The Office of the Inspector General (OIG) of the Department of Labor (DOL) on Tuesday warned that potentially thousands of fraudsters who stole pandemic relief funds could “escape justice” unless Congress acts to extend the statute of limitations on pandemic-related financial crimes.
The OIG faced an “unprecedented” surge in cases related to unemployment insurance (UI) fraud amid the government’s rapid rollout of COVID-19 relief, opening 200,000 such investigations since April 1, 2020 compared to the roughly 100 per year the agency usually opened, according to the report. Although charges have been brought against more than 1,300 individuals for the theft of tens of billions of dollars in aid, more than 157,000 of the investigations remain ongoing, many of which the agency warned could be shut down prematurely if Congress does not authorize an extension of the government’s deadline to file charges.
“Currently, the statute of limitations for many pandemic-related UI fraud cases will begin to expire in 2025 as the statutes most often used to prosecute UI fraud have 5-year limitations,” wrote Inspector General Larry Turner. “We are concerned that, unless Congress acts to extend the statute of limitations for fraud associated with pandemic-related UI programs, many groups and individuals that have defrauded the UI program may escape justice. The expansion of the statute of limitations would provide investigators and prosecutors time to pursue and hold accountable those who defrauded the UI program and victimized the American people during the pandemic.”
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The OIG estimated that “improper payments” accounted for more than $191 billion, roughly 21.52% of the $872.5 billion in pandemic-era unemployment benefits that were paid out. Fraudulent payments accounted for at least $76 billion, nearly 40%, of these improper payments and roughly 8.57% of all pandemic-related relief spending, the agency estimated.
The agency also reported that it was “particularly concerned” by the practice of deploying unemployment benefits in response to natural disasters and economic downturns, citing a lack of preparedness by states in deploying resources. The rapid deployment of funds by overwhelmed state UI systems — which were handling 10 times the applications per week as they were pre-pandemic — led to several “shortcomings” and “programmatic weaknesses,” and to massive delays for legitimate beneficiaries to receive funds while exposing opportunities for fraudsters, according to the OIG.
The OIG cited a lack of access to DOL UI data and insufficient funding as two other “significant challenges” the agency faced in resolving its outstanding cases, alongside the upcoming expiration of the statute of limitations.