Washington

President Donald Trump’s administration has “neglected” state efforts to crack down on domestic and foreign criminals who fraudulently collect billions of dollars from overburdened unemployment systems, California’s employment development director said Monday.

Nancy Farias recoiled violently statements by representative James Comer, R-Ky., that California has done a poor job of cracking down on unemployment fraud.

“We object to the chairman’s mischaracterization of California’s response to the attacks on unemployment insurance and the chairman’s failure to acknowledge the Trump administration’s inadequate response,” Farias wrote in a four-page letter to Comer.

Comer is chairman of the House Oversight and Accountability Committee, which is investigating California’s unemployment system. The committee plans to hold hearings Wednesday on California’s actions, as well as other states.

Farias argued that it is President Donald Trump’s administration that has “left neglected government user interface systems that effectively fight domestic and international criminal enterprises on their own.”

Their fight is shaping up to be a very partisan fight. Republicans took control of the House of Representatives earlier this month, and Comer has promised to examine COVID-related spending.

“I believe with all my heart that we have an obligation to support the American taxpayer. That’s something that’s been left aside for the last few years in Congress,” he said Monday.

It is not yet clear who is most to blame for the initially slow response to fraud and the chaos that occurred in the system during the outbreak of the 2020 COVID pandemic. California’s state auditor has been critical of the state’s response, and the independent federal Labor Department has been critical of some federal measures.

Tormented by fraud

California, like other states, was suddenly inundated with jobless claims when the economy went into freefall in the spring of 2020, when restrictions brought on by COVID virtually brought public activity to a halt.

Washington has created a program to help with unemployment during the pandemic. It provided weekly unemployment benefits to people who traditionally could not qualify for unemployment insurance, such as self-employed workers.

Unemployment agencies across the country have made it their priority to get help quickly to those in need. But in doing so, they exposed their systems to massive fraud.

California officials estimate that about $20 billion was improperly paid, including some to inmates, organized crime and others. The vast majority of such frauds occurred in the new country, which is funded by the federal budget The Pandemic Unemployment Assistance (PUA) program, which lacked some of the basic safeguards built into regular government unemployment insurance programs.

Regular unemployment insurance is a joint federal-state program. There are some federal regulations that govern the program, as well as some that are specific to the state.

But with PUA, states had to create and run what the federal program called for, funded entirely by federal funds, not by employer contributions that pay for regular UI benefits. The states administered the PUA program in accordance with the program requirements established by the federal government.

Kamer blamed government officials for the mess.

“Governor (Gavin) Newsom and agency officials have tried to deflect attention by accusing the federal government of expanding unemployment benefits during the pandemic and relaxing eligibility rules,” Comer said in a letter to Farias earlier this month.

He said that “despite the unexpected and unprecedented nature of the coronavirus pandemic, California’s problems cannot be blamed solely on COVID.”

He cited a January 2021 report by then-state auditor Elaine Howle. She said “the federal government warned the state at least three times in the early months of the pandemic to strengthen fraud protection.”

EDD is fighting back

Farias hit back at Comer on Monday.

“The Trump administration showed no interest in building such a coordinated national response when these programs were initiated in 2020, leaving states to deal with the apparent pattern of active international crime syndicates,” she wrote.

She cited the Labor Department’s August 2020 report Inspector Generalnonpartisan oversight.

The report showed that on May 26, about two months after PUA was created, the inspector general warned of possible fraud.

And that office suggested that “timely additional guidance could help states better protect funds from fraud, waste, and abuse.” In addition, ETA directed states to use their existing program integrity systems to incorporate (new) programs, but ETA can do more to ensure that programs are properly evaluated.” ETA – Employment and Training Administration of the US Department of Labor.

August 31 of this year that agency sent a 17-page memorandum to the states that discusses ways to combat fraud.

But Farias told Comer that the federal agency has not acted to develop any coordinated national measure to detect or prevent fraud. And federal anti-fraud money wasn’t available until September 2020, and California’s share was woefully inadequate.

Still, Farias said, California has “aggressively responded to fraudulent attacks by implementing new fraud prevention and detection measures that have prevented more than $125 billion in fraudulent payments.”

As of November, the EDD reported that it had opened 1,713 fraud investigations over the past three years. There have been 296 convictions and more than $1.1 billion in forfeitures or recoveries as fraud investigations into the pandemic continue.

Farias, assigned to the current job Last year, Newsom praised the Biden administration, which takes office in January 2021, for creating an anti-fraud task force at the Department of Justice to prosecute and recover stolen funds from domestic and international criminals involved in fraud.

Last year, the department appointed a chief prosecutor to lead a task force to investigate major fraud sites.