identification, we can 
then provide excellent customer service, whether that be filing 
an initial claim or reviewing an active claim.
    Mr. DAVIS. Let me again just thank you and your workforce 
and your colleagues for the work that you have done and the 
faith and trust that we have in what it is that you do.
    Thank you, Mr. Chairman, and I yield back.
    Mr. LaHOOD. Thank you, Mr. Davis. I will now recognize one 
of our new numbers, Rudy Yakym, of South Bend, Indiana.
    Mr. YAKYM. Thank you, Mr. Chairman, and thank you to our 
witnesses for being here today. Unemployment insurance improper 
payments and fraud ran rampant during the COVID-19 pandemic. 
The Government Accountability Office, GAO, estimates that 
pandemic unemployment fraud totaled $135 billion. That is about 
15 percent of total UI benefits paid during the pandemic. But 
the Department of Labor's Inspector General says that number is 
at least $191 billion.
    Even worse, outside experts estimate that the total could 
be upwards of $400 billion. California alone accounts for $20 
to $33 billion of fraudulent pandemic UI payments. One estimate 
put the state's improper payment rate at nearly 37 percent 
during the first six months of the pandemic. No business could 
survive allowing for over one third of payments that are made 
to be fraudulent. We should expect more of our government and 
of our states. We should expect that fraud--and we know that 
fraud isn't just money going out the door. It is money that 
undermines the faith that the American people have in the 
system and the confidence that Congress has in states to manage 
federal resources.
    Hardworking measures in my district don't want their 
taxpayer dollars going to subsidize California or any other 
state with such lax payment controls unless the state 
implements reforms, upgrades systems, and demonstrates a 
commitment to chasing down fraudsters. Despite these eye-
popping fraud numbers, we have only recovered about $5 billion 
of it or less than 4 percent. The statute of limitations to 
prosecute these cases expires at the end of March. Congress 
must extend that deadline so that we can continue unwinding 
these criminal rings and hold the fraudsters accountable.
    One of our most important responsibilities as members of 
Congress is to be good stewards of taxpayer money, because 
after all, the only money that we in the federal government 
have is money that we take from the American people in the form 
of taxes. Allowing this level of fraud to occur and not taking 
every possible step to recover these funds and these fraudulent 
payments would be irresponsible.
    Mr. Chairman, I ask that this email from the DOJ pertaining 
to uncharged UI fund matters be entered into the record.
    Mr. LaHOOD. Without objection.
    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. YAKYM. Thank you.
    Mr. Talcove, as of January 28, 2025, the Department of 
Justice had 1,648 open cases. These are uncharged criminal 
matters relating to COVID-19 fraud. The Department of Labor's 
Inspector General has shown approximately 157,000 open UI fraud 
complaints assigned to its hotline office. Are you surprised 
about the sheer number of unemployment insurance fraud cases 
our federal law enforcement agencies are actively 
investigating?
    Mr. TALCOVE. Thank you so much for the question. I want to 
start with I really believe in unemployment insurance. The 
number that was lost was approximately $250 billion across the 
country, and California was ground zero for it. Unfortunately, 
because they paid some of the highest benefits in the country 
and their then-Commissioner Julie Su had some of the least 
amount of safeguards in place.
    I am actually surprised that there are that many open 
cases, because I truly believe a lot of the fraud took place 
and individuals don't even know their information was used. As 
I mentioned in my testimony, a lot of this happened with 
criminal groups, both domestic and transnational, who use the 
stolen PII that went into these eligibility determination 
systems that knew how to manipulate them better than your 
constituents. And to this day, we were talking about it before, 
you had individuals that got a notice from the State of 
California, the State of Ohio, saying you know, you got your 
benefits, and those people threw those notes away because they 
never got benefits. So I am not surprised by that.
    But I also want to note that it is not just unemployment 
insurance. It is the SNAP program. It is the other programs, 
including rental assistance. Anywhere where the government is 
providing a check, these criminal groups are now working at 
scale.
    Mr. YAKYM. Thank you. And briefly, Mr. Talcove, do you 
believe that there is still more unemployment fraud carried 
over from the pandemic out there that could result in 
prosecution or recouping funds if we were to extend the statute 
of limitations?
    Mr. TALCOVE. Yes, I think there is.
    Mr. YAKYM. Thank you. Mr. Chairman, I yield back.
    Mr. LaHOOD. Thank you, Mr. Yakym.
    Recognize Ms. Chu of California.
    Ms. CHU. Well, first let me say that I can't believe that 
Republicans are holding a hearing purportedly about going after 
pandemic-related fraud in the unemployment insurance program 
without addressing the fact that a few days ago President Trump 
illegally fired the inspector general who is responsible for 
doing that very work. Inspector General Larry Turner was a 
well-respected non-partisan Senate-confirmed professional. His 
leadership investigating UI fraud had already resulted in over 
2,000 individuals charged, more than 1,400 convictions and $1.1 
billion in taxpayer dollars recovered. And IG Turner even 
testified as a witness for the Republican majority for the 
hearing they held on UI fraud back in 2023 during which time he 
warned that despite the office's successes, insufficient 
funding from Congress was limiting their investigative capacity 
and causing lost opportunities to hold fraudsters accountable. 
The Republican majority still hasn't addressed that funding 
shortfall, and now President Trump has fired the person 
responsible for reducing that fraud.
    If Republicans want to better combat and prosecute UI 
fraud, we need to push back against President Trump's illegal 
firing of our nation's top UI fraud investigator and get Mr. 
Turner and other independent non-partisan inspector generals 
across government whom the President illegally removed back on 
the job.
    And then if we have the fraud, who is going to do the work 
of actually deterring it? Well, it would be our federal 
employees. And yet the Trump administration's undermining of 
the federal workforce goes far beyond inspector generals. It is 
part of the systematic attempt to politicize the civil service 
and make services worse for everyday Americans who rely on 
safety net programs like unemployment insurance.
