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McCarthy, Steel Lead Bipartisan Effort to Recover Billions in Pandemic Unemployment Fraud

Jun 29, 2021
Press Release


Today Representatives Kevin McCarthy (CA-23) and Michelle Steel (CA-48) announced the introduction of H.R. 4190, the Pandemic Unemployment Assistance Fraud Protection Act. This bipartisan bill, which was also sponsored by Representative Josh Harder (CA-10), would require states to recover fraudulent benefits payments, prevent future fraud, and support the victims of unemployment benefit fraud and identity theft. The intention of the bill is to address the billions of dollars in fraudulent Pandemic Unemployment Assistance (PUA) benefits payments that have been stolen from American taxpayers.

Congressman McCarthy issued the following statement:

“Last year, Congress acted in a bipartisan manner to provide emergency unemployment benefits to Americans who lost their jobs because of the pandemic and various state shut-down orders. Unfortunately, there has been an outrageous amount of fraudulent unemployment assistance distributed throughout the country, with California’s Employment Development Department estimated to have paid out up to $31 billion in Pandemic Unemployment Assistance (PUA) benefits to fraudulent entities or ineligible individuals. Every dollar distributed fraudulently is a disservice to the millions of Californians who have become unemployed due to the pandemic and have struggled to receive aid while attempting to return to the workforce.

“I am proud to join Rep. Michelle Steel’s Pandemic Unemployment Assistance Fraud Protection Act as an original cosponsor. This bill creates an incentive structure to encourage states to recover fraudulent PUA payments, requires that states revamp and improve fraud-prevention efforts in the PUA program, and includes necessary protections for victims of unemployment benefits fraud. My constituents, Californians, and Americans who actually need unemployment assistance should be the ones to receive it, not criminals. I look forward to continue working with Michelle to hold California and other states that wasted taxpayer dollars accountable for recovering those funds.”

Congresswoman Steel issued the following statement:

“We should all be on the side of good governance and protection of taxpayer money, and the billions in fraud paid out over the last year is an embarrassment. While more than 1 million people in California waited for benefits that never came, the state paid out $11.4 billion to fraudsters and criminals. This bipartisan legislation ensures transparency and accountability and protects your taxpayer money from falling into the wrong hands.”

 

Background

  • In February, Reps. McCarthy and Steel led the California delegation in a letter to the Newsom Administration expressing outrage regarding fraudulent COVID-related unemployment benefits payments administered by the State of California, which was uncovered in a January 2021 audit by the California State Auditor.
     

The Pandemic Unemployment Assistance Fraud Protection Act would:

1. Incentivize the recovery of fraudulent PUA payments by requiring states to:

  • Submit plans to recover fraudulent PUA benefits payments to the Department of Labor;
  • Develop state anti-fraud task forces;
  • Report to Congress on fraud recovery plans and developments; and
  • Recoup at least 75% of any fraudulent PUA payments made by the state by December 31, 2022 or face certain penalties.

2. Prevent future fraud by:

  • Requiring states to cross-reference PUA benefits claimants’ information with federal prison records, state prison records, and E-Verify; and
  • Applying maximum fines and prison penalties, under federal mail and wire fraud statutes, for those knowingly seeking PUA benefits fraudulently with a falsified or stolen identity.

3. Support victims of identity theft by:

  • Requiring states to establish a fraud hotline for residents who believe that they are victims of unemployment-related fraud, maintain this data, and transfer it to the U.S. Internal Revenue Service; and
  • If an individual receives a 1099-G form incorrectly and files a correction claim with their state, the individual must receive their federal tax refund payment in full while their claim is adjudicated.