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tv   Inspector General Testifies on COVID-19 Spending Fraud - Part 1  CSPAN  February 2, 2023 2:52am-6:34am EST

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governments to prevent fraud in the future.
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we will call this hearing to order. the first hearing of the 118th congress for the house committee on oversight and accountability. welcome. mr. chairman i intend to focus his committee's attention and resources on its core mission. to ensure our government is working for the american people in an efficient manner. agencies guard taxpayer funds from fraudsters and in eligible participants, and political leader should be held accountable for bad consequences of their policies. class a congress of democrats strayed far from this mission for the biden assertion faced little to no scrutiny under unchecked one party democrat, programs, policies the
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nonpartisan senate democrats and f and oversight last congress. as of the committee spend time demonizing oil and gas industry, investigate nfl football team and examining pet, fleet, and to colors. the american people suffered from the lack of oversight and accountability. crises have continued in worship. face the worst border crisis in american history. sentinels come across the southern borders a leading cause of death for many americans. americans are facing high energy resource from processing diminishing energy production. the american people have struggled with consequences prolonged covid closures and lockdown inflation and shortages of labor's and good. this was first hearing is so important. today's hearing is first step examine the waste, fraud, abuse covid relief programs.
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march 2020 presented by covid-19. with the economy on the brink of collapse, congress passed a series it could programs like protected protection saved jobs across the country rolled out pandemic unemployment insurance to help american workers are victims on spiking unemployment. these programs and brought relief to many americans. but with massive government abuse. democrats conducted little oversight at the over $2 trillion spent under the cares act they did the exact opposite. they spent another 2 trillion but this time with no protections or guardrails to prevent waste. and worse, they spent dismay there's no sign it was actually
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needed. this out-of-control spending led to 40 year high inflation cap people out of work longer and harms our economy. during the market this legislation when he was mourned without oversight mechanisms in place, taxpayer's arms at risk of being misused or lost to fraud, waste, or abuse. republican amendment to put strings attached photos on every single amendment we offer. what happens of the snow oversight? nothing good. $2,632,400,000,000,000 in unemployment insurance benefits were paid out. we have seen reports 76 to more than $100 billion seen reports 266 billion in improper payments by medicaid during the pandemic this are having a first hearing of the new congress always come
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up front, endemic spinning programs but will hit many more on his hearing to this important issue. we owe it to the american people to get to the bottom of the greatest theft of american taxpayer dollars in history. what should be done to make sure happens again? times of billions of dollars in grants and loans doled out for nearly every agency and payees are unrelated matters. i wonder elementary secondary school relief funds, many meant to help reopen schools and address learning loss. said these funds were often is unrelated expenditures to push divisive ideologies onto our students. will work to ensure watchdogs in our office of inspector's
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general enforcement officers agents and prosecutors of the tools they need to track down fraudsters and recover illegally obtained covid-19 taxpayer funds. this community has for too long stood on the sidelines while taxpayer dollars are wasted by bureaucrats to only priority is getting money out the door. today we will hear from inspector general horwitz, comptroller and assistant director david smith with the office of investigations of the secret service. thank you all for being her to testify about your efforts to conduct oversight of pandemic funding. mr. chairman i thank you kindly for the committee's purpose is to ensure effectively delivering on its promises to the american people and is a new member eager to work with you and the rest the committee series nonpartisan and evenhanded way.
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i heard our first hearing with spotlight pandemic relief programs i was pleased felt everything the democrat majority have been doing in the 1117th congress since covid-19 began. ripping off the taxpayers and continue to strengthen the structural efficiency of critical government programs to help families and businesses across america meet the challenges of the pandemic. just as a political system the campaign-finance system shockingly vulnerable hustlers, conmen, big liars out and fix. some programs developed response eco- 19 pandemic have proven vulnerable to the relentless, deceitful fraudulent predators will need to decide to split the generosity of the american people. the language and waste, fraud, abuse is not quite capture the
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confidence and organized criminal artisans and schemes that are targeted and exploited relief programs built on these solidarity and goodwill of the american people. the house select subcommittee on the coronavirus the last congress by the inventory whip clapboard which i served on lead the effort to identify and combat these criminal actors. dissent committee conducted no fewer than seven focused on rooting out front and relief programs. i hope your conference leadership in the first week or two of existence the subcommittee recovered improper 10 million-dollar paycheck protection program alone. less than three months later help secure the return of .8 or $9 million from a nursing home chain that was not using the loan as congress had specifically intended. in march of 2021 weeks mostly trump administration reckless mismanagement of small business relief programs refusal to
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implement basic antifraud controls led to nearly $84 billion in fraudulent loans. should another report highlighting awarded $95.7 million in pandemic food box program funds to three companies that already severe at red flags for april 20 to accomplish and trump white house officials overruled career department of defense officials to purvey seminar million dollar security loan to a single company and so on. this spotlight of a small subcommittee to expose colossal fraud taking place against the american people. while i remain optimistic this can ensure taxpayer dollars go were intended for i confess i am troubled some of our colleagues seem to want to cherry pick that and deploy distorted figures to
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attack the underlying legitimacy of the programs themselves. the programs that were a lifeline and salvation for millions of businesses and families across the country. recall that while the former president denied, trivialized and dismissed the covid-19 pandemic, it was congress to act responsibly swiftly in a bipartisan fashion to create supercharged programs that saved countless businesses and families from bankruptcy and run these programs which empowered families and businesses to avoid economic collapse. as a result of our actions covid-19 economic recession was the shortest on record for the programs were by no means perfect. antique government it. many running at obsolete software collapse and were incapable of adapting to the
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scope of the crisis. states enter the pandemic at a 50 year low for unemployment insurance system funding and ui claims 11000 to 6.683000 million% increase over a three week period march of 2020. people are not sure how they would pay their housing or medical bills in panic as they waited hours on phone calls for customer service representatives reach endless busy signals in unemployment insurance purgatory. my own state of maryland was no exception. and the one you paid for march 2020 until march 2021 my district office received 1400 constituent request for help with unemployment. this is in contrast to one constituent request we received in all of 2019. congress s agencies and state see in the near impossible. they did their very best expanded benefits estimated five to 6 million people out of poverty in 2026.7 million people
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above the poverty line in 2021. expanded benefits may have saved the lives of his many as 27000 people in high risk occupations you may have died from covid if they did not have access to benefits. organized criminals and fraudsters took the damage of the circumstances by exploiting weaknesses in our it system. this problem was compounded by critical decisions made by the trump administration hamstrung pandemic relief and joy from the very outset crippling the government's ability to detect fraud. despite specific legislative instruction from congress the trump administration regularly told agencies to ignore data reporting requirements. the congressional democrats and the biting damage diligently other fraudsters and built new
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structural capacity to detect and prevent fraud. departments and agencies across the government moved swiftly to strengthen program integrity and bolster efforts to prevent, detect pursuit fraud festered under the lexi days ago stewardship of the prior administration for the days preceding this hearing republicans have claimed democrats on this committee and the biden administration neglected to conduct meaningful oversight of these programs. directed these assertions are baseless. democrats systematically out fraud, waste, abuse for pandemic relief although all-consuming a much more effective job and that is what this hearing should be about. the work of the modern 18 congress commences i urged all of my colleagues across the aisle and on our sites from the crucial role this committee must apply if a limiting fraudulent schemes by imposters in order to protect the integrity of the programs we adopt in america needs at that mr. chairman cap neil back.
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next thank you the ranking member yields back getting great pleasure to introduce our panel. i'll go through and introduce each member and then we will turn over to begin their opening statements. let me say this, it's a pretty quality financial. the perfect hearing to determine waste, for a company is the federal government i can think of three better witnesses from three more appropriate agencies to come before i think you will see this will begin a trend to talk about serious substantive issues and i'm very proud of this witness panel today. our first witness today eight the comptroller general of the united states head of the u.s. government accountability office. in a career spanning over 49 years at gao is worn many hats and testify before congress on important issues including
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waste, fraud, abuse mismanagement the nation's response to the pandemic. extensive experience at the helm of an agency often referred to as a congressional watchdog is an invaluable but we are glad to have you here for the syrian port oversight topic will forward your testimony. a second witness, no stranger to congress who is the chair of the pandemic committee and inspector general of the department of justice. mr. horwitz is testifying today an entity created by the carriers act to support independent oversight of pandemic relief spending coordinates cross agency investigations by agency's inspectors general and fraudsters across multiple programs. this is a very important role the committee looks forward to learning. more about your and your colleagues efforts to detect management of taxpayer dollars. through sinister david smith's
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director office of investigation at the secret service. as the 28th assistant director mr. smith leads agencies global mission comprising 161 officers and over 3000 employees. mr. smith's office oversees the secret service cross agency efforts including investigation foreign national relief fund. in efforts to encounter such activities. welcome mr. smith and we will begin. i hope i pronounce that right i apologize if i didn't. cooks that was excellent mr. sherman, very good i appreciate it. thank you very much good morning mr. chairman ranking member raskin very pleased to be here for holding this hearing i'm
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pleased to see the attendance. i like to focus my comments this morning on four points i believe are the main causes of the widespread fraud that has occurred and what can be done to deal these issues. first, agency should be much better prepared in order to prevent fraud in the first place. congress passed the fraud data analytics acts. to help prevent fraud in the first place. therefore were not prepared properly when the coronavirus occurred. this means greater tension oversight i believe from this committee. secondly the urgency in providing relief funds led to trade-offs that limited the ability to achieve accountability and transparency close legislation and
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applications limiting the amount of supporting documentation applicants apply. these trade-offs allows internal control weaknesses within the agencies make these programs much more susceptible to fraud that would otherwise have been the case. congress rectified some of these trade-offs agencies have begun to implement our recommendations for their >> for the needs to be god to catch people perpetrated fraud may bring them to justice. also unless we make these changes we are not better prepared for future emergencies that certainly will come. disaster assistance relief
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third, advocating i'm done this before there is a permanent center for excellence and analytics in the inspector general community. this first one was created back in the recovery act we have the great recession. that recovery operations center help prevent fraud together along the fraudsters hit multiple programs as well. it brought in great data analytics. this center was terminated in 2015. i recommend the treasury has the ability to pick up the center that they declined on that. i recommended to congress to make it permanent but i was not successful. make sense to have this to do
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with fraud occurs and federal programs all the time as well as improper payments which we talk about in our statements. knowledge of the regular fraud it would be ready and they are when emergencies occur and you jump to waste time standing up. every date wasted is this would help us underlying improper payment probably some payments it should not have been made but were made. i've testified before this committee many, many times with this problem over the years. it occurs in a wide range of federal programs. it is pervasive across the government. so, when you have that type of problem were not done with on a regular basis and you add additional spending hundreds of billions in this case trillions of dollars are going to have
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these type of problems in place. many recommendations in my testimony that i think would help address this issue. and i put forth at least 10 legislative suggestions for how congress can act to make sure this problem does not happen again at the magnitude we have seen in this particular case. i am looking forward to answering questions today. also looking forward to working with this committee to put solutions in place that can guarantee when the federal government to provide funds for public health purposes and economic reproductions of disasters this done in a way that gets the funds to the people who needed and not allow this type of fraudulent activity international programs great thank you very much mr. chairman. >> thank you.