    Ms. CHU. Those attacks on our Civil Service include mass 
emails to almost all federal employees asking them to resign 
and then threatening layoffs if not enough employees comply 
with this.
    It includes the administration's proposal to politicize the 
federal workforce by stripping nonpartisan federal employees of 
their job protections to make it easier to fire and replace 
them with Trump loyalists.
    And it includes putting tens of thousands of employees on 
administrative leave without cause.
    We have career civil servants for a reason. They are 
professionals with expertise who are essential to the 
successful operation of federal programs and benefits for the 
American people.
    And that includes the staff responsible for investigating 
UI fraud.
    In fact, Inspector General Turner led a team of over 300 
federal employees, including criminal investigators, auditors, 
attorneys, and other subject matter experts dedicated to 
combatting waste and fraud in all of the Department of Labor's 
programs including UI.
    The Trump administration's actions put us at risk of losing 
this expertise, and it is jeopardizing our able to successfully 
continue going after this fraud.
    I am also concerned that the Trump administration's threats 
to fire federal employees will lead to further outsourcing of 
core government responsibilities.
    We saw during the pandemic what happened when States 
outsourced their UI work to untrained contractors, and that, in 
some cases, actually caused waste and fraud in the program by 
giving employers incorrect information, resulting in 
overpayments, or by exposing workers' sensitive information to 
fraud rings.
    Now, Mr. Meyenburg, you testified about the risks of 
outsourcing during the pandemic. Can you expand on that and why 
investing in an experienced government workforce leads to 
better outcomes than outsourcing to contractors?
    Mr. MEYENBURG. Yes, I believe it comes down to two 
different things--it is training and the mission. With 
dedicated staff that have dedicated time for implementing 
robust training programs, this offers the ability to highlight 
those safeguards and make sure that they are utilized in the 
proper way.
    Ms. CHU. And could you have more waste and fraud happening 
with the contractors?
    Mr. MEYENBURG. Potentially. I would say potentially.
    Ms. CHU. Yes. Thank you. I yield back.
    Mr. LaHOOD. Thank you.
    Pursuant to committee practice, we will now move to 2-to-1 
questioning. I will recognize a new member of the Committee on 
Ways and Means, Max Miller of Ohio.
    Mr. MILLER. Thank you, Chairman LaHood and Ranking Member 
Davis, and excuse my voice. Thank you for the opportunity to 
hold this important hearing.
    We must make every effort to equip and empower Americans to 
reenter the workforce and unlock the full potential of our 
Nation's economy.
    To achieve that, it is imperative that we safeguard the 
integrity of our employment safety net. Since coming to 
Congress, I have been a strong proponent of building our 
Nation's future workforce by providing individuals with 
opportunities to acquire qualifying work skills, and keep the 
United States at the forefront of innovation and productivity.
    Like many, I am very concerned this view I have heard from 
a lot of our colleagues on this side of aisle on the 
unprecedented fraud that occurred during the pandemic, which 
the GAO has estimated, which we have heard a lot today, that 
anywhere between $100 billion to $135 billion and possibly 
more.
    Just in northeast Ohio alone, where I am from, the United 
States Attorney for the Northern District of the State 
sentenced perpetrators who stole millions of dollars from the 
program intended to assist the unemployed, which was all over 
our area.
    This commitment to prosecute and to hold criminals 
responsible demonstrates that we must continue to be vigilant 
of those who try to scam federal leave programs and waste our 
tax dollars, including providing federal investigators with the 
continued authority to prosecute those stealing from American 
workers.
    It is my understanding that 2,000 individuals have been 
prosecuted with $47 billion--I will say it again--$47 billion 
in potential fraud to date. But there are at least 157,000 open 
cases and much more to be done that are unaccounted for at this 
moment in time to date.
    Fortunately, efforts such as those undertaken by my home 
State of Ohio and others will help their respective States' 
unemployment system stop unemployment insurance fraud before it 
starts and get resources to eligible workers in a timely and 
accurate fashion. And I believe that is what everyone would 
like regardless of political affiliation.
    Mr. Ficke, as you testified, the State of Ohio was 
experiencing a high volume of fraudulent claims. In fact, the 
unadjudicated claims backlog was growing exponentially, and as 
you know, Ohio's governor made a decision to engage the private 
sector for support, including the Ohio Business Roundtable's 
members' expertise that you had mentioned earlier, with a goal 
to stop fraudulent claims, reduce the backlog, and reengineer 
the customer experience. I understand the project's results 
exceeded expectations.
    How can such public and private partnerships be effective 
in reducing fraud, safeguarding public resources, and allowing 
funds to be targeted to those who are truly in need?
    Mr. FICKE. Thank you for the question. You know, in Ohio's 
case, I think that some of the key factors involved is 
collaboration across agencies, across state and federal 
resources, especially when it comes to, as an example, the 
prosecution of those cases.
    If you look at the amount of work that Ohio Department of 
Jobs and Family Services did, they focused a lot on advanced 
analytics, taking advantage of Big Data technology programs to 
really segment off the claims that actually were fraud-free, so 
that we could actually get to the point of real citizens in 
need were getting paid.
    And as we--and the other thing I think that the State did 
an excellent job at is, the claims that were submitted that 
were actually--had significant amount of fraud indicators on 
them, were all processed, and they were all ultimately looked 
at and freed.
    In the long run, I think the other thing that was really 
important was taking all that advanced analytics and data and 
actually providing it to the law enforcement sides to actually 
enable the actual prosecution with good data and with things 
that go with it.
    I think it is very important, and it is a core part of my 
testimony, is the collaboration between the financial services 
industry and the unemployment agencies.
    There is lots of really important analytics work that has 
been done in both of those worlds that actually required the--
and can provide a collaborative effort to go between those.
    The work that NASWA has done around the Integrity Center, I 
think, is very important, and Lieutenant Governor Husted's 
focus on advanced analytics for the State of Ohio clearly put 
Ohio in a very good position coming into this at a time when in 
Ohio's case, they had to stand up a brand-new system for the 
pandemic unemployment assistance programs that went with it.
