Work & Welfare Subcommittee Hearing on Reclaiming “Forgotten” Fraudulent Pandemic Unemployment Funds Frozen by Banks

Benefits Fraud and Improper PaymentsHouse Ways and Means Subcommittee on Work and Welfare · March 5, 2026 · 119th Congress
The Ways and Means Subcommittee on Work and Welfare examined findings from two Department of Labor Inspector General memos showing nearly $1 billion in pandemic-era unemployment funds sitting unclaimed or frozen at financial institutions, much of it tied to potential fraud. Begins at ▶ 0:13:53
Transcript
Highlights

Title

Recovering Nearly $1 Billion in Frozen Pandemic Unemployment Funds Held by Banks

Purpose

The Ways and Means Subcommittee on Work and Welfare examined findings from two Department of Labor Inspector General memos showing nearly $1 billion in pandemic-era unemployment funds sitting unclaimed or frozen at financial institutions, much of it tied to potential fraud. Lawmakers and witnesses discussed how to recover these funds before they are transferred to state unclaimed-property offices, and revisited the stalled Pandemic Unemployment Fraud Enforcement Act (HR 1156), which would extend the fraud prosecution statute of limitations from five to ten years. The hearing also touched on state UI system funding, data security, and identity-theft victim assistance. Begins at▶ 0:13:53

Who spoke

• Chairman Darin LaHood (R-IL)▶ 0:13:53: Opened by citing GAO's estimate of $100–135 billion lost to pandemic unemployment fraud▶ 0:14:21 and detailed the IG findings of nearly $1 billion held by two financial institutions▶ 0:16:02; criticized the Biden administration for inaction on flagged claims and blanket waivers of "non-fraud" overpayments▶ 0:16:52▶ 0:17:49; later questioned witnesses on the statute-of-limitations extension and civil forfeiture tools▶ 0:46:16.

• Ranking Member Danny Davis (D-IL)▶ 0:20:31: Argued the subcommittee's focus should be paying earned benefits accurately and preventing future fraud, not just recovery▶ 0:20:31; blamed underfunding of UI administration and the end of ARPA grants for weakened fraud prevention▶ 0:21:54▶ 0:22:55; later asked about the IG office's 20% staffing cut in FY2023▶ 0:54:49 and raised a question about the U.S. repatriation program for Americans in the Middle East▶ 0:37:27.

• Inspector General Anthony D'Esposito, DOL OIG▶ 0:24:22: Testified that DOL dispersed over $880 billion in pandemic UI benefits, with at least $190 billion improperly paid including $76 billion lost to fraud▶ 0:25:56; said OIG investigations produced 2,300 people charged, 1,800 convictions, and $2.2 billion in monetary accomplishments▶ 0:26:54; detailed over $1 billion in unclaimed UI funds across 21 states, with $912 million linked to potential fraud▶ 0:27:50; supported extending the statute of limitations and asked Congress to grant OIG asset-forfeiture authority▶ 0:47:22▶ 0:48:09; denied campaigning for New York's 4th congressional district when questioned by Rep. Chu and Rep. Horsford▶ 1:05:58▶ 1:36:55.

• Linda Miller, President, Program Integrity Alliance▶ 0:30:34: Called pandemic UI fraud "the single largest theft of American taxpayer" money in history, with close to half of funds stolen▶ 0:31:30; cited a single botnet from a Chinese national linked to $6 billion in fraud▶ 0:32:02; said banks were fined a combined quarter-billion dollars for freezing accounts too cautiously▶ 0:33:56; urged Congress to create a statutory framework and safe harbor for banks, similar to the UK's national pandemic fraud coordinator▶ 0:34:53▶ 0:35:23.

• Dan Williams, Founder, Origin Payments▶ 0:35:53: Explained that prepaid-card funds are concentrated at a few financial institutions, making recovery more feasible than other fraud types▶ 0:37:50; recommended indemnifying banks and creating data-sharing pathways between banks and state agencies▶ 0:39:22; warned that inaction will cause remaining funds to escheat to state unclaimed property, complicating recovery▶ 0:39:47.

• Michele Evermore, Senior Fellow, National Academy of Social Insurance▶ 0:41:08: Cautioned that some card balances remain for legitimate reasons and that recovery ROI declines as cases age, suggesting more focus on detection/prevention▶ 0:42:06; cited a 34-state survey finding fraud has declined but remains a moving target, with AI cited as a growing threat▶ 0:42:33▶ 0:43:53; flagged that DOGE accessed personally identifiable UI claim data and DOJ shared Social Security data on an unsecured server▶ 0:45:18; later clarified under pointed questioning from Rep. Miller that she does believe frozen funds are "worth examining"▶ 1:10:20.

• Rep. Mike Carey (R-OH)▶ 0:57:04: Highlighted Ohio's recovery of over $400 million from financial institutions and praised Gov. DeWine's efforts▶ 0:57:35; asked D'Esposito about the origin of the subpoenas behind the IG memos, learning one debit card alone held over $85,000▶ 0:58:26▶ 0:59:16.