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thank you, mr. chairman, ranking member raskin, members of the committee. thank you for holding today's very important hearing. this committee has consistently worked on bipartisan base to advance payment integrity government spending transparency in the use and analytics. and ensure government benefits go to those who need them most. yet, as our pandemic oversight demonstrate far more should be jon to recheck their money. for example early this week which issued a fraud alert fighting over 69000 questionable social security numbers were used to obtain $5.4 billion in pandemic loans and grants. this alert resulted from correct data scientists using our analytics platform to assess over 33 million idle and ppp from that they developed set of
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applications and asked the social security administration name, date of birth and social security numbers number 69000. this type of advanced analytic work is transforming how we do oversight report data transparency and spending accountability. it also demonstrates the needs to improve program in routine program and administration reaching the speed excess complement this ability for payments are sent down for it at on getting ppp loans issued as quickly as possible the outset of the pandemic, based solely on applicant self search eligibility resulted in
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substantial fraud as well as issuing 50000 loans for $3.6 billion that's already on the government do not pay list. a list they did not bother to cross check for the federal government needs more robust cross agency datasharing reduce improper payments in identity fraud and better prepare for the next crisis ends. can have a significant impact in reducing identity fraud as we detail in our follower. similarly authorizing agencies to access master filing index would help eliminate improper payments to deceased individuals. these are two of many eligibility verification tools agency should be using our
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oversight for the need for agencies to be more transparent about spending information and to address data reporting gaps in data reported weaknesses for the public has a right to know how it's money is being spent and policymakers seem to be able to assess whether programs perfect. moreover transparency and greater accountability. justice transparency is said to be the best of disinfectants. for the past two years we have met weekly with columbia leadership in the american rescue plan to timely share concerns with executive branch leadership and ensure impediments to our oversight are being addressed promptly. we've also participate over more than two dozen millions prior to implementation and before money
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went out the door. in december 2021 omb issued a memorandum highly the value of this model and institutionalizing. finally, let me touch on three legislative priorities. first pip congress won't take up taxpayers need that sophisticated tool to continue to exist and appreciate the control was support for that. second congress should consider in the program fraud civil remedies act from 150,000 to $1 million so i geez can more effectively pursue smaller dollar fraud. finally congress should consider extending five -- 10 years the statue limitations for pandemic unemployment insurance fraud as it did last year with pvp and fraud. the crack in the ig community is committed to using all of the
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tools been provided criminal, civil and administration. to pursue the taxpayers every dollar fraud to school from pandemic thank you for your support of the severance will answer any questions you want me asked. thanks thank you, mr. smith. quick spin morning ranking member raskin and distinguished members of the community. thank you for the opportunity to appear today and discuss the ongoing efforts of the u.s. secret service to capture pandemic fraud. as the chairman mention i serve as assistant director overseeing 161 offices. i also oversee our 42 taskforces that are essential for criminal investigations. i also as well as prosecutors and judges.
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conducting criminal investigations to protect the american public from criminal exploitation. we continue to do so will also fulfilling our protective duties. after 21 years in federal law enforcement, exploitation of government programs by criminals is not new to me. i often say the pandemic did not create any new criminals just provided the opportunity for them to exploit. pandemic related thoughts are investigative priority since march of 2020. we have thousands of investigations were covered over a billion dollars arrested nearly 500 criminals. it is our duty to protect to arrest criminals reaffirms our
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investigation status and involve our application of technology in training we recognize the potential for fraud based on natural disasters. in 2020, or recapture some national partners of the office of inspector general for the small business administration department of labor and the council the inspector general on integrity and efficiency. the best way to address a potential way for fraud is to work together. with partners inviting financial crimes of the department of justice including u.s. attorneys offices around the country. the department of treasury and many others.
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the secret service has a full spectrum this includes and 95 masking, ran somewhere, targeting hospitals the white use of stolen identities and inmates applying for benefits. numerous cases also involve insiders with access to data. for years there selling identities stolen from past data breaches. they're also fabricating identities using personal and financial data from real people combined with false information. our investigation criminals shall companies false implement information. observations related fraud investigation. person or data government
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funding programs it is important. advanced collaboration in the financial sector is essential in mitigating fraud, targeting government programs and emergencies. steps in curtailing this magnitude as well. our fraud tax in these taskforces similarly in our protective we constantly communicate the importance of sharing information and planning for contingencies. thank you again for the opportunity to testify today i am honored to represent the dedicated men and women of the secret service and i look forward to your questions. >> thank you mr. smith. before we get to questions i'll ask if you would stand take the oath.
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which will raise your right hand you all swear or affirm the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god? let the record reflect the witness is simple answered in the affirmative and we want to thank you. without objection your written statements of the main part of the record and before we move into the portion question we have a lot of new members, a lot of freshman who've never served in any committee in congress. we want to make sure everyone knows the rules here. will rotate back and forth five minutes please adhere to the five minutes will try to be strictly by the book. the order is determined by myself and ranking member raskin. please be respectful of everyone's five minutes rest on some of the freshman during the 2017 since my first full year in congress i was the very last person, dead last in seniority
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and you appreciate people don't go over there time. but this is your time. your time to ask anything you want. so to both sides let's be respectful of each members five minutes. with that i will begin questioning. we will start with mr. horwitz. you mentioning do not pay list. can you briefly tells but that is? works of treasury set up a list of suspicious doesn't mean they're not eligible. doesn't mean they can't get benefits but they go on a list that requires minimum secondary screening. was this use by government agencies? this is a chill i would've sent wind event eligible in their toolbox. plus it is business demonstration or someone was giving out a lot of money really
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quickly they did not the issue there is we have heard over and over again at the time we needed to get them out right away the emergency, no dispute about that. when you get the money out right away there was an emergency. we need to be ready for that. this was sitting there would not have taken much time for the need to be preparation. some you get this straight. people who owe back taxes, people that may be out job support there's a variety of reasons. >> convicted of fraud. convicted of a potential fraud indicative of individuals with other payments. you can get on the list for a variety of reasons. >> how many do we know who received money for the federal government or on the do not pay list? oxygen about across all programs. what i do know from the sba ppp
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program, because almost $40 billion would have two weeks in that program. of that amount 3.6 billion should not have gone out right away. i'm not seeing every one of those would have been denied bittner admin militiamen screening. parks what would sba have done to ensure our people were flagged interactions with treasury department to make sure that screening was occurring that data matching was occurring. banana 2020 congress of the past five laws containing more than more than $3 trillion for the really fun. when 1 trillion had been flagged for waste, fraud, abuse.
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inspector general's and others were highlighting covid relief money going to criminals another in eligible recipients and that of americans. nonetheless democrats point enjoying work putting at risk of massive inflation so do we lose funds the arp was passed? x improper payments for 2020 the paycheck protection program and the economic program made improper payment estimates. does about 29 billion for ppp idle program.