    So collaboration, advanced analytics, and really working 
with some of the key private sector organizations to enable 
that, I think, is critical. Thank you.
    Mr. MILLER. Thank you, Mr. Ficke, and I just want to thank 
you again for all the work you do in my home state, in our home 
state. It is very much needed, and just thank you again from an 
Ohioan to another Ohioan.
    Mr. Chairman, I yield back.
    Mr. LaHOOD. Thank you, Mr. Miller.
    I now recognize Mr. Bean of northern Florida. Welcome.
    Mr. BEAN. Thank you very much, Mr. Chairman. Good afternoon 
to you, and good afternoon to you Work and Welfare Committee 
family. I am one of the new guys. It is an honor to be here.
    I was sent to Congress. I believe one of the reasons that 
northeast Florida sent me to Congress was, I want to go after 
spending. I think we have an out-of-control government that 
just spends far more money than it has.
    And so I am a man on a mission, a man on a mission, to 
fight fraud, abuse, waste, and to get spending under control.
    So, Mr. Chairman, I want to thank you for your draft 
selection in allowing me to serve.
    Ranking Member Davis, it is an honor to be with you as 
well.
    My first question--well, first of all, Mr. Talcove, I 
appreciate you. You have actually mentioned, anywhere 
government is giving away checks, you will find fraud, and, 
indeed, we did that.
    I come from the Small Business Committee, where we did the 
PPP program and the EIDL loan program, and we have reports that 
23 percent--over 1 in 5 loans that we made back then are pure 
fraud, not somebody making a mistake on an application, not 
somebody checking the wrong box, but fraudsters that had the 
sole intent of stealing our money.
    We actually had an administrator come before us with the 
Biden administration and said, you know, it might be too much, 
maybe we just need to all let it go.
    I say no, the American people say no, and so we want our 
money back. I actually filed the bill ``We Want Our Money 
Back'' to not let anything go. We want all of our money back.
    We heard from fraudsters that used Barbie dolls to take a 
picture. We had a program, a FinTech that administered the 
program that would take a picture of you just to make sure you 
are an individual person, and the program fraudsters could take 
a Barbie doll and stick it in front of a webcam and the program 
said approved, you are approved for a loan.
    So we called it Swindler Barbie. A new Barbie is in town, 
Swindler Barbie. Ken got in on it too by the way, of people 
stealing money.
    So the first question goes to you, Mr. Chairman. Where are 
we on the statute of limitations? How can we make sure that we 
don't let it go, that we want our money back, and we are going 
after fraudsters? Where does that stand? Who is running it? Who 
is in the lead? What is going on?
    Mr. LaHOOD. Well, thanks for the question, Congressman 
Bean. So as was alluded to by the witnesses and a number of us 
today, we are coming up on the March 26th date where the 
statute of limitations will expire. So we have legislation that 
has been introduced that will be marked up to extend that 
statute of limitations, so we can go after the fraudsters and 
get to the criminal elements of this and make sure that we get 
that money recouped for taxpayers.
    Mr. BEAN. Amen, amen, we are on schedule, we are on flight. 
It is a very tricky thing.
    So you and Mr. Davis last year did a program that is called 
the Reemployment Services and Eligibility Assessment, the 
RESEA, which really was to help prevent fraud and designate 
support to those who need it.
    Does anybody know about that?
    Mr. Talcove, are you aware of that? Did that program work, 
did it work with the intent of delivering help to people that 
needed it but not the fraudsters? Good program?
    Mr. TALCOVE. Unfortunately, I am not aware of that program.
    Mr. BEAN. Ms. Hui.
    Ms. HUI. Yeah, so that program really allows for local 
workforce boards and other professionals who are working with 
individuals who are currently getting unemployment benefits to 
really----
    Mr. BEAN. Did it prevent fraud or help fraud? Did it help 
or not?
    Ms. HUI. I think it does help with fraud because you 
actually have to show up in person or virtually to actually do 
an employment about workforce development. So there is that 
verification and engagement, and we feel that those more 
personalized service will result in better workforce outcomes, 
more sustained employment for those individuals.
    Mr. BEAN. Great.
    Ms. HUI. So there is that that individual touch to that. So 
if someone is getting that benefit, they are also then required 
to either report in person or do the virtual visit.
    Mr. BEAN. So it has given some benefits.
    Mr. Talcove, I know we got time. Everything is in a hurry 
here. We got to boogie.
    What do we need to do? I helped launch a DOGE. I think some 
of us up here are part of the DOGE caucus, to say, we have got 
to--enough, enough with the stealing of our money, enough with 
the fraud, waste, and abuse.
    I think American taxpayers are celebrating some of the 
early wins that we have discovered, fraud and abuse.
    Where should we start? Where should this committee start to 
say enough with the waste, fraud, and abuse?
    Mr. TALCOVE. It is three things. It is front-end identity 
verification, it is no more self-reported information, and it 
is managing the back-end to beneficiaries.
    Mr. BEAN. Three small hurdles. It doesn't sound like it is 
that hard. It shouldn't be that----
    Mr. TALCOVE. The private sector does it every day. Their 
fraud rate is 3 percent. The public sector is 20 percent.
    Mr. BEAN. Thank you. Thank you very much.
    Witnesses, thank you so much.
    Mr. Chairman, I yield back.
    Mr. LaHOOD. Thank you. I will now recognize Ms. Moore of 
Wisconsin.
    Ms. MOORE. Thank you so much, Mr. Chairman, and I want to 
thank our ranking member and all of our witnesses for being 
here today.
    I did have a conflict in my schedule, so I was unable to be 
here an hour ago, but I did have an opportunity to review your 
testimony, and I appreciate your appearance here today.
    I want to welcome particularly Mr. Talcove to the Ways and 
Means Committee. Are you a member? Is he a member of the Ways 
and Means Committee now.
    I am talking about my new colleague here.
    Mr. LaHOOD. Oh, Mr. Bean?
    Ms. MOORE. Mr. Bean.
    Mr. BEAN. Hey there.
