The first fraudsters of the COVID-19 pandemic are about to get away with their crimes.
Unless Congress steps in, the five-year statute of limitations on unemployment fraud cases will expire in March. Congress approved hundreds of billions of dollars in the initial round of assistance in March 2020.
As much as 40% of that money is estimated to be stolen.
Current law gives prosecutors five years to bring most government fraud cases, including unemployment fraud.
Congress is considering doubling the statute of limitations but hasn’t reached a compromise. The inspector general community, senior Republicans and President Biden have proposed doubling the statute to 10 years and letting states keep some of the fraudulent money they recover.
Sen. James Lankford, Oklahoma Republican, announced the latest legislation two weeks ago.
“Making the government more efficient isn’t a partisan issue — it’s an American issue,” he said. “Loopholes in the law let fraudsters get away with billions in COVID recovery and Unemployment Insurance payouts while forcing taxpayers to foot the bill.”
In December alone, prosecutors in Maryland announced indictments against two men accused of bilking more than $1 million by filing for unemployment benefits under stolen identities. Authorities said the scam lasted from March 2020 through September 2021.
In New York, prosecutors charged a man with using a stolen identity to claim benefits from September 2020 through March 2021.
In Massachusetts, federal prosecutors announced the Dec. 13 arrests of two Boston-area corrections officers on charges of bilking the unemployment system. One, Jasmine Murphy, attempted to alter her identity to prevent the government from realizing she was employed while collecting the unemployment benefits, prosecutors said.
Absent a congressional extension, the Special Inspector General for Pandemic Recovery, which polices the Main Street Lending Program, will shut down operations on March 28, five years after it was established.
About 70% of balloon loan payments are due after that date. The inspector general said the payments already due have shown an “alarming rate of defaults.”
A Republican bill to double the unemployment fraud statute of limitations cleared the House in 2023.
Nearly all Democrats opposed portions of the bill. One provision trimmed money allocated to states to modernize their unemployment systems. Another would have required those who received overpayments, though not necessarily from fraud, to pay back the money.
“Don’t punish people who may be caught up in this net that was not of their making,” Rep. Earl Blumenauer, Oregon Democrat, said at the time.
Many bills introduced in the Senate have been bipartisan but have not received substantive action. One was introduced by Sen. Ron Wyden, Oregon Democrat, and Sen. Mike Crapo, Idaho Republican.
Eric Fejer, a spokesman for Mr. Crapo, said the senators are still looking to take action.
“Sen. Crapo is aware of the deadline and is committed to finding a solution,” he said.
The statute of limitations will probably have a negligible effect early on, given that most of those who engaged in fraud continued it for months. They remain liable five years after receiving their last ill-gotten check.
Jordan Burris, who served as a senior technology official in the federal government and is now a vice president at Socure, a fraud-fighting company, said the statute of limitations won’t reclaim the money.
“They could extend it for beyond five years, they could extend it to 20 years. Many of these fraudsters are advanced nation-states, and we’re not going to claw it back,” he said.
He said the fraud fiasco underscores a bigger problem with government spending: The feds are too intent on paying out cash than trying to track down and reclaim misspent money.
More than three years into the pandemic and perhaps $300 billion in bogus payments, just $1.2 billion in unemployment fraud has been recovered, according to the Government Accountability Office.
“Our mindset needs to shift from going after and getting back money we’ve already lost,” Mr. Burris said. “Our efforts need to go toward prevention.”
Even if a state deems an unemployment case likely fraud, existing law requires payments to be restarted within two weeks if the claimant appeals. The state can’t hold a hearing before the deadline.
Mr. Lankford has introduced legislation to strike that automatic payout restoration.
Congress has acted to double the statute of limitations for pandemic fraud cases involving small-business loans, creating a 10-year prosecution window.
Source: Washington Times
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