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with payments made earlier in 2021 and make the assessments then. congress or agencies? works what could congress of done to prevent this? >> is there any new programs over $100 million not billion million dollars to be designated immediately because of past problems susceptible to improper payments. therefore make an estimate in the very first year of the program. right now the improper payment estimates only have to make two or three years after programs already started, it is too late. it is too late. some of these temporary programs congress can't and should have that as a requirements to be put in place. >> hopefully they'll be some kind of bipartisan legislative fix same question got 40
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seconds. what warning signs were there what should've been done? works are plenty of warning signs. the urgency and speed to get it out without any consideration of full was already available to use. like do not pay, as we did this week have there been agreements in place they could have checked against social security ministration. think it's very important verification tools be put in place for programs. in each of the applicant is eligible you cannot self and they were relying on self certification. >> am sure we will have many discussions moving far from my time is expired i yield to the distinguished ranking member mrr christmas that mr. gentlemen, thank you very much. when they start using the do not pay program to check the eligibility pixelate recommendations and gao cooks
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and generate 2012 at the beginning of the bite administration? what they said they were i'm not actually sure that exactly started in. one of the actions is to get them to implement. and subsequently start doing that. quickly pass the cares act in 2020 we created the pandemic response accountability which you lead, the cares act included specific language directing the youth to create a user-friendly websites give the american people an overview of how pandemic relief funds are being spent all the way down to the project community level. president trump made it nearly impossible to effectively track pandemic relief past the first distribution. mr. chairman going to have unanimous consent to insert the
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ministration april 10 into the record without objection. >> out mr. horwitz, this effect to identify and prevent pandemic relief fraud question can the cares act newly launched a website in 30 days we did. the money spent. you get your zip code if you would like. we were challenged at the outset because omb leadership decided to use what was already existing in putting tools and spending. we did not believe was sufficiently gao did not believe was sufficient sba and others did not believe was sufficient. to meet the cares act put that in place. it limited our ability for folks who followed our website from
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2024 we will see gradual additions to the website. indeed, sba would not give us the information this is an sba agency issue until september or october of 2020. we cannot get much of any data from them. they were litigating lawsuits. >> got you. you think that guidance met the language and spirit of the cares act requirement for tracking endemic relief to the ground? works the publishing over the money went. congress needs to know where money wins. whether it's worked or been defrauded, who is accountable if you don't know where the money went. >> following the 2008 financial crisis, president biden signed the reinvestment act to stimulant the economy and get us out of the great recession. i think that's a 787 billion-dollar if memory serves me. do you think the trump administration 2020 guidance we are talking about effectively
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lessons learned from obama's successful implementation of the american recovery and reinvestment act? >> not to the full extent they should have been. the recovery act reporting required reporting from recipients. the recovery act board created that. much more timely than you did under the guidance of mr. horwitz just talked about. which is using usa they could have taken some of those lessons i think, so. >> did you express your frustration with the undermining of the cares act determination the public's accountability? >> at the time we were meeting district that leadership was meeting with omb in expressing the need to have better reporting portals than what existed with u.s. spending.
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there are many issues with usa spending. in britain about those that have been written about those previous men report after report of that. those in need to be fixed. if you want to find the best information out there it's actually for the crime last relief on which is one of $50 billion in the cares act went to the state. the reason that is they are, information is because the treasury ig working created the recipient reporting. we cannot do that, it cost us money it cost them money. we cannot do that for trillions of dollars. but that is what needs to be done. >> i am probably precluded those provisions precisely to ferret out fraud prevent the waste abuse and obvious requires leadership at the presidential level the very top a commitment to make sure everything is accountable. >> thank you mr. sherman i yield back. >> chair recognizes for five minutes.
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on that basis every six months. would you agree with me? >> yes, think more regular reporting would be helpful. part of that is getting me the data.
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do you agree with that? >> it will be a wild before the
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full extent of fraud is known. as i mentioned in my statement, there's been over 1000 people pled guilty or been convicted for this over 600 charges still pending against people the aig has 536 investigations right now with the department of labor's opening up 100 new cases every week. this is going to go on for a while. there are definitely indications of widespread fraud but is impossible to estimate right now to the full extent will be. time will unfold in these investigations will have to be undertaken. because the definition of fraud is woeful misrepresentation to give something of value that adjudicated through process?
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do you see a process leaking forward with that? >> yes bring their state regular process for the inspector general. but we have extraordinary circumstances likely have there can be more frequent reporting in those cases. there's definite benefits of having more frequent interaction and oversight by congress with oversight bodies in the inspector general's and things like this, secret service. some of these legislative solutions i have recommendation could've been taken a lot earlier in the process. >> is truly writing the national emergency depth or would you be able to give us your input how
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to detail the changes? >> i'll be happy to look at the act and make suggestions. >> how about you mr. horwitz? he was come with great ideas. >> absolutely, be happy too. >> and mr. smith, do you see any aspects of particularly from a secret service where we can make some amends with the national emergency act? it mentioned in my opening brand is largely associated with it is advanced work ever spoken about earlier or survey taskforces corporate and private sector and academia. we share information on a continual basis. so we'd wait till the present shows up in the district established relationships. we do it prior to that time. so similarly we know it is
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important to maintain relationships and academia in order to get in front of fraud and share ideas. there is a constant cadence and interrupting with bad guys. >> i'm about to run the time i yield back. >> the chair recognizes mr. lynch for five minutes. quick thinking mr. chairman and ranking member for holding the sand. i want to thank our panelists who do good work. i recognize a few from previous hearings and thank you again. this was a difficult challenge of the very beginning. i want to take us back to the trump administration's initial response. back in 2,192,020 mr. trump on the date the second coronavirus case was confirmed in the united
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states president trump tweeted and again reiterated quote china has been working very hard to contain the coronavirus. it will all work out pretty want to thank president xi. and then went on to say the coronavirus to be over by easter. based on what we know now, those statements by the president of the united states and reduce the sense of urgency that the american people should have harbored with respect to this pandemic? >> i think the actions congress takes show a sense of urgency in passing the cares act back in march of 2020 on a bipartisan basis. i think they sent it the right signal and sense of urgency that needs to be addressing those
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issues. diplomatic as always. >> and take a crack at that question? not particularly. [laughter] let me just get down to the details a little bit here unless mr. smith you like to add? no? i am not sure of the of labor within your agencies. are any of you familiar with the yellow corporation during your investigation? no? switch corporation question yellow corporation. it was a trucking company with the political connections the trump administration. >> i think that is the one that's on one of the programs. approximate refresh that.
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thank you. let me try to refresh your recollection. the selected subcommittee confirmed a 700 million-dollar loan to this trucking company that was politically connected to the trump administration. it was given a seven her million dollar loan in the trump administration overrule defense department officials in that case to actually certified the company as a quote critical to maintaining national security. therefore eligible for the loan. they use for long-term capitol investments in violation of the cares act requirement. i was just curious are you familiar with that? jeff anything else you could add to that? >> i will be happy to provide our results for the record. i do not want to misstate.
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>> okay, what with the take that at a later time. but our lessons learned based on how the trump administration responded initially to the pandemic? >> number one, i think there should have been more preparedness on part of the agencies to prevent fraud. congress passed legislation in 2016. based on advice on how to prevent fraud in the first place. part of this is there is a cultural problem. in most cases the fraud issues people think of the inspector general and secret service. but you've got to prevent it in the first place by the agencies were slow to implement it. it was supposed to create a working group to develop this issue reported 2019 is the working group they needed to take more actions, number one.
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number two, the other lessons learned for congress is to be careful about putting provisions in the legislation that makes progress more susceptible to fraud. allowing for example self certifications not using tax transcripts. i think there is legislation there as well. thirdly, the agencies had not address improper payment problems. and not addressing open gao and recommendations make them less prepared. there's a lot of legislations in my legislative solutions to address some of these lessons learned. ask think it mr. chairman my time has expired and i yield back. the chair now recognizes doctor fox for five minutes. >> thank you very much mr. chairman. and i thank you for holding this hearing.
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i don't have any questions for him but i want to thank him so much for the work he and his team do on behalf of the american people and helping us figure out the way to be more efficient and i appreciate your comments just now. so coming into congress i fought for transparency and accountability of federal spending. with trillions of dollars in such a short period of time it's imperative we closely watch where and how that money was spent and they can give us more ideas it's likely something we are going to have to track for a long time. i have questions for you. can you speak for the pandemic response is it important? >> thank you congresswoman. i think it was critical for congress to set up in the cares act was passed the time we were
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asked to oversee 2 trillion it's now $5 trillion of pandemic oversight. what it did was brought the inspector general's community together coordinate oversight we created the analytics platform to do the work and are fraught a work alert last week and gave us hiring authority to bring on great data scientists. great team that has enabled us to do this work. we got it up and running. and as a result of the coordinate more closely with not only are ig partners but with the gao and with state and local auditors. we have created a state auditor residence program. from the state of tennessee it came on board recently first ever that's present in the ig community. moving to coordinate with our counterparts at the state and local level. so we brought together people that we have never had before in
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the ig community. >> it in your work how would you rate the various covid relief spending programs for most to the least to improper? >> what you have seen so far are the three of the biggest programs paycheck technician program. the economic injury disaster loan program and the unemployment insurance program. those three programs which by the way account for just under $2 trillion of the spending had shown to be highly susceptible to fraud for different reasons. >> can you give us a characteristic that cause that? >> those were administered at the federal level. the problem and there was the desire to simply get the money out is simply as possible
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without taking audit on reasonable amount of time but an appropriate amount of time to make sure they're sending money to the right people. that was the problem among others with those two problems. the unemployment insurance the issue is different because that is administered by the 50 states. the problem there is the lack of coordination among them and with the labor department. the labor has written extensively about that problem. >> we have sent recommendations on what to do in that area? >> a number of recommendations i'll be happy to send up to you. >> absolutely that labor department is in the jurisdiction of education and workforce committee i am anxious to see those. so you charged 47 defendants 2,050,000,000-dollar fraud scream involving minnesota nonprofit. one of the largest covid aid frauds uncovered.