    Ms. MOORE. Hi. Welcome to the Ways and Means Committee. 
Your enthusiasm, of course, is very welcome. And I am learning 
now about the DOGE caucus and your efforts to reduce waste, 
abuse, and fraud.
    So I guess what I am concerned about, Mr. Talcove, is, if 
we are indeed going to combat fraud and waste, how does firing 
the Inspector General of the Department of Labor contributing 
to this?
    I mean, this is a person who successfully prosecuted 1,400 
cases, and, of course everybody on the committee would like to 
see fraud reduced. So how can we expect to do that without an 
Inspector General on board?
    Mr. TALCOVE. If you go back to--and hopefully you read my 
opening statement--I think the biggest challenge we have is, we 
don't want to pay and chase. What we want to do is, we want to 
prevent this at the front end. We want to use----
    Ms. MOORE. Okay. Okay. Thank you for that. I don't have a 
lot of time. So, your notion is that this DOGE caucus and Mr. 
Musk, the billionaire, going in, is an effective strategy for 
start--we don't know exactly what he is doing. And I checked 
with the Speaker of the House. He also has no idea what they 
are doing.
    So, what information do you have to provide the 
subcommittee to demonstrate that this is indeed a better 
strategy than having an Inspector General on the back end? What 
are they doing that is making them more effective?
    Mr. TALCOVE. I have nothing to do with the DOGE. I don't 
know what they are doing.
    Ms. MOORE. So, you don't know what they are doing?
    Mr. TALCOVE. No, ma'am.
    Ms. MOORE. Okay. But somehow you feel like the inspectors 
general is not a good strategy. Okay.
    Mr. Talcove, you also recommended eliminating broad-based 
categorical eligibility. You know, just like an infant born at 
1 pound, 2 ounces, for example, is categorically eligible for 
Medicaid because they are disabled. Their mother might also be 
eligible for WIC or for SNAP.
    Why do you think disconnecting and making it inconvenient 
for them would be helpful, particularly since our having 
disconnected these benefits has cost $2.3 billion in 
administrative expenses over 5 years?
    Mr. TALCOVE. So during the pandemic, I saw over a trillion 
dollars of taxpayer money get stolen, and unfortunately, by 
having broad-based eligibility determination in place, the 
criminals were stealing at scale, and they were impacting 
legitimate individuals that live in Wisconsin, that live in 
Illinois. It created a huge opportunity for them to exploit the 
system.
    Ms. MOORE. So, you just punish the eligible people, like 
the 99 percent who are eligible, having them run all over the 
place? You got your 1 pound, 2 ounce baby, and you got to go to 
five offices to get your benefit so that you can--okay, I get 
it.
    Mr. Meyenburg, we are talking about accountability a lot. 
Can you explain to me how an unelected, unaccountable 
billionaire who has accessed this personal information with, I 
guess, microwave security clearances for his team, how is--and, 
you know, sticking thumb drives in the sensitive information--
how is this appropriate?
    Mr. MEYENBURG. I honestly have no idea. I am not even 
allowed to stick a thumb drive into my own computer to copy any 
data over. So I don't know why they would have access to that.
    Ms. MOORE. Mr. Chairman, my time is winding down, but I do 
appreciate your hearing from me.
    Mr. Ranking Member, I thank you for your leadership as 
well, and I thank the witnesses, and I yield back.
    Mr. LaHOOD. Thank you, Ms. Moore.
    I will now recognize Nathaniel Moran, a new member of the 
Ways and Means Committee, a new member of the subcommittee, 
from east Texas. Welcome.
    Mr. MORAN. Thank you, Mr. Chairman. I look forward to being 
part of the subcommittee and the full Ways and Means Committee 
this next session.
    I have got a number of questions based on the testimony 
that has been given here today. I wanted to, and I am prepared 
to, talk about foreign adversaries and their role in the 
unemployment insurance fraud issue, but let me start with this.
    Mr. Talcove, I think you said this earlier. Your quote was, 
``It is the same groups running the same playbook, stealing at 
scale.'' And you even gave some examples of after certain 
disasters and you said, ``We need to use data and analytics to 
effectively prevent some of this.''
    I want you to go back though because your three 
recommendations were: apply ID verification at the front end, 
end self-certification, and continuously authenticate 
beneficiaries.
    And I love that because it really is front-end oriented, 
but be more specific when you talk about applying ID 
verification. I mean, how onerous would this be, or what kind 
of verification are we talking about, to be able to make sure 
that before the money goes out--because I agree with you and I 
will come back around to this in a second. Once it goes out, it 
is so hard to get back. So we need to make sure that every 
dollar that goes out is the appropriate dollar. How do we just 
do some simply ID verification on the front end?
    Mr. TALCOVE. It happens every single day. Every single one 
of you goes through that identity-verification process when you 
go to your bank, when you use Amazon, when you go online to do 
e-commerce.
    And the great thing about the technology today is, you 
don't even know it is happening, right? Think about it. You are 
at the gas station, you put your credit card in, and all of a 
sudden you get a text on your phone, and it says, Congressman, 
are you really in Washington, D.C.?
    So that technology is used in the private sector every 
single day.
    One of my frustrations is, government seems to use this 
thing called NIST 863-2, I think. It was created in 2017. It is 
complicated. It is hard. Nobody in the private sector uses it.
    So the technology is out there every single day, and we all 
use it. It is just different in government.
    Mr. MORAN. And you are making the exact point that I was 
hoping would be brought out here, that it is easy. It is not 
that difficult. In fact, today I got one of those texts from my 
bank, asking me if a particular charge, an $85 charge, was, in 
fact, me using that charge. All I had to do was respond yes, 
and we are good to go.
    So I think there is an easier way, a more effective way for 
us to stop the fraud on the front end, and certainly it is 
going to benefit us on the back end because we have got a 
number of those cases that are out there, that we need to 
prosecute.
    But I am a little bit concerned, I will just tell you, 
about the return on investment, the cost-benefit analysis of 
doing that.
