Rep. Mary Peltola voted against H.R. 1163, an act designed to help recover fraudulent unemployment claims from highly sophisticated scammers and criminal enterprises. As much as 50% of the $655 billion in Covid unemployment payments that were issued were based on fraudulent claims, federal officials believe.
For example, in 2022, a Nigerian citizen pleaded guilty to Covid-19 unemployment fraud in Washington and 17 other states, with amounts in the hundreds of thousands of dollars.
Abidemi Rufai, who at the time of his arrest was the special assistant to the governor of Nigeria’s Ogan State, used stolen identities to claim hundreds of thousands of dollars in pandemic-related unemployment benefits, according to U.S. Attorney Nick Brown. He was arrested at New York’s JFK airport in May 2021.
In another example, the Department of Justice indicted eight individuals – two who are prisoners – for conspiring to scam $25 million worth of unemployment benefits from California.
It’s unclear how much Covid unemployment fraud occurred in Alaska, and none appears on the map at the federal Pandemic Oversight Office, but California’s share of Covid unemployment insurance fraud is estimated to be between $18.7 billion, according to the the federal oversight agency, and $32.6 billion, according to Republican Congressman Doug LaMalfa of Northern California, who voted for the bill.
Congress created three programs to provide unemployment insurance benefits to individuals who lost their jobs because of the pandemic. The programs expanded eligibility, extended the length of time someone could claim benefits, and added a weekly supplement to existing state UI benefits.
Together, the three programs issued nearly $655 billion in benefits.
But federal and state oversight work in recent months revealed that fraud in pandemic-related UI programs is rampant, with 22 states reporting incidences of fraud.
Fraud was so rampant that even Rep. George Santos of New York was indicted on Wednesday on 13 criminal counts, including fraudulently applying for and receiving unemployment benefits during the Covid pandemic, during a time when he had a $120,000 yearly salary working at an investment company.
Business owners are currently shouldering the burden of this fraud, as they are compelled to pay higher taxes to restore the funds that have been scammed. At present, states lack sufficient motivation to pursue cases of unemployment insurance fraud or recover illicit payments, since they do not retain any of the funds they manage to reclaim.
The Protecting Taxpayers and Victims of Unemployment Fraud Act, which passed with the votes of the Republican majority, permits states to keep 25% of recovered fraudulent Covid funds and 5% of fraudulent regular unemployment funds.
Not a single Democrat in Congress voted for the bill. Peltola stuck with the Democrats.
The Protecting Taxpayers and Victims of Unemployment Fraud Act is intended to remove the liability from business owners who are having to foot the bill and place the responsibility for fixing their own mistakes on state governments that mishandled the federal unemployment money in the first place.
“Business owners should not be on the hook for money that states allowed to be fraudulently paid out to people who did not deserve it,” Congressman Doug LaMalfa of Northern California said.
“Billions of dollars in Covid money was lost to fraud, including to Russian, Chinese and Nigerian foreign scammers and even prisoners in prison for life. I support this legislation that will incentivize states to start taking this problem seriously and prosecute this fraud. Business owners have enough trouble trying to make ends meet and meet payroll without being financially penalized for the incompetence of bureaucrats,” said the Republican representative from California’s 1st District, which includes Butte, Colusa, Glenn, Lassen, Modoc, Shasta, Siskiyou, Sutter, Tehama and Yuba Counties.