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what if any indicators were there at this sort of fraud including those that could've been stopped earlier? which is always hard to say whether someone can be stopped earlier one should be careful in hindsight to say that. had there been on these various programs pre-review and applicants whether it was a legal entity didn't really exist? what is the e-mail address coming from overseas? was it from ip address coming from overseas? as we just reported on names, date of birth, social security's numbers match wits and social security and menstruation records
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ongoing investigations regarding transnational criminal actors defrauding our pandemic relief programs. it looks like in a statement the secret service put out in
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december, you talked about a group called atp 41. are you familiar with that group? >> yes sir. >> atp 41 was a chinese state sponsored cyber threats group that is highly adept at conducting espionage missions in financial crimes for personal gain. are you familiar with that? >> i'm familiar with the article. >> according to the same article, this group committee a pt 41 chinese state-sponsored tens of millions of dollars and u.s. covid relief benefits including sba loans, unemployment insurance funds and over a dozen states is that right? >> that's what the articles say. >> since the article came out i've got to believe they targeted a lot of states, beyond a dozen. can you tell us how widespread the geographic coverage was in terms of the number of states
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they had tried to target? >> so again i'm familiar with the article and who i appointed to the position and in one of the field offices. in the spirit of what he was conveying is that it was unimaginable that organized transnational criminal organized groups did not look to exploit pandemic related fraud no different than an american one. there are some commonalities between some of the thousands of bank accounts that we see used to move to gain pandemic fraud resources that were also being used by some of those groups to include the one you mentioned. it's also worth mentioning when we do have cases that involve the criminal organized groups or state-sponsored entities, we do
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in fact -- >> we've established it is a state-sponsored cyber gang. let me turn your attention to russia. have we identified any russian state-sponsored cyber gangs involved in pandemic fraud? >> a lot of the pandemic related fraud he has to do with identity theft. so -- >> state-sponsored of though? >> secret service focuses on financial crimes whether or not an entity's state-sponsored is generally not why we tend to focus on them. we follow money and if that leads us to be state-sponsored actor, we don't stop the case. >> have you come across that link yet in other words that required referral to doj?
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>> the referral to doj is part of the task force doj started at the beginning of the pandemic so there are cases where we have some linkages or commonalities between cases we are working for financial crime reasons and every state-sponsored actor has commonalities. >> now we've established there's a chinese state-sponsored cyber gang as well as russian state-sponsored linked to the state individuals who've committed pandemic relief crimes. >> what i said is there are commonalities between some of the accounts and other indicators we've seen. that's what i've said. >> now with regard to atp 41 in particular, in your statement, i'm sorry the secret service statement it said it was, quote on quote, state-sponsored. now, did -- have you been able to identify any evidence that the chinese communist party
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ordered or asked this particular cyber gang to commit this fraud or do we have evidence to look the other way and permitted them knowing to have committed this fraud? >> i have no evidence as to what the chinese government ordered an entity to do. >> are there any other cyber gangs, state-sponsored either chinese or russian or any other state-sponsored criminal gangs that have committed pandemic fraud? >> just last year we disrupted a transnational criminal organized groups known as black acts. they are nigerian based operating in south africa and they had a long-standing history of committing a lot of different types of fraud and they use a load of the pre-existing money rules. there is a network that operates here in the states.
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again given the international groups used or leveraged in an american profile to facilitate the pandemic related fraud so we did see that in hand in operation that disrupted to that group just last year. >> thank you. >> the chair recognizes mr. grossman for five minutes. >> a few more questions for mr. smith. would you give me a little more information as far as the stereotype as far as fraud being committed by people abroad or by being committed by immigrants? >> what was the last, fraud being committed by -- >> immigrants. >> i'm not going to get into stereotypes. we follow money and evidence and at the end of the day as i mentioned to the previous
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committee member, the majority of the cases we've seen even if there is a criminal looking to exploit pandemic related fraud abroad, they use an american fuel. we had certain campaigns know cyber fraud task taskforces a money mule witting or unwitting because we saw a lot of americans being utilized to move money abroad because the criminals didn't know overwhelmingly what we were looking for were american bank accounts, american identities to issue money to so they used that and leveraged an extensive network of many mules that preside overwhelmingly here in the united states. >> what would be an example is the mule in america, do they have contacts within the foreign nations, or they immigrants from foreign nations commit us to
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grant a grabbing a random person off the street? can you comment on these? >> we have dozens of cases where we would have a person in a blank state one comes to mind where there is a mule that literally funneled $12 million to some criminal that resided abroad and once we start following the money and looking at some of the commonalities and bank accounts and we had an opportunity to interview a person -- >> can you tell me what the countries were brought into the background of the mules? did they have connections to the country and abroad? >> one of the cases as i mentioned a second ago was out of south africa focused on some nigerian individuals in a group called black acts with $12 million was one of the cases wherein a money mule send money to accounts that were operated
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by black acts. i want to impress upon the group of money mules are not a new concept. there's an extensive network. >> that doesn't answer my question. presumably they got them somewhere. okay you mentioned nigeria, south africa. for the people who do the work in america connected in those countries in any way? where they immigrants from those countries, where they just random people? >> not necessarily. >> i know not necessarily but does it happen and how often does it happen? >> overwhelmingly. people, criminals take advantage of folks looking to make a quick buck and the pandemic offered that opportunity with resources that were made available. >> okay now in general i can think of frauds and the programs that the fraud would be almost predictable. can you tell us in the future
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what things we can do in the programs where the fraud is not committed to so easily? >> i think one of the easiest things to do that wasn't done is to prepare as the general said by employing verification tools, identity verification tools. the american identity theft was extraordinary here and it needs to be addressed because we are not only talking about when that occurs, theft from a government program, from the taxpayers but for anybody that's been on the receiving end of having identity stolen you understand how you are victimized in that way and just in the fraud alert we indicated we have 200,000 social security numbers that we use that we need to follow up on to see if those individuals identities were stolen so in other words the money is going to someone, it's going to an
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account or something other than the person that's committed the fraud. so what's happening is individuals are claiming that they are the person whose name is on the application, whose date of birth is on the application and/or social social security numbers on the application. when we checked and went to the social security administration to ask them to verify it, a check they can do we entered into that. they were doing large-scale verification for us. they came back into said those don't all match. the 212,000 numbers which means somebody in some instances could be false positives, somebody could have transposed their social security number down or date of birth down so there are going to be some of those, but presumably for most of them those are individuals who obtained on the dark web through other means social security numbers that were previously stolen from individuals and had their identity stolen.
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>> anyway of going to a bank account that has this person's name -- >> the time is expired but we will let you finish the question. >> there's an ability to go to the bank as with the ppp program said you don't need to do anything other than accept the person's verification that it's of them in other words all that had to happen at the outset was you went to the lender, signed in application saying no i am really this person and they accept it. no one can walk into a bank today for a loan and say no really i'm this person give me the money, but that is what was going on. >> the chair recognizes ms. norton. >> thank you mr. chairman. mr. horwitz, this question is for you. democrats provided the department of labor inspector
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general $25 million in the american rescue plan to combat fraud and corruption in the process. also in the american rescue plan, democrats made critical investments in fraud prevention and accountability including providing more than $200 million in funding for watchdogs to investigate fraud, waste and abuse as well as $2 billion to support states modernization of unemployment insurance systems to reduce fraud vulnerabilities. the biden administration has begun using these funds to support state efforts to make unemployment insurance both more accessible to eligible recipients and less susceptible to fraud. the american rescue plan provided significant funding to the pandemic recovery accountability committee as
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well. yet my republican colleagues voted against these commonsense measures to reduce fraud. when the american rescue plan became law, mr. horwitz, you released the following statement and here i am quoting you. the enactment of the american rescue plan is to the important oversight responsibilities of the pr ac and its members inspector general's. we appreciate the ongoing support from congress and the administration of the pr ac and its oversight mission. mr. horwitz, how much funding do they receive in the american rescue plan to perform the vital oversight functions? >> in the american rescue plan is received $40 million as
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funding. >> mr. horowitz, what other resources and authorities do you need to continue your work? >> as i mentioned in my written statement at the outset, it's very important to continue the data analytics platform the 40 million that was in the american rescue plan covered our ability to start the data analytics platform that we have in 2021. it's funded through 2025. but we sunset on the 2025. we turned the key off unless it's extended. congress invested $40 million to fund that over 4.5 years. that's $15 million, $16 million we are spending right now. just the fraud alert alone this past week identified
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$5.4 billion of potential fraud that's 360 times the amount of money that we spent this year or are spending this year to run the platform. in other words it would take us 360 years of spending at that number to add up to $5.4 billion so that i think is very critical. >> i would agree. i want to turn my support beyond the establishment of this platform and data analytics platform. right now it only provides the pandemic spending and it's going to expire. this happened back after the recovery act as i mentioned in my opening statement and it was a very effective process than but it expired in 2015. now if it had been in place at the beginning when the cares act was passed in 2020, i think we could have saved a lot of money and prevented fraud were went after it earlier but it wasn't
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established in the american rescue plan in 2021 so by that point, hundreds of billions of dollars had already been spent to so i think this is a prudent investment on the part of the federal government to have this capability in the community on an ongoing basis that will pay for itself many times over. >> in addition to the funding democrats included funding for the american rescue plan to provide grants to states to engage their local community organizations that represent those eligible for benefits. the goal is to help states learn how to more effectively reach these traditionally underrepresented and under resourced communities. so may i ask you mr. horwitz and ms. d'addario while these types of investments in the community engagement help you to separate
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these errors and other unintentional mistakes and actual fraud? >> i think it's important to recognize that we have ongoing work so we are going to be looking at that issue to see how effective the labor is working with the states and those entities. today we focus a lot on the fraud part of that unemployment insurance program, but on the benefits side there was a lack of timely benefits that were given to people. we found also some disparities in terms of how different people in different races had been treated so there is a lot to be done in unemployment insurance areas to make sure there are timely payments made in the proper people and a balanced equitable fashion while stopping fraud on the other end. we've had along with the ppp and