    What are the size of the claims, and I will give this to 
all three of the witnesses--Ms. Hui, Mr. Ficke, and Mr. 
Talcove--what is the average size of the claim that we are 
dealing with once we extend this statute of limitations if we 
are able to do that? And what is the cost for actually moving 
forward to prosecute those claims?
    Mr. TALCOVE. So what I would say is, I wouldn't look at the 
average size of the claims. I would look at the criminal 
groups. Some of the groups, the China group, APT41, Scattered 
Canary, you are talking literally hundreds of millions of 
dollars, but you need sophisticated law enforcement at the 
federal level, agencies like the Secret Service, who have been 
outstanding in this area.
    So it is worth it, but you have to get to these large fraud 
rings, primarily located overseas.
    Mr. MORAN. Yeah, I have got a financial crimes 
investigation center for the State of Texas located in my 
hometown of Tyler, and they chase after these groups that do 
this, and it is, it is the same groups moving about, but using 
the same technologies and the same methodology.
    Ms. Hui, you were talking about the stealing of personal 
identification information on the front end which gives them 
the gateway to steal and to create fraud. How are they doing 
that? How are they obtaining the personal identification 
information of American citizens?
    Ms. HUI. They just buy it off the dark web. I mean, with 
all these different data breaches that have happened, it is 
really kind of open season on the dark web and purchasing 
legitimate personally identifiable information, and therefore, 
you know, you can--at least in Missouri, you can get in perhaps 
and file a claim, but we do have flags within the application 
that then clue us into there is something not quite right, 
right?
    And the partnerships, both between government agencies and 
private sector, whether it is a vendor like Mr. Talcove's or 
association like Mr. Ficke's, it is really important that all 
the partnerships across the board work together and understand 
what may be some limitations but also challenges and 
opportunities.
    I think the biggest thing for us to realize, though, is 
that it is not a one-and-done situation, like, this, if you 
don't accept that update on your operating system, it is a 
paper weight, an expensive paper weight, right.
    So we have to adopt that mentality when it comes to 
protecting taxpayer dollars that are invested, whether it is a 
UI trust fund or any other beneficiary fund. We want to make 
sure the eligible people are getting the benefit.
    Mr. MORAN. Yeah, I agree.
    And, Mr. Chairman, I see my time is over. I didn't even get 
to my foreign adversary questions. I am part the China Select 
Committee, and I will tell you, it is really concerning to me 
that China is at the forefront of this, of stealing our 
personal information and then being part of obtaining these 
dollars from American taxpayers, using it against us. It is a 
national security issue in my opinion.
    Mr. Chairman, I yield back.
    Mr. LaHOOD. Thank you, Mr. Moran.
    I recognize Mr. Evans of Pennsylvania.
    Mr. EVANS. Thank you, Mr. Chairman and Ranking Member 
Davis. Today I want to discuss improving our unemployment 
insurance for the betterment.
    Unemployment insurance is a critical benefit for American 
workers. During the pandemic, unemployment insurance was a 
lifeline for Pennsylvanians in getting fast emergency 
assistance.
    I support increasing the funding for the State unemployment 
operations so that the workers can get more resources. They 
need help.
    I specifically want to discuss the important work that 
merit-based staff do the U.S. The best way that we can fight 
and prevent unemployment insurance fraud is to hire well-
trained merit-based staff.
    We know that certain States during the pandemic hired 
untrained contractors in staff roles which only led directly to 
more fraud in errors in the system. It is interesting that the 
Musk administration is trying to do the same thing right now, 
inside certain federal agencies, replacing employees with their 
own outside contractors.
    Right now, the last thing we need is someone unqualified 
scooping our constituents' private data, including our 
unemployment system.
    Mr. Meyenburg, I would like to ask you a question. In your 
testimony, you highlighted the importance of merit-based 
staffing in the UI system as opposed to States who are 
outsourcing work through untrained contractors.
    Mr. MEYENBURG. Yes. I believe that merit staff UI workers 
are key and ideal for helping prevent fraud because there is 
no, like, third-party system. It is, you know, State workers 
performing the work of the State and making sure that it stays 
within the State. It is not a third-party by any means.
    Mr. EVANS. Can you speak more about experience under merit-
based systems and the advantage it has in preventing fraud.
    Mr. MEYENBURG. Yes. When you, say, are a trainer, training 
folks that are unfamiliar with the system, after years of 
experience, you understand the complexities within the system 
and how to get from A to B to C in a timelier fashion.
    This allows you to conduct the training at a faster level 
but still maintain that high level of training that is required 
in order to do the position.
    Mr. EVANS. Can you please explain the level of job training 
that State worker agencies, employees, go through to provide 
the highly qualified servicing of the UI system and how this 
training differs from non-merit staffing training?
    Mr. MEYENBURG. I will say, during the pandemic, I received 
a minimal amount of training. It was enough to allow me to 
process claims.
    Now, with regular merit-based staff, they receive, at a 
minimum, 6 to 8 weeks of training, so that way, they are 
sufficient when they hit the floor and talk with claimants on 
the phones.
    Mr. EVANS. I want to, one, thank the chairman and thank the 
ranking member for the conduct leaders here.
    Mr. LaHOOD. Thank you. Appreciate it, Mr. Evans.
    Now, I will turn to Ms. Van Duyne who is a new member of 
our subcommittee. Welcome, Ms. Van Duyne, and you are 
recognized.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
    It is egregious and actually disheartening that in the wake 
of a global pandemic that disrupted the lives of millions--we 
all saw it--that forced thousands of small businesses to close 
their doors and robbed millions of Americans of their loved 
ones, bad actors and international criminal gangs that would 
seek to take advantage of good-faith efforts to help those 
negatively impacted by a once-in-a-lifetime tragedy.
    The GAO estimates that pandemic unemployment fraud may be 
as much as $135 billion, with some estimates even higher.
    And I think it is vital that Congress act so that 
prosecutors have the opportunity to track down and to hold 
these criminals accountable.