• Rep. Judy Chu (D-CA)▶ 1:02:16: Said Democrats support fraud recovery but opposed HR 1156 because it "punished innocent workers for state errors" and didn't address the firing of the prior inspector general▶ 1:02:39; pressed D'Esposito on whether he was running for Congress in NY-4, citing a Newsday report▶ 1:05:27.

• Rep. Max Miller (R-OH)▶ 1:07:36: Pressed Evermore repeatedly on whether recovering fraud-linked funds is worth pursuing, characterizing her initial answers as evasive▶ 1:08:37▶ 1:11:42; cited a lawsuit in Ohio over retroactive pandemic fund disbursement▶ 1:09:52.

• Rep. Gwen Moore (D-WI)▶ 1:12:49: Defended Evermore's testimony, noting concern about limited resources and Wisconsin's $29 million clawback in federal funding for UI fraud prevention▶ 1:13:16; asked D'Esposito and Evermore whether the system is prepared for another recession▶ 1:16:11; entered a Center on Budget and Policy Priorities report into the record▶ 1:18:04.

• Rep. Randy Feenstra (R-IA)▶ 1:18:33: Said the Biden administration pressured regulators to fine banks for freezing suspicious accounts too slowly▶ 1:19:19; asked D'Esposito what more Congress could do, including creating task forces and IG Act amendments for asset forfeiture▶ 1:20:15.

• Rep. Dwight Evans (D-PA)▶ 1:23:49: Asked Evermore about DOGE's access to worker data and risks of sharing it with IRS/SSA▶ 1:24:18; explored the difference between overpayment (mostly claimant error in work-search and income reporting) versus fraud▶ 1:24:47▶ 1:25:09.

• Rep. Rudy Yakym (R-IN)▶ 1:27:48: Cited GAO's $135 billion fraud estimate and private-sector estimates up to $400 billion▶ 1:28:11; asked Williams about hurdles banks face returning funds and D'Esposito about the $30 billion in improperly waived overpayments tied to Biden-era guidance▶ 1:31:16.

• Rep. Steven Horsford (D-NV)▶ 1:32:32: Noted Nevada has the third-highest unemployment rate in the country▶ 1:32:56 and referenced his GUARD Act to modernize state UI systems▶ 1:33:55; asked Evermore about identity-theft victim assistance and entered a Connecticut DOL letter into the record▶ 1:36:31; also asked D'Esposito to confirm on the record he was not campaigning for Congress▶ 1:36:55.

Key moments

• D'Esposito testified that more than $1 billion in taxpayer-funded UI benefits remain unclaimed or unused across 21 states, with $912 million linked to potential fraud, and that $472 million of that had already been flagged as suspicious to DOL in 2022 with no action taken▶ 0:27:50▶ 0:28:36.

• LaHood's opening summary: Financial institution #1 holds $523 million across 2.7 million debit cards; institution #2 holds $197 million across 774,000 cards; another $192 million has already moved to state unclaimed property▶ 0:16:02▶ 0:16:29.

• D'Esposito said only 6 billion, or 5%, of fraudulent pandemic UI payments have been recovered to date, and warned criminals are deliberately waiting for the statute of limitations to expire before moving stolen funds▶ 0:17:49▶ 0:47:48.

• Miller cited a single botnet developed by a Chinese national linked to $6 billion in pandemic UI fraud, and said two major banks were fined a combined quarter-billion dollars for freezing suspicious accounts too aggressively▶ 0:31:59▶ 0:33:56.

• Sharp exchange between Rep. Max Miller and Michele Evermore over whether pursuing frozen-fund recovery is "worth it," with Miller repeatedly demanding yes/no answers and accusing her of "spin" before she clarified it is "an area worth examining"▶ 1:08:37.

• Rep. Chu confronted IG D'Esposito with a Newsday report that he is planning to run for New York's 4th congressional district; he stated he was not campaigning, a claim Rep. Horsford also asked him to confirm later in the hearing▶ 1:05:58▶ 1:36:55.

• Evermore disclosed that DOGE accessed personally identifiable UI claims data and that DOJ shared Social Security data on an unsecured server, raising data-security concerns▶ 0:45:18▶ 1:26:07.

• D'Esposito said DOL guidance under the Biden administration allowing "blanket categorical waivers" of non-fraud overpayments resulted in more than $30 billion in improperly waived funds▶ 0:17:49▶ 1:31:16.

• Williams explained prepaid-card funds are unusually recoverable because they are concentrated at a small number of card-issuing financial institutions, unlike funds dispersed via direct deposit▶ 0:37:39▶ 0:51:26.

• Rep. Davis noted this is the subcommittee's fifth hearing on pandemic UI fraud and called for a future hearing focused specifically on strengthening state unemployment systems▶ 0:22:55.

Metadata

CommitteeHouse Ways and Means Subcommittee on Work and Welfare
Chamber / CongressHouse · 119th Congress
DateMarch 5, 2026
TypeHearing
Witnesses
Ms. Linda Miller — President, Program Integrity Alliance
Mr. Dan Williams — Founder, Origin Payments
Michele Evermore — Senior Fellow, National Academy of Social Insurance
The Honorable Anthony D’Esposito — Inspector General, U.S. Department of Labor
Videoyoutube
Transcript213 caption blocks · 13,568 words · 1:39:32 runtime
EventCongress.gov 119024