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economic disaster loan program the risk of high-risk areas across federal government. the unemployment insurance area is badly in need of transformation not only dealing with the community organizations but they are terribly integrated and not capable of executing this type of program in the future until they are modernized. >> the chair recognizes mr. palmer. >> thank you mr. chairman and i think the witnesses. today to do we know the full amount of the payments in the covid fund? >> there are estimates the improper payments were $78 billion up from $9 billion in 2020 and then there was
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another $18.9 billion of improper payments reported by unemployment insurance programs for 2022 and that was a 22% error rate and was the 18.9 rate prior to the pandemic it was about 9%. in the idle areas combined it's about $36 billion. >> we are talking 135 million. >> it might not have been as forthcoming. the small business administration potentially violated federal law but failing to respond to the gao request has that been the case that they've not responded to the
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request? >> it was early on in the start of the programs. i had to go back in 20 and 21 i testified before the coronavirus select committee and called the chair and ranking members of the small business committee is both the authorizer's and appropriators to get help. we couldn't get any information on the sba at all and it wasn't until later there was a lawsuit where they had to close the loans now it's gotten better. >> one of the problems as they are authorized under the act were excluded from the program's total reported improper payments because they were not in existence for more than 12 months and these programs represented about 70% of the payments in 2020. should congress consider legislation reform improper payments reporting periods to more accurately track the cool
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food relief fund and in the future if we have to have this again? >> absolutely. that's one of my legislative recommendations. >> i've enjoyed both working with you and mr. horovitz on things like this. if you would provide to me in writing the recommendations for legislative fixes, i want to move to something else. it's been discussed what actions republicans took and i want to ask you if we had required the two factor identification for online applications or provide estate transmission copies of state id if we utilized protocols to prohibit applications from the ip addresses if we denied the claimant's using virtual private network identification required individuals, i could go down this whole list of things would
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that have helped reduce the amount of fraud? >> yes. >> i want to point out that these are recommendations that were made by republicans in the house and senate including myself. i introduced a bill myself to do this that largely ignored. when we began to see the massive amount of fraud as early as i think april and may of 2020. we couldn't get these guardrails in. without help? i want to ask one other question
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to bolster the 2026 world cup we solve the state of washington sent out 128 million-dollar payments. the institute are any of those improper uses of funds? i know we want to give flexibility but is that a little bit out of the box? >> there are broad uses authorized in the legislation. we are looking at it right now and we will try to identify those areas it reminds me of the recovery act when there were
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questions about the use of the money whether it was appropriate or not when it was legally authorized because we gave great flexibility to the state and local community to make decisions. the other issue you have to deal with always is the money in the state of local fungibility of the money. >> we didn't have that early on. i think this might be something we will look into. it's the improper use of. my time is expired. the chair recognizes ms. aoc. >> thank you very much mr. chair man. this hearing is called federal pandemic spending a prescription for waste, abuse and fraud. the paycheck protection program, all of it. january 13th i see that the
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chair sent several letters to three states. pennsylvania, california and my home state of new york with serious allegations with widespread fraud and abuse. but i am curious a little bit about how we got to these three states. if you were auditing or investigating what went wrong in states and the distribution of pandemic related insurance how would you go about choosing what to states to examine? >> we would look at a number of factors. one would be the amount of money that would go there we would look for geographic distributions of the programs and we would look for other characteristics. we would take a nationwide
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sample. on a per capita level. >> i don't have the per capita numbers in my head so i don't want to venture or guess at this point. i would be happy to provide something for the record. >> what would be some of the top states you would look at in terms of your experience and oversight in the programs? >> certainly california and new york are candidates to look at but you have michigan, florida, states in the south and the west and so we would have a geographic distribution in order to make sure. >> what we try to do in these cases like right now we are looking at the state and local coronavirus refund. we selected about 18 states and
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we are looking at about 60% of the total amount of money. >> i would like to submit for the record some of the pandemic response key insights, pandemic unemployment insurance programs. now can you think of any methodology that would have brought the committee to send those three letters specifically to just those three states? being under investigation by this committee? >> i don't really know what their objectives were in that case and i don't think -- according to this report arizona pays $1.6 billion to individuals
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stolen identity to get unemployment insurance benefits. louisiana dispersed more than 1 million to individuals after the date of their death and in kentucky, state employees applied for unemployment benefits while still employed by the state and were able to hack the management system and remove holds on their own accounts and none of the states had been put under investigation by this committee. i find it very interesting because the bipartisan nature of oversight is what gives it its power and what we are seeing our investigations into and i believe the methodology for these three states is highly questionable. i ask for the committee if we are going to perform oversight and let's perform oversight. they are ready to provide
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oversight to get the constituents the money they need to pay their bills and i think there's no shortage of members of the committee willing to stand up to their party when it's necessary but i cannot for the life of me understand why the majority would send these three letters just to these three states that leaves us with no other conclusion that there may be some partisanship in this investigation. >> if we are going to start off, let's do it right and with that i will yield my time. >> before i yield back, ms. i would like to join if you wanted to do that a joint probe or whatever i would love to work with you on that or any of the 50 states because i believe it is a problem in all 50 states especially kentucky you are right. the chair recognizes mr. higgins for five minutes.
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>> fraud is always connected with money. i've supported the cares act. there was a new virus. we didn't know what it was. the cares act was our effort to respond and help american families and employees remain financially stable while we and were at the impact of this unknown virus. so here we are in year for to flatten the curve and it very well. on the committee majority to begin conducting meaningful
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oversight into the massive fraud that was no doubt staged to take place when you started rolling out programs with trillions of dollars. 7 trillion in total economic commitment from the united states of america. american treasure, 7 trillion, 7,000 per sovereign state within average 62 counties per state. over 2 billion per county. it's not the absence of fraud,
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americans expected the presence of accountability and criminal prosecution. that accountability is what the republican controlled oversight republican-controlled oversight committee is going to deliver. we know fraud is not born in the mechanisms of man. fraud is born in the heart of man. to be anticipated. the gentleman referred to certain trade-offs between urgency and processes that will put in place the trillions of dollars were set to be dispersed. we anticipated this but to support a 2 trillion-dollar response to this unknown virus we insisted that the money being made available to local banks and credit unions and we post pd
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the sba product out through my recollection is about 4,500 institutions that never handled the sba product before. we wanted and insisted regular americans would be able to communicate directly with the bankers they knew to access. so we knew it was right for fraud but we expected terminal investigations to take place and people to be put in jail. for criminal acts generally begins with suspicions and report at the local level of forgery, identity theft et cetera. we witnessed of that kind of
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accountability. but as we pushed out of congressional investigations, that hasn't happened for the last three years. it will happen now. director smith, specifically regarding investigations it's understandable that the most massive cases would be to prioritize millions of dollars but according to my research the vast amount of fraud that we have witnessed is primarily from smaller cases and i've been advised that they've gone ignored.
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we follow money and evidence and one of the things i talked about in my opening is the secret service training, state local professionals at the computer forensics institute it's the ultimate to teach a man to fish if you will. we trained thousands of enforcement professionals every year to be able to investigate cases locally. i was down in the chair man's home state last week. on the cases they were working at a local level that they were focused on elder abuse and pandemic related fraud so we are a federal law enforcement entity but we have the responsibility to help train, equip and resource local partners who help us in every aspect of the mission to be able to build the capacity. >> thank you for your response.
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>> the chair recognizes ms. porter for five minutes. >> good morning. i have new questions about unemployment insurance. could you read this headline for the room? >> could you hold your microphone on, sir. >> california's edd unemployment system disaster predictable fiasco. >> thank you. could you please, we want to get everyone in on the fun. could you please read this? >> there's no way i can read the headline. >> etds new software has thousands of defects, some critical. mr. smith we will see what is also in my test in case you need to get a checkup can you read that for me?
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>> the north carolina unemployment agencies -- >> a broken system. mr. horwitz, do these headlines seem familiar, do they seem representative of the problems with unemployment in the pandemic? >> they do. >> would it surprise you to know all of these stories were from 2013 and 2014 long before covid-19 was a problem? >> not at all. this is an issue that gao has spoken on for decades may be. i'm not sure if it's about long but the unemployment insurance system needs to be fixed. >> i couldn't agree more so let's talk about that and how we can fix it. what the headlines a show of course is as you said to state agencies have long had problems getting help to people who need it and preventing our tax
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dollars from ending up in the wrong hands. when the pandemic first began we needed to deliver relief quickly but due to chronic underinvestment in technology and systems act states that administer programs, we saw the same problems with waste, fraud and abuse that we've seen for decades under democratic and republican presidents in blue states and red states. i want to talk about the gao high-risk list. what is that? >> the high-risk list was originally created to identify for the congress and the administration areas across the government that we believe were highly susceptible or fraud, waste abuse mismanagement or in need of broad-based transformation as it evolved. >> did the gao identify the system is a high-risk program? >> yes. >> when? >> in 2022.
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>> june of 2022 of the year before unemployment was added to the high-risk list do you know what the rate was for the overpayment of unemployment insurance? >> 2021 it was 18.9%. >> and according to the department of labor before that, before you put it on the high-risk list it was about 15%. in 2019 it was about 9.5%. in 2018 it was 12.1%. in fact the overpayment rate has been over 10% for 14 of the last 18 years according to the department of labor's oig. when the gao announced the unemployment system has been designated as high-risk you said, quote, gao is concerned that many long-standing problems may go unaddressed. do you remember saying that? >> i believe so. >> is that a little bit of an
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understatement at this point? >> for many of those years it was mostly stayed money that was collected. there really wasn't big federal investments in this until the pandemic broke or perhaps earlier in some other emergency situations, so i thought the time obviously was right. >> what they said is the program has experienced some of the highest improper payment rates across the federal government. so my question is why don't we fix this? >> i think if it requires some leadership on the part of the congress and the labor department like a lot of these programs that were the program is reliant on the state and local governments they give them a lot of discretion and when times are good, unemployment is low they don't get a lot of attention. these problems come up.
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>> when someone has a dollar and they lose a dime of it they think shocks but when someone has $100 and they lose ten dollars they are a little angry and it just keeps going up and now we are in the billions and trillions so i would love to have your continued pressure on the department of labor to use all of the funding congress provided in the american rescue plan to actually modernize because i am trying to add up where the 2 million from the american rescue plan has gone and it doesn't seem to have all been deployed and spent to improve these programs. >> yes. i agree. we are going to follow the $2 billion. also i was in the senate testifying last march with michael horwitz and the ig for the labor department. he mentioned the money that was given to states after the great recession to reform the programs that he mentioned some of the money went unused.
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>> in california, after the american recovery act, they were given a 2 million-dollar grant to prevent fraud and guess what, it worked. at the end of the grant program, california quit using the fraud detection program. that exact fraud detection program would have prevented and saved tens of billions of dollars for federal taxpayers during this pandemic so i appreciate the chair man's indulgence and yelled back. >> you want to be recognized? >> i just want to affirm the gentle lady from california we have worked on this for quite a while and over half of the problems with improper payments are antiquated data at the state level administrative error and failure to identify eligibility so i want to affirm what you just said and i will yield back. >> the chair recognizes
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mr. sessions. >> mr. chairman thank you very much. mr. dodaro, welcome. mr. horwitz, good to see you again. i would like to focus my question to you while it is on this subject. we had conversations about ideas that went back and forth with the administration. is there anybody at work? >> or they were there working with them, answering questions? give me an idea about people at work at least from the last two years what has that been like? >> we are engaged with folks. they've been engaged with the labor department to try to address long-standing problems. this is not new. we've been engaged with leadership to try along with of the labor ig to try to push these issues forth and get them addressed because the numbers
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are staggering. >> if they are staggering then what's the progress that may have come back? what have they said? >> to give you a sense of some of the basic issues, the labor ig because these programs are managed by 54 entities in 50 states and other territories, the labor ig needed to send regularly subpoenas to the 50 states to get the data because it isn't housed at the labor department so all 50 states denied information? >> no they didn't but to get it you need to go to them and ask for it and they needed a legal process to be able to send it so we now have it, we are looking at it to give you an example it was found because it is in this locally based system one social security number we've identified
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to date so far was used in 29 states because the systems don't talk to each other, they are not managed at the department at the federal level they are managed at the state level and it's frankly not fair to blame the states for that. they are not resourced to be able to fix and modernize the various systems. some states have done more than others but they are all i think it is fair to say if not all, most are struggling. but not a new issue. >> not a new issue at all in the gao has been at the forefront with the labor ig speaking about this. >> i think part of the problem is there's not a sustained attention to these issues over time and these issues require multiyear efforts and we've been working with the agencies but quite frankly, they are state administered programs, medicaid is another one for example,
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which has huge improper payments where it's administered at the state level, the federal agencies get a lot of discretion to the states and quite frankly, there's not enough oversight on the part of the states and this is a particular issue in the unemployment insurance program because in normal times, it's stayed money that's leveled on employers that there's no federal funds involved until there is an issue where they need the money so there's not a good sense of direction as to how involved our country wants the federal government to be involved in state administered systems and so you run into a federalism issue a bit with these programs and quite frankly i think it would benefit from congressional oversight and direction as to what signals you want to send. >> is there still such a thing that we invented with you years
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ago, 97, the high risk of serious? >> it's still there and sba, two programs are on emergency loans on high-risk loans along with unemployment insurance programs. verse 37 areas we are getting ready for the normal update at the beginning of each new congress so we are ready to unveil the update on the list. >> one question, this information on your website for the agency were where did we find this information? >> it's on the website we have a whole special section. gao .gov and on the homepage there's a medallion that says high-risk list. >> i want to thank all three of you. the gentle man mr. smith, please know the secret service is a valuable organization to us but you should know you've got employee problems that we have
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been trying to work on for years and i encourage your management to look at that about how they treat their employees and how quickly they respond back to the needs of those people and i appreciate each of your time and i yield back. >> the chair recognizes mr. gomez for five minutes. >> thank you mr. chairman. this is the first hearing of a two-year session and i want to be very clear to the american people what i believe the majority of the republicans in this committee and in congress will do over the next two years it will attempt to rewrite history. it will attempt to absolve themselves in any of the decisions they made over the last two years in order to fit into their own political narrative. everything from the pandemic response to january 6th 2 holding president trump accountable himself. we will have colleagues here
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that believe some of the januare patriot and heroes. they are not. they are traders. that's what those are. so let's focus on unemployment insurance. the chair man and the majority of the republicans voted three times in 2020 for the benefit extensions and that's a good thing because it put money in the pockets of americans who were struggling to make rent, to pay food, just to get by but after a month of voting to extend benefits, one month later they voted to stop those unemployment benefits. what changed? did they not know about some of the concerns in the program at that time? know. what changed as we had president biden. my hunch is if it was president trump they would have voted to
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extend the benefits once again, but it wasn't and why are they cherry picking this program and not focusing on other programs? but now let's talk about the paycheck protection program. as members, we voted to put the money in the pockets of constituents who need it the most, to keep the small businesses afloat. we voted to put money in their pockets not members of congress. we have colleagues from georgia who had $183,504 forgiven. other republican members had up to $4.3 million forgiven. why not focus on this program? that's because if they did, they would have to answer these questions regarding their own businesses, their own loans and why were those forgiven and not others? so if we want to talk about handouts and fraud, let's talk about it.
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let's not cherry pick. let's pick all the programs that were in place during the pandemic. let's talk about if we want to do oversight, let's do it, but this isn't about oversight. it's about passing the buck and making one. so don't be fooled. the american people shouldn't be fooled by them trying to rewrite history it of the rules and responsibilities and implementation of those programs. i believe they were a good thing. you know, yes no program is perfect, but it did keep afloat the american economy, the american worker and made sure that we didn't fall into a deep recession so with that, let's focus on, inspector general, on the estimates on the website but it says the estimates on the
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website say we spent roughly 653 billion in pandemic expanded unemployment however your website also points out less than a quarter of that could potentially be in a proper and less than apples fraud. can you speak to the fact a substantial majority did what they were intended to do and keep americans out of poverty and save lives? >> certainly, congresswoman. in all the work we've done in the oversight work, no one has suggested in any way sought to underline the importance of these programs. we all can recall what was going on in march of 2020, april of 2020 and the need to assist and help people. the problem has been not that the programs were well-intentioned or valuable, the problem is we've seen substantial amounts not going to the people it was intended to help because of the fraud. we've also had hearings and
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panels and programs about the scope of the identity fraud is such that for example we heard how in the unemployment insurance program, individuals who were intended beneficiaries sometimes when they went to get benefits were denied because the state agency thought they were the fraudster not the person who came first who was the actual so they struggled to just get the benefits they were entitled to. that's why the programs need to be fixed and addressed because congress meant for the money to go to the people who needed it and that is where we should be putting our efforts. >> thank you. with that i will yield back. >> the chair recognizes mr. biggs. >> thank you mr. chairman and for all of you. i'm sorry i've been in and out during multiple hearings. it's good to see you again mr. horwitz and mr. dodaro. welcome, mr. smith. so i guess i'm going to try to broaden shoot this thing. is there any money not expended
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in any of the covid relief packages that you are aware of? >> yes. there's about as of november 2022, there's about 157 billion unobligated funds. >> okay great. thank you. and what is the total amount that you estimate was spent through either fraud, improper payments or waste in any of those programs? >> so, congressman even at this point it is too early to give any estimate that's reasonable. what i've said before and i will say it again it's in the tens of billions of dollars. it wouldn't surprise me if it exceeds ultimately more than $100 billion, but we have so much work to do that's why congress extended the statute of limitations last year to ten years. we are in year three and that's
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why we need that extension on the unemployment insurance site as well so we are going to be counting and figuring this out for years to come. we will go after every penny we can and use every tool you give us but it's going to take time and we are not there yet. >> mr. smith, i read that you had returned through an analysis of i think 30,000 financial institutions something of about $3 billion to unemployment insurance benefits is that correct? >> yes sir. >> and i want to get to this because i think this is interesting during the last round of questioning, the assertion was made to the other $653 billion overall in unemployment insurance that was disseminated through those programs and that the estimate was somewhere below 25% was improper payments, fraud or whatever so if that's the case
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though, we are talking is that accurate, first of all i want to make sure i don't want to mistake something. that's what i understood the testimony to be. >> the department of labor estimated for 2021 improper payments of $78 billion. about 18.9% and in 2022 it estimated 18.9 billion that is a 22% improper payment rate so those are the estimates at the department of labor and it's mostly for the regular unemployment benefits. it's not for the pandemic unemployment insurance fund so those are not complete estimates for all the federal spending that was made during the period of time. the labor department is now trying to figure out the
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pandemic unemployment insurance program. that's the one that went to people who were self-employed or working part-time. that was the new program that was created. the other federal programs spent the benefits or added to the benefit during a period of time. those estimates are covered and those programs are covered by the estimates but not the other one. >> i am more confused now than ever. i just want to be clear on exactly what's happening. i appreciate that and as we go forward maybe we can get together and just kind of understand what that range might look like. >> what we've done is estimated on the unemployment insurance area if you take the fraud rate and extrapolate it at the low end of the estimate, it is
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greater. and now we are working to try to figure out in estimate again. i agree until all these investigations are underway and i mentioned the labor department is opening up 100 new investigations every week and the program has over 500 investigations underway so they will have investigations into fraud on this for a period of time, but we are trying to get a sense of what we think the magnitude would be. >> i look forward to the discussion with you gentlemen. mr. chairman, my colleague mentioned fraud occurring within the unemployment insurance program in my home state of arizona. what she didn't mention is arizona identify the problem, partnered with the private sector and implemented an identity verification system because we know what you're talking about there, that the biden administration official in treasury called kind of a silver bullet and that quote almost immediately the fraud saw the
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game. once the tools were rolled out. you had a 99% reduction in fraud once we implemented of those measures in my state. so i would love to take a closer look at arizona's response, how it worked, why it worked and maybe we get there. the federal level as well, mr. chairman. and so i appreciate you all being here today and thank you. i yelled back. .. a city of about half a million people, coastal community. i was a mayor during the entire time of the pandemic and the emergency. very proud of the response we had as a community in the act
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pandemic by president biden called our sponsors the governor of california said is the best response from a city in the state of california print fax were the first community to vaccine 99% of our seniors first community to vaccinate all of our public school teachers in public school system. the first city to reopen public schools as a school system in the state of california. i live the pandemic 24 hours a day every single day since it started. i think it's important as we have this hearing and others on that important topic through the pandemic in a response will continue its important to remember catastrophic loss of life event. million americans across this country and long beach loan we've lost over 1300 relatives, friends, families and neighbors personally i lost both my mom
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and my stepfather to the pandemic with my mom's healthcare worker. the lost israel for a lot of us. businesses were closed families and kids are greatly impacted by attacks other republicans on this committee response is happening in her agencies important to note we had a catastrophic emergency and the president, the vice president all the agencies did the best job they could to manage this emergency. want to thank the president for his response. want to thank his continuous work that's happening right now in our recovery. a lot of folks don't realize a karis act the american rescue plan saved lives. save small businesses save and save nonprofits.
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the money that was sent to us by the federal government cap cities like long beach afloat and countless others across the country. it allowed us to provide food for those who are hungry but loud people in their homes with tenant and rental assistance for it allowed us to open homeless shelters rescue for follow-up into homelessness it allowed us to provide small business grants for small businesses that needed to stay open to restaurants that were about to close. i am grateful to all of you who are involved in some oversight or implementation grateful to the federal government for supporting providing support for our cities. most importantly money from the cares act and the american rescue plan provide opportunities for astute text on trip test, vaccinate and keep employed. any major crisis or emergencies are going to be mistakes we are all moving fast and quickly. we take them seriously and we learn from them bring california for example we've already seized were covered over a billion dollars in fraud and abuse for its important to know mistakes
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in emergencies are going to happen. but it's also to note who should be held accountable for some of these concerns brought up by my republican colleagues. they should remind us who is actually present when the pandemic started? >> president trump records thank you for that. i remember as a nurse how difficult it was the acne support from the white house. there is no ppe, were not getting our masks on time but we had to procure tests ourselves. so i'm sympathetic often times in emergencies things are going to be difficult for us as a city had to spend $20 million of her own money immediately without knowing it would get reimbursed i got real forced on fema just to keep people alive on the ground. insistence smith what establish the fraud enforcement task force? >> or we were protecting president trump at the beginning of the pandemic were
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questionably present by put in place additional committee on fraud and abuse on the pandemic. so, i say that there's i was going to be mistakes made across administration grateful for the biden/harrison administration for trying to the best they can to address of the abuses that are happening but also think it's important but the entire context of what we are talking about in this idea it would just experience a single largest life loss of life event in our area to think through fear services thank the committee for bringing this up in this hearing i yield back rest my time. as for recognizing exit member. the $137 billion on obligated covid funds "i believe it's one or 57 million. >> and have a general estimate how much phones and all agency accounts regardless of what
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they're there for? do you have an idea what's out there? >> for all federal spending? >> and non- obligated phones because they do not have any idea on that right now. i can find out and provided for the record. >> i would appreciate if you would provide that. >> is a big government. >> the child and share now it recognizes her questions request thinkers or german to think the ranking member for this hearing today. and the partisanship's and the politics of this hearing is absolute and complete bs. our country and the entire world face the pandemic unlike anything our generation has ever faced recent decisions were made that regarded some decisions were made i'm sure were going to look back on 20 years from now and have great heartburn like over all the fraud that is been committed. partisanship and politics has kept us from doing our job out oversight keeps us from doing our job in congress. heaps are federal agencies from being able to be the best they can be.
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and anytime the federal government spends trillions of dollars we should in sure that safekeeping regardless of who is in power. call for 19 is not the fault of this administration or the past administration at all. but, it is up to us. it's republicans and democrats for generations under decades. we've got to ensure the safekeeping of this money is done better now than ever before. there is guidance and federal agencies on how to allocate these funds. the guidance was vague. lead to potential integrity concerns and opportunities for bad actors seeking to take advantage i note the time this was rushed and there was urgency because of the worldwide emergency. but even with these concerns the money kept flowing as last two covid relay spending bills added to the sum total of 1.15 trillion payments to individuals just over 1 trillion to unemployment when we
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literally paid people to stay home. no wonder, none of us should be suppressed it's hard to get people out of their homes and back to work. with 779 billion for ppp loans for a total of about $5 trillion was spent roughly on covid relief. as of today this bit of a 1000 people convicted of fraud relating to covid-19 problems. all over 600 are currently facing similar federal charges. sounds like by the testimony today there might be thousands of more charged in the years ahead. i appreciate everyone's testimony today coming here being forthright with our committee. today i am encouraged by her leadership on oversight that we will leave no stone unturned to uncover waste, fraud and abuse plaguing this program. the thing he found most interesting lead to me on the testimony today is the data issues we as the federal government have forgiveness and should mr. horwitz having to
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subpoena 50 states for data if it doesn't record during dealing with immigration or covid relief fraud or dealing with the background checks on bad guys trying to buy guns. we have a real problem with data, data integrations or systems talking to one another legacy technology being utilized. and if we don't fix it sooner going to be overrun with that. i appreciate the ideas put forth part one of the things that intrigued me probably intrigued a lot of people the few moments i have left in the committee today is the use of artificial intelligence in some of this. trying to find the fraud. and of course now we all know about it 5 million users over 1 million users in the first five days and only growing exponentially. they are not the only ones. but my questions today and also
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mr. horwitz can you explain the type of work how is ai being used questioning is it advantageous is it speeding up the progress? i think at the outset people need to be cautious about it. also read about some of the cautions and using ai. during oversight work in that space in gao is as well. the analytics we are using to try and find issues and anomalies and problems. things should be following up on. more primitive form of ai at the outset sba inspector general. they were getting him one day 1000 or more complaints which
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was more than they got in the prior year in total. they needed to try to figure out and tree awes what were the highest level most important ones. we help them triage that by using a form of if you will ai far more primitive than what you mentioned. those are the kind of things we can do. it is something we have to do as governmentwide agencies need to use it. inspectors general needs to use it. it is the future of oversight for. >> thank you i've run out of time but look forward to working with you also to subcommittee chairman on tech, cyber and government interfacial risk on the huge marker for us determinate waste, fraud and abuse in future think if your time today. talk to chair now recognizes gentlemen from florida for five minutes for his question for. >> think it mr. chairman from blood were starting this committee talk about waste, fraud, abuse how we can make government look better for the people. the previous comment i agree the
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initial comment when you take the politics out of the discussion very take politics out of the posturing and hyperbole so that way we can work together to modernize our government and make it work for the people part of this committee will continue to look at other financial abuse such as wage, theft, corporate welfare as we continue over the next two years. assistant director smith, we have heard a lot of hyperbole in the little posturing from this committee today. i think will be communicating talk about an issue is extremely important. finding the solution with her things like the grace theft in our country's history but i'm curious from the point of view from law enforcement, does that type of hyperbole when talking about crime work to exacerbate the issue? >> , thank you for the question. i think it's inconsequential to the bad guys as law enforcement professional bad actors exploit situations no matter what the political climate is. so we focus on investigating
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violations of identity theft fraud and wire fraud and bank fraud directs thank you, thank you. yes okay. [laughter] all the gao's recommendations increase the capacity and resources of the federal government's ability waste fraud and abuse. oversight is not just talking about an issue we have to solve it. in the spirit of solving it can real improvements be made without additional resources and money to the government to be at the department of agencies to their set up for success agility issues? >> some of them can be made without additional resources. some need additional resources such as the ig community to continue their investigations on fraud. also to set up this analytics center. on so it's really a mixture of both. >> do you think that the amount of resources that were allocated
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during the previous administration was sufficient enough for what we are dealing with? >> i think there is adequate money given. think it was just the choice of decisions that were made in some cases. i talked about limitations in the legislation itself. the agencies made decisions that i think could have been different decisions. they were given money to help administer the programs. i think there could have been a little more flexibility that was given. treasury has run into problems recently because they could not redistribute the money among some of the programs particularly new programs. because until you started administering them you don't know whether it's an adequate allocation or not. congress affixed that with the latest consolidation appropriation act. i think by and large the resources were there it was just some decisions that were unfortunate. >> thank you, thank you.
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mr. horowitz, on this committee have heard a lot of demonizing of washington bureaucrats. puritan cracks are often the scapegoat a week to be clear were mainly working-class people have decided to serve the country but working to power our government. do you believe that on the central issues here is that agencies and departments were not set up for success? i am thinking specifically about the previous administration. we got into this issue. you believe they were set up for success to be able to dole out the amount of money that was given out? >> think the problem at the outset of the pandemic was the lack of preparedness. now, understanding this was 100 year event with the pandemic. but we have emergencies all outside we have earthquakes, floods, hurricanes, tornadoes, other disaster relief, happens regularly. not at this scale perhaps listed. but we don't take the steps
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after an event like this or smaller recent events to fix what is needed. that was the problem for just to give you a sense of at the sba the small business administration which administered the ppp, the largest amount of money they had ever given out in a loan program prior to the pandemic was $30 billion. they were giving out $50 billion in a day when the pandemic hit. so when you say were they ready for success? if you go to an agency that is experience giving up $30 billion over a year you say here's $800 billion get the money out the door which was initial ppp program. that is a recipe for a very challenging situation. no matter who is running the agency for. >> thank you. i think the point here is i agree. we need to prepare for the future here. whether it's a pandemic or anything else. i look forward to work with my republican colleagues on assuring we give the adequate
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resources and no i tore agencies and apartment so when this happens again we are prepared for, thank you yelled back. quick to chair now recognizes mr. donald for five minutes for his questions for. >> thank you, mr. chairman. and to the witnesses, thank you for being here for it's actually great to have all the witnesses here in person into novel thing in the 118th congress pretty really appreciate your attendance. a couple of things have been stated to the hearing. we want to make sure oversight is being conducted of course. i would like to remind a lot of my colleagues in the freshman who are here for the first time, there was an oversight over any of these dollars in the last congress. i know that because i sat on this committee for there were no oversight hearings about anything associated with pandemic spending. so i'm glad we are tackling this now when it is critical for the others and it's kind of in the new cycle especially today, tomorrow being with us for a couple months as we have hit our debt ceiling. we are out of money, folks.
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thirty-one half trillion dollars we do not have new money. so if you're going to take account of having to potentially raise the debt ceiling in the united states of america you have to take account of how the federal government because of the process of spending its money. during normal times or three pandemic times. mr. chairman i want to submit for the record an article by politico. title the other articles inviting administration reroutes of billions in emergency stockpile: funds to the border crunch. that is the article. the article states that the administration went there process of re- appropriating or moving around almost $2 billion from money supposed to go to the strategic national stockpile. also funds intended to help study long covid that is at the national institute of health and reit routed that help house migrants coming across the southern border.
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because of the president's reckless border policy. so are you aware of this reshuffling of dollars from the pandemic emergency to the southern border and my view failed strategy of the president? >> yes. >> when the president made this rerouted worse on the uses of funds that it was used for the southern border? >> i don't have that information right now. i am aware of the situation what happens. but i do not know the details. >> okay. i will request from you and your offices could you provide those details? it is going to be important for the oversight committee to understand that when money was shuffled from pandemic response to border policy which by the way was a unilateral policy shift at the beginning of the biden administration, that could have put american citizens at risk during the pandemic for that reason why this is illustrative as if we go down the line of setting a precedent
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on how funding is going to be used, we should have an idea of what administrations have done in the past for this is very critical information. one other point, there is money that came to the american rescue plan $1.9 trillion quote unquote covid bailout of the american economy i see quote unquote because it really didn't work. a bunch of that money supposed to go to state and local governments including two school districts. now there is another bunch of this money slated to go out this goes the previous question by mr. palmer about obligated funds so much of the tune of half a trillion dollars in slated to go out in the president as it is going to end the covid emergency effective may 11. if the covid emergency and effective may 11 what's going to happen to these funds that are obligated but have not yet been transmitted? >> all have our attorneys take a
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look at that to make sure. we have appropriation law attorneys that provide assistance. i am not sure the offending is tied to the national emergency declaration in terms of what is been appropriated already. i know some of the funds are available for use up to 2026. some after 2030. so i don't know if the termination of the national emergency would trump what is already in the legislation in terms of how available those funds are made. i will have our attorneys take a look at it. my guess would be the appropriation would be the governing factor for that uses of those funds in the future they would still be available on but i don't know for sure i will double check on that. there are some funding thanks particularly in medicaid for example there would have to be
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changed that are tied to the emergency declaration for. >> agreed medicaid is one times the national emergency. if we are going to go down this road of having to find a way to raise our debt ceiling one of things we should do wish it and let it money go out the door that was tied to the pandemic. that is now essentially over the width that i yield back. talk to chair now recognizes the young lady from vermont for five minutes for her questions for. >> thank you mr. karen good afternoon all. thank you for being here. i'm sitting here is a new member of congress also sitting here is a former leader of my state senate in vermont. and was on essentially our states front lines in dealing with the pandemic and emergency much like my colleague mr. garcia. and i want to be clear we all want to reduce improper payments i think that is clear. i don't semi- collect on the the
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republican side i think we can all agree that it's a goal because it is the people's money. what i want us to do though is bring us back to that moment at the beginning of the pandemic. it is a moment that i remember so clearly thousands and thousands of vermonters calling my office. calling the office of all of my colleagues, republicans and democrats to say we are desperate. we are desperate. we cannot pay our bills. we do not have money for food we cannot pay our rental payments. and i cannot convey to you the loss of sleep or worried as being state legislature i feel it at the heart of this hearing has been a false choice between
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ease of access mr. garcia said we lost over 1.1 million americans. and i'm sure like many in this room many succumb to ease of access to help alleviate fraud make sure people get the help they need. it's about desperate people needing assistance. do you agree with that assertion the government must either choose spieth or accuracy. because what i know is getting the money out quickly
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desperately in need to think it i've said all along i've acknowledged all of our reports the assistance delivered to needy americans. there are definitely choices. one of the things the economic impact statements the money went directly to individuals. there were some problems with that. the first round went to 1.4 billion we got over half of that back. one of which was my own mother who passed away earlier. my sister return the money though. >> is on the record? >> yes, yes. that is. i've already said i testified in
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2020. the programs that are administered through third parties prevent problems. the agencies are prepared and designed properly get the money out quickly. you can also minimize the frauds. you can never eliminate but at the agencies are prepared, the programs are designed properly, people can get the aid they need as soon as possible. what happened with the fraud the person going to run out of time appreciated. batting improper use of funds. make sure better identity
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verification system to know who the people are who are applying. make recommendations about that for the agencies ought to be better prepared to prevent fraud from happening in the first place. can be done and done properly. >> i appreciate that and i am eager and he went on dunce addresses choosing simultaneously. i just want to say this committee we have to keep the people back home and mind every single day. i yield back. brexit chair now recognizes this point i've all seen the headlines paycheck protection program fraud, economic loan fraud, improper unemployment payments. i like to concurrently collect from florida and one of the common and important denominators in the headlines
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with a healthy majority oversight committees failed to have a single hearing from waste fraud and abuse. the most frightening result of this lack of oversight is foreign hackers including this acting on behalf of foreign countries have tapped into these larger funding mechanisms and stolen dollars for struggling americans. it is in the large scope and disbursement can result and waste, fraud, and abuse with unacceptable strategic adversaries have such an easy means to infiltrate the hacking group talked little bit learner stole at least 20 million in u.s. covid relief funds including unemployment insurance dollars in small business administration loans. by the time the covid relief became the target of opportunity have been existence for about 10 years and have become the workhorse of cyber espionage activity for the chinese
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communist party. dhec are believed to be connected very closely to the government they largely acts on china's ministry security. while there bad actors targeting government programs this is allegedly the first strategic state-sponsored cyber threat of the s coded. assistant director smith, earlier you answer the secret service is unsure a pt 41 was directly ordered by the chinese government to target u.s. covid relief funds. when do you think the secret service expects that resolution if dhec at exit on their own accord on government direction? >> , sometimes the context of a criminal investigation those answers never get reconciled. as i said before to your colleague who asked me the question originally, we focus on financial crimes. sometimes financial crimes and the evidence leads you to
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entities that may have other interests in mind. again if that happens we employ our partners at the department of justice he may have additional angles another look at different groups. >> just generally speaking whether they're working directly for them out the chinese communist party knows the comet's party, right? >> reports have stated secret service recovered nearly half of the 20 million stolen by dhec. i am assuming continuing that investigation. these are kind of unfair to have any timelines? do you have anything you can share this publicly or privately? i will be impacting up or something soon. ackerson targeted what can we do
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outside of tearing down this entire systems in all 50 states to provide states with what ever safeguards the federal government unemployment insurance even without enhanced covid benefits from foreign actors. >> and the labor department of some given available begin to set up identity verification methods, means to also check addresses. those efforts need to be continue to go down the road. cyber security is an issue the federal government, government at all levels have not heeded. without the high risk list in 1997. had a critical infrastructure protection 2003. this problem has been known for a while. we need to make sure we have more modern systems that can check. the other problem is allowing data sharing.
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it took years for congress of the social security administration or require them to give the master your pile so we can stop paying deceased individuals. that is not even happen jeopardy set scheduled to happen until next year. and recommending that be expedited there's a lot of things it can be done but the systems have to be modernized. there are too many legacy systems for some of the state systems go back to the 70s. some of the federal governments are decades old as well. >> in many states at the last idf upgrade everybody does. regardless all across town thank you i yield back. the chair recognizes ms. lee. >> thank you chairman thank you to the witnesses for your testimony. it is still surreal to be in this room on the oversight
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committee. in january 2023 our country has experienced multiple mass shootings and a lynching at the hands of police. and yet here we are the very first hearing of the oversight committee to criticize critical unemployment benefits from a global pandemic. this isn't just politics from me. before joining congress i, like many of my colleagues or four years in the state legislature in pennsylvania. as one year later we crashed head on into this global pandemic that frankly we were not remotely prepared to handle. every single day heard over and over the desperate calls of folks unable to access food banks. people facing the risk of homelessness folks literally
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contemplating suicide unable to eat our work. every call was a brilliant pennsylvanian. a real person whose literal lives relate on the same benefits my colleagues see fit to criticize this morning. when the benefits were ended in september of 2021 there were 174,572 people receiving pandemic emergency and 387,932 people receiving the pandemic unemployment assistance in the pittsburgh metro area. the pandemic relief was literally the difference between life and death for my community and communities all over the country. focus on the people impacted i turned to you mr. horowitz. understanding 3.1 