    But this committee also has a responsibility to ensure 
proper oversight in the administration of the UI program as a 
whole.
    Mr. Talcove, government officials, state employees, and 
contractors routinely participate in insider UI fraud, and 
states either ignore the problem, or they try to infer that 
embezzlement is not an issue with state employees.
    This problem is often overlooked by government officials as 
in Delaware, for example, where the Public Integrity Commission 
refused to investigate a Delaware Department of Labor employee 
who was embezzling money directly from the state's Unemployment 
Trust Fund.
    Can you please speak about your experience regarding 
insider UI fraud, and is it being taken seriously by government 
officials?
    Mr. TALCOVE. Yeah. I would say, of the $250 billion that 
was stolen from unemployment insurance, I would say 
approximately 10 percent, or $25 billion, was insiders.
    Ms. VAN DUYNE. Wow.
    Mr. TALCOVE. And what the insiders were doing was, they 
were, in some cases, selling their access to some of these same 
criminal groups that you mentioned, from China, Russia, 
Nigeria, and Romania, they were selling their access to gangs, 
or--which I think is worse--is, they were stealing from the 
very people that they were trying to serve.
    And you have to have oversight, and you have to have 
auditing in those programs. And it wasn't just in Delaware. I 
mean, I think it happened in 20-plus States.
    The other point that I would make is, unfortunately, it is 
still happening today, and it is just not in the unemployment 
insurance program. It is in the SNAP program, it is in 
virtually all the programs across the country.
    Now, last point, 99.9 percent of those workers, they are 
really good people. They show up every day and they do the 
right thing. It is a very small percent, but they give 
everybody a bad name.
    Ms. VAN DUYNE. And I appreciate that. I am also with Aaron 
Bean on the Small Business Committee, and this is my fifth year 
on that committee. And we have talked to small businesses who 
during this time have seen, you know, benefits that they should 
have received, not delivered, because that was given out to 
fraudsters and criminals, and the complete lack, during the 
last administration, of holding these people accountable or 
providing oversight.
    Ms. Hui, in your written testimony, you quoted a national 
study published in August of 2020, by the University of 
Chicago, entitled ``U.S. Unemployment Insurance Replacement 
Rates During the Pandemic.''
    You say that the median percentage of salary replacement 
unemployment during the pandemic was 145 percent. It was more 
than 200 percent for workers in the bottom 20 percent of the 
U.S. income spectrum and more than 300 percent for workers in 
the bottom 10 percent.
    This compares to the typical pre-CARES Act salary 
replacement rate of only 40 to 50 percent of lost income.
    In plain English, we are paying a lot of money to stay home 
rather than to go to work, and the disaster effects of this 
policy are still being felt today.
    And according to the U.S. Chamber of Commerce, workforce 
population remains below pre-pandemic levels, and we are 
missing 1.7 million Americans from the workforce, compared to 
February of 2020.
    Can you please speak on the disastrous effects of paying 
people unemployment benefits that were double or triple their 
salary before the COVID-19 pandemic and why this must never 
happen again during any type of economic downtown in the 
future?
    Ms. HUI. Certainly, you know, the American people are so 
generous in making sure that their fellow Americans get support 
during these times of emergencies, right? And so I think one of 
the things that we saw that was a major motivation for this 
type of fraud was the federal pandemic unemployment 
compensation plus-up.
    So most states have a regular weekly benefit amount. In 
Missouri, the maximum benefit that you can get is $320 a week, 
and, again, that is based on what your income was and what your 
credits are into the trust fund from the employers that have 
paid in.
    Now, when you then add $600 on top of that, you are 
definitely putting a huge multiplier on it, right? And during 
the 2008/2009 crisis, that plus-up actually was $25.
    So you would have your weekly benefit at the state level 
and then a $25 plus-up. But in 2020 we raised it to $600.
    And we needed a flat number. There were a lot of states 
that had legacy systems, and they could replace that $25 number 
with another flat number. But they couldn't prorate it.
    So that was one thing, but the choice of $600 absolutely 
was, like, the spark that really generated the attention of 
fraudsters to get in. You just had to have some successful hits 
to--in each state, you could have multiple states that you file 
in, just a few weeks, and you can get, you know, quite a few 
thousands of dollars. So, again----
    Ms. VAN DUYNE. My time is expired. I appreciate your 
answer.
    Ms. HUI. No problem.
    Ms. VAN DUYNE. I need to yield back, but thank you all very 
much for your testimony.
    Mr. LaHOOD. Thank you, Ms. Van Duyne.
    I now recognize Mr. Gomez of California.
    Mr. GOMEZ. Thank you, Mr. Chairman. Congratulations on 
being the new chairman of this committee.
    Let me be clear. Democrats and Republicans both say that 
there is no place for fraud. Democrats, it is because it 
undermines people's faith that government is actually doing the 
job that they are supposed to do. And I think that is a big 
deal.
    And also, I appreciate the gentleman from Florida 
mentioning that there was fraud in a Republican-run State, and 
it is not just the Democratic states have the problem.
    And also, one of the biggest ways that fraud happens is 
through weak security measures that leave people's personal 
information vulnerable.
    Mr. Meyenburg, what kind of training do State worker agency 
employees receive to ensure they are protecting personal 
information?
    Mr. MEYENBURG. Yes. It is at least 6 to 8 weeks' worth of 
training with a heavy emphasis on protecting identity 
information and all personally identifiable information.
    Mr. GOMEZ. Social Security numbers, birthdays----
    Mr. MEYENBURG. Yes.
    Mr. GOMEZ [continuing]. Accounts, anything that can say 
this person is associated with this--or this information is 
associated with that individual?
    Mr. MEYENBURG. Absolutely.
    Mr. GOMEZ. Yeah. And that is--you know, I want a bureaucrat 
to be just a pain in the ass. I want them to, like, Oh, u don't 
have the proper information? You know, reject it.
    Oh, you want to access this information? You need this 
form. You need this clearance. You need this kind of training. 
You don't? Too bad. You can't have it.
