WASHINGTON, D.C. - Ways and Means Work & Welfare Subcommittee Chairman Darin LaHood (IL-16) delivered an opening statement at a hearing on reclaiming "forgotten" fraudulent pandemic unemployment insurance benefits frozen by banks:

As delivered.

"I want to thank our witnesses for traveling here and for your commitment to helping us understand this important issue.

"Today's hearing is titled, 'Reclaiming Forgotten Pandemic Unemployment Funds Frozen by Banks,' and will examine new fraud alert memos issued by the Labor Department Inspector General.

"GAO has estimated between $100 and $135 billion in pandemic unemployment funds that were lost to foreign and domestic fraudsters and international crime rings.

"The Ways and Means Committee has conducted considerable oversight of fraud exposed during the COVID-19 pandemic - to find the causes of fraud and also how to find ways to prevent it - and to recover what we can for American taxpayers.

"Almost six years after the CARES Act was passed, a new investigation has found nearly $1 billion in 'forgotten' taxpayer funds held by banks and tied to pandemic unemployment fraud.

"These funds were identified on thousands of prepaid debit cards issued by states to distribute benefits during the pandemic. Many of those cards were flagged for potential fraud and essentially left ignored, unreconciled, and in some cases, transferred to state unclaimed property for inactivity.

• The good news is, those funds did not get into the hands of fraudsters.

• The bad news is, instead of rightfully being recovered and returned to the Federal Treasury, the funds are now being transferred to state coffers as result of the inaction.

"I want to talk a little bit about these findings. We've done a summary table that can be seen on the screens so everyone can get a clear picture.

"The table shown to my left and right shows investigation findings from subpoenas of two financial institutions that have contracts with multiple state workforce agencies to issue debit cards.

"According to the reports issued by the Inspector General on January 30 and February 11 of this year:

• Financial Institution 1 is holding $523 million in potentially fraudulent pandemic unemployment funds, representing 2.7 million debit cards.

• Financial Institution 2 is holding $197 million, representing 774,000 debit cards.

• Another $192 million was identified by those financial institutions as having been transferred to state unclaimed property.

"In total, nearly $1 billion was found, with an estimated 78 percent of the funds identified as federal.

"I submit these two Department of Labor Inspector General memos for the record.

"I also have concerns about findings that nearly half of the unemployment claims associated with these funds, was previously flagged by the Inspector General, in 2022, as suspicious and potentially fraudulent, under the Biden Administration.

"Claims identified as potential fraud were associated with individuals with Social Security numbers filed in multiple states, of deceased persons, and federal prisoners.

"Despite being alerted to these warning flags in 2022, the Biden Administration and many states took no action.

"In an effort to 'move forward' from the pandemic, the Biden Administration largely abandoned efforts to go after fraud and issued guidance that made it easy for states to sweep fraud under the rug.

"This includes guidance in 2022 to allow states to issue blanket, categorical waivers of 'non-fraud' overpayments. At the request of this Committee, the Inspector General conducted an investigation out of concerns that suspicious claims would be waived.

"Their report found that the authority to waive nonfraudulent overpayments led to millions in improperly waived funds.

"It should be no surprise in this environment that according to DOL, only $6 billion, or five percent of the fraudulent UI payments made during the pandemic have been recovered.

"It may be true that much of the funds lost during the pandemic - especially those lost to international cybercrime networks that went overseas - are unrecoverable.

"But these funds held by banks are identifiable, recoverable, and must be returned rightfully to taxpayers. It is not too late to recover this money, and we must act to do so.

"I hope that this will be something we can address on a bipartisan basis. However, I must admit my frustration that we have not been able to tackle this issue of pandemic unemployment fraud together.

"Surely, Democrats would want to recover as much of these lost funds as possible.

"But, so far, my Democrat friends on this Committee have opposed efforts to recover pandemic fraud.

"Last year, at about this same time, this Subcommittee held a hearing to call attention to the fact that the statute of limitations for prosecuting pandemic unemployment fraud started to expire in March of 2025.

"We subsequently marked-up legislation to extend the statute of limitations from 5 to 10 years to give federal law enforcement more time to go after fraudsters.

"Every Democrat on this Committee voted against that bill.

"The 'Pandemic Unemployment Fraud Enforcement Act,' subsequently passed the House with large bipartisan support, with 81 Democrats voting for the bill.

"These new findings from the Inspector General underscore the need for the Senate to pass that bill so it can be signed into law.

"I hope that this time around we can find some common ground. I invite my Democrat colleagues to work with us to find a path forward to make sure every dollar in these banks is examined, and that those attributed to fraud are recovered. We can still recover these taxpayer dollars.

"I want to again thank our witnesses for being here today and I look forward to your testimony."