West OC Times

Representative Michelle Steel (CA-45) and Ways and Means Committee Chairman Jason Smith (MO-08) have called on Department of Labor (DOL) Acting Secretary Julie Su to provide details regarding any potential efforts to "forgive" or write off fraudulent unemployment insurance (UI) payments issued by California or other states.

During the COVID-19 pandemic, the California Employment Development Department (EDD), under the leadership of then-Secretary Su, is estimated to have paid approximately $30 billion to fraudsters, prisoners, scammers, and known international organized crime rings. The role of Acting Secretary Su in allowing this fraud during her tenure at EDD raises significant concerns about possible intervention by the Labor Department.

Chairman Smith and Representative Steel stated, “As you know, in addition to the large amount of fraud that occurred at EDD, California remains one of only three states and territories (the others are New York and the U.S. Virgin Islands) that continue to maintain an outstanding federal UI loan. California received the largest such loan in US history, at one time totaling $23.8 billion in August 2021. With a current loan balance of approximately $18.3 billion, California owes federal taxpayers nearly three times more than the State of New York at $5.7 billion."

They further expressed concern over guidance from DOL that could potentially forgive these fraudulent benefit payments: “For this reason, we were very alarmed about guidance from the Department of Labor – issued by you in your role as now Acting Secretary of DOL – that would potentially ‘forgive’ this $30 billion in fraudulent benefit payments issued by EDD and other states – suggesting a serious conflict of interest.”

Smith and Steel are demanding that DOL provide all relevant correspondence between the Department and the State of California’s auditor. This includes any documentation regarding DOL's consideration of forgiveness for fraudulent UI payments by California or any other state.

The Ways and Means Committee has been working towards ensuring American taxpayers are reimbursed following widespread fraudulent UI payments during the COVID-19 pandemic. The Government Accountability Office (GAO) estimates these fraudulent payments range between $100 billion and $135 billion. In May 2023, the House of Representatives passed H.R. 1163 on a bipartisan basis—the Protecting Taxpayers and Victims of Unemployment Fraud Act—which incentivizes states to recover fraudulent payments.

You can read the letter here.