    But something that is going on now at the Federal level is 
when it comes to Secretary Bessent and President Trump. I don't 
think Secretary or President--or President Trump made sure Elon 
Musk got that kind of training, or any training for that matter 
before all of our personal data was turned over to him.
    I want my friends on the other side of the aisle to see 
this as a big, big issue, because if there is nothing there 
being a check, this is becoming the largest fraud and scam of 
our government when it comes to personal information in our 
history.
    This is at a time when people are struggling with 
skyrocketing rent, when grocery prices are through the roof, 
and when childcare costs are out of control.
    What are Donald Trump and Secretary Bessent doing? They 
gave Elon Musk, an unelected, unconfirmed, untrained, special, 
quote/unquote, special government employee, and the rest of his 
tech bros, access to every Americans' sensitive and personal 
financial information.
    They have access to our bank accounts, to your bank 
accounts. If you filed taxes electronically, you paid your 
taxes, you received payments, they have access to all your 
accounts. You know, we need to do something to address that.
    And it doesn't matter where this--like, they have access to 
everybody's information, if you live in Indiana, Illinois, 
Ohio, California, and that is risking a massive personal data 
leak that can lead to identity theft on an unprecedented scale.
    I had my identity stolen so I know how painful it is to 
have to prove who you are and to get your money back and to 
make sure that you are not going into debt.
    Improper disclosure of taxpayer information is considered a 
felony under section 6103, punishable up to 5 years in prison, 
as well as $5,000 fine, and that is just for one instance of 
improper tax disclosure.
    What is the punishment for every single American? That is 
the scale of this potential fraud and breach of information.
    Is Secretary Bessent's careless disregard for most 
sensitive personal information worthy of Articles of 
Impeachment? I don't know yet because they refuse to hand over 
any information of what occurred in the last several days.
    But this is a serious, unprecedented situation. Secretary 
Bessent needs to come before this committee and answer 
questions on violating the people's trust but also when it 
comes to their personal information.
    We can't stand for it. Fraud is fraud, no matter who does 
it. Is it a public employee? Is it a criminal enterprise? Or 
even if it is the Secretary of the Treasury himself, we need to 
stop it, and we need the answers now.
    With that, I yield back.
    Mr. LaHOOD. Thank you, Mr. Gomez.
    I now recognize the gentleman from northwest Iowa, Mr. 
Feenstra.
    Mr. FEENSTRA. Thank you, Chairman, and I want to thank the 
witnesses for being here. I enjoyed reading your testimony and 
also listening to it.
    I just want to remind everybody that all bureaucrats are 
not elected. This is just common sense.
    We are here to create solutions. We are here to understand 
the problems and then create solutions, and, Mr. Ficke, that is 
what I want to talk about.
    I was impressed by reading your testimony. I know you are 
not a law enforcement officer, but you have 30 years of 
experience in the financial services industry. And generally 
unemployment insurance is prosecuted using federal banking 
laws, including mail fraud, wire fraud, conspiracy, aggravated 
identity--identity theft, money laundering.
    So considering your time in financial services and working 
with the State of Ohio, are these banking offenses the right 
charges for individuals with unemployment insurance fraud? What 
is your thoughts there?
    Mr. FICKE. Well, first of all, thank you for your question. 
You know, in my previous testimony, I have actually stated a 
few times that I think it is very important to look at 
collaboration of data and information between--between what is 
available in the private sector and what is available in the 
benefits applications and submissions and those types of things 
that are going with it.
    I think the prosecution of those criminals is extremely 
important. We have talked about the number of cases. I think it 
is really important to focus on the magnitude of individual 
cases and looking at the impact that those can have on the 
overall collection and recovery of those funds.
    Mr. FEENSTRA. Do you think we should figure out better 
ways, though? Instead of using the, you know, the financial 
services industry, is there a better way to prosecute these 
claims under something different than banking regulations?
    Mr. FICKE. Well, I think in my experience, especially with 
the Attorney General's offices and the collaboration that 
happened in Ohio, a lot of it was driven and supported by the 
amount of information-sharing that happened between.
    And as Mr. Talcove has pointed out a few times, this is not 
limited to unemployment insurance. This goes across SNAP and 
multiple other programs.
    I think it is important, when we looked at the guidelines 
from a private supporter of our State, when we looked at the 
guidelines, what we were able to do, it was our role, as the 
agency's role to actually identify----
    Mr. FEENSTRA. Yep.
    Mr. FICKE [continuing]. That a case had to be prosecuted 
but then to turn that over to the appropriate organizations at 
that time.
    Mr. FEENSTRA. So you are in the State of Ohio. I was in the 
State of Iowa. I was a state senator, head chair of Ways and 
Means at that point. And really the states are the ones that 
handle all the unemployment insurance issues, and here is the 
situation.
    Obviously, through COVID we gave a lot of dollars and stuff 
like that. How can us, as the states, what can the federal 
government do to help the states with fraud issues?
    And then I think moving forward and saying, all right, what 
happens if we have a situation like this again? How can we be 
proactive in trying to find solutions to mitigate some of these 
issues?
    Mr. FICKE. Well, thank you for the question. I think the 
first thing that comes to mind for me is sustainability. There 
have been very strong measures put in place during the crisis. 
The support to actually encourage and enable the states to 
actually keep those in place, I think, are going to be a really 
important part in the overall success.
    Another one is--and I say this a few times--is 
collaboration, not only from a data perspective but best 
practices that have taken place in multiple private sector 
organizations.
    Mr. FEENSTRA. And using each state. So Ohio might have a 
great way of doing it. I mean, we should be collaborative 
across State lines, figuring out what are the best practices.
    Mr. FICKE. Yeah. A very good example of that is the reality 
that one false account in a financial institution could be used 
across multiple states----
    Mr. FEENSTRA. Yeah.
    Mr. FICKE [continuing]. And today the individual state has 
a harder time recognizing some of those trends.
