The congressional committee investigating California’s unemployment system says it didn’t get an adequate response from the state about its efforts to combat massive unemployment fraud during the COVID-19 pandemic.
Committee Chairman James Comer, R-Ky., told The Sacramento Bee Wednesday, “We just want to know exactly the extent of the fraud there and what measures they’ve taken to prevent this in the future.”
Comer wrote to state Employment Development Department Director Nancy Farias on Jan. 13 asking that she turn over several documents and communications related to the investigation by a Jan. 27 deadline.
Farias sent Comer a four-page letter in response. It detailed the extent of suspected fraud in the unemployment system during the COVID-19 pandemic, and explained the state’s aggressive efforts to combat the schemes and prosecute the perpetrators. The letter included footnotes with the sources of its data.
Comer said Wednesday he wanted more specifics. He has been seeking what he termed “all documents and communications between state EDD employees and U.S. Department of Labor employees.”
He also wants documents and communications “related to efforts to prevent payment of fraudulent unemployment claims,” as well as efforts to recoup improperly paid claims and material that should show whether that money was still in this country or transferred elsewhere.
EDD stated Wednesday night that it “transparently provided detailed information about the activities of fraudsters in 2020, the steps California took to stop them, and the amount of estimated fraud, and our response letter describes those efforts in detail. We’ve transparently and publicly reported tremendous detail throughout the pandemic about our response to fraud.”
Comer Wednesday chaired a hearing by the House Committee on Oversight and Accountability to examine COVID-19 pandemic money abuses.
“We must identify where this money went, how much ended up in the hands of fraudsters or ineligible participants, and what should be done to ensure it never happens again,” he said.
The hearing is part of a broad effort by Republicans, who took control of the House last month for the first time in four years, to spotlight what GOP lawmakers say is a Democratic habit of overspending and failing to keep a close eye on how money is spent.
Democrats argued that the COVID-era relief programs helped millions of people hit hard by the sudden economic downturn.
Comer told The Bee that California, New York and Pennsylvania “were the three worst offenders, according to our data.”
It’s difficult to say who was most responsible for the explosion in unemployment fraud in California.
While the federal Labor Department’s independent inspector general criticized some of the federal response to the unemployment benefit explosion in 2020, the California state auditor in January 2021 criticized some of the state’s response.
The fraud problem is centered on the Pandemic Unemployment Assistance program, created by Washington weeks after the COVID-19 pandemic all but shut down public life. It provided unemployment benefits to people who traditionally could not qualify for such aid, such as self-employed people.
While Washington and Sacramento wanted to get the money out quickly, prisoners, crime syndicates and others found the program ripe for fraud.
State officials have estimated about $20 billion was improperly paid, most of it from claims to the PUA program, which didn’t have many of the basic safeguards of California’s regular state unemployment insurance programs.
While that regular jobless insurance is a joint federal-state program, both federal and state regulations govern the program. With PUA, states had to create and launch the federally funded program and follow requirements set by the federal government.
As the fraud escalated, Democrats insisted they were not blind to what was happening, and they reminded the committee who was in charge at the White House.
“It’s important to know mistakes in emergencies are going to happen. It’s also important to know who is accountable ... who was actually president when the pandemic started?” asked Rep. Robert Garcia, D-Long Beach.
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