    Mr. FEENSTRA. Mr. Talcove, can you talk about that a little 
bit, making sure that, moving forward, our state systems are 
prepared for these unemployment spikes, and, you know, this 
stealing of billions of dollars, and what the States can do 
collaboratively with the federal government?
    Mr. TALCOVE. Yeah. So I mean, I want to make the first 
point. I was out in California this week, L.A., and the same 
criminal groups----
    Mr. FEENSTRA. I heard that, yes.
    Mr. TALCOVE [continuing]. That stole from the unemployment 
insurance----
    Mr. FEENSTRA. Are doing the same thing with fire.
    Mr. TALCOVE [continuing]. Are now stealing from the 
disaster unemployment----
    Mr. FEENSTRA. So that should be a clue to us, right?
    Mr. TALCOVE. Right. We haven't fixed it----
    Mr. FEENSTRA. Yes.
    Mr. TALCOVE [continuing]. Right? And it really starts with 
those three things that I talked about, right? It is the front-
end identity verification----
    Mr. FEENSTRA. Yep.
    Mr. TALCOVE [continuing]. It is no self-reporting, and it 
is managing that back-end population. And it is frustrating 
because there are people in California who need those benefits 
that are going to wake up one day----
    Mr. FEENSTRA. And not have them, yep.
    Mr. TALCOVE [continuing]. And they are going to see that 
someone put a loan against their house because they got an SBA 
loan for a half a million dollars.
    Mr. FEENSTRA. Great point. My time is up, but thank you. We 
are in this together. As states and as the federal government, 
we are in this together to try to figure out solutions.
    Thank you, Chairman. I yield back.
    Mr. LaHOOD. Thank you, Mr. Feenstra.
    I recognize Mr. Horsford of Nevada.
    Mr. HORSFORD. Thank you, Chairman LaHood and to Ranking 
Member Davis for holding this hearing and for the courtesy of 
allowing Members to wave on.
    I would also like to just talk about the importance, as we 
are, about rooting out waste, fraud, and abuse, and protecting 
American taxpayers, but also, we really need to provide some 
answers to our constituents based on the immediate issue that 
they are facing.
    The largest illegal data breach is happening right now in 
U.S. history, at this administration's direction, and we still 
don't know who is in charge or what they are up to, where this 
information is being used or how widespread it is.
    So, I really wish that this was the focus of today's 
hearing since this is what the majority of my constituents are 
calling me about today.
    I would also like to talk about what we are doing to 
prevent Elon Musk, and the hackers who are involved with 
potentially slowing down people's tax refunds, their Federal 
payments, and their hard-earned benefits. That is what people 
want to know.
    Less than a year ago, Chairman Smith introduced legislation 
meant to increase the maximum penalty for the unauthorized 
disclosure of returns and return information, and I agree with 
Chairman Smith when he stated that Congress must not tolerate 
the theft and leak of taxpayer information.
    So why aren't we doing something about it, since we have 
the largest illegal data breach in U.S. history taking place 
right now under this administration's watch?
    Now, turning back to the issue of this hearing, I actually 
introduced, back in August of 2022, the GUARD Act, the 
Guaranteeing Unemployment Assistance and Reducing Deception 
Act.
    My bill enables aggressive action to recover pandemic 
unemployment benefits that were paid to criminal cartels by 
supporting prosecution of ring leaders and helping victims of 
fraud.
    The bill would also seek to provide workers who were 
victims of identity theft with help to quickly resolve any 
remaining issues.
    My district has no shortage of identity theft cases. That 
is why I am concerned with this illegal data breach that is 
happening right now.
    But between 2020 and 2023, we saw a 63 percent increase in 
the Metro Las Vegas area alone of identity theft cases. I know 
this issue because my constituents know this issue.
    So, I was pleased to see that we would be addressing a 
recommendation by the Department of Labor Inspector General to 
extend the statute of limitations for pandemic unemployment 
insurance fraud.
    Unfortunately, last week, President Trump fired that IG, 
the one who made the recommendation that we are all discussing 
in this hearing, the one who makes this hearing relevant.
    So, now the IG is gone, the majority is holding this 
hearing anyway with two contractors, but not one single public 
employee who investigates and prosecutes fraud.
    My constituents want to know what we are doing about these 
issues, Mr. Chairman. So I suggest that as a committee, we 
focus on those priorities and to make sure that they are being 
addressed.
    If I could go to the witness, the minority witness, to 
understand, would providing measures like the Guaranteeing 
Unemployment Assistance and Reducing Deception Act, the GUARD 
Act, help address protecting the victims of fraud from identity 
theft?
    Mr. MEYENBURG. I don't know all of the details that go in 
with the GUARD Act, but I do think that there is--there is 
always more we can do to protect not only ourselves, our loved 
ones, our neighbors, our families, all of that. So I do believe 
there is more that we can do, absolutely.
    Mr. HORSFORD. Do you agree that having an Inspector General 
who oversees protecting taxpayers is an important function?
    Mr. MEYENBURG. Absolutely.
    Mr. HORSFORD. And that person being fired is preventing 
that protection being in place at this time?
    Mr. MEYENBURG. Absolutely.
    Mr. HORSFORD. So, Mr. Chairman, why aren't we addressing 
that today?
    I yield back.
    Mr. LaHOOD. Thank you, Mr. Horsford, for your questions.
    That concludes our questions from committee members here 
today. Let me just, again, acknowledge your statements today, 
your testimony today, answering our questions.
    We appreciate your expertise, your experiences, your 
suggestions, very, very helpful here today, and to lay the 
context for what we need to do between now and March 27th, 
which is to extend the statute of limitations on this, for 
taxpayers and for this particular program.
    And so I look forward to working collaboratively, look 
forward to working in a bipartisan way with my colleagues to 
get that done on behalf of the taxpayers of the United States.
    So with that, I will advise members that they have two 
weeks to submit written questions to be answered later in 
writing. Those questions and your answers will be made part of 
the formal record.
    With that, the committee stands adjourned. Thank you.
    [Whereupon, at 3:48 p.m., the subcommittee was adjourned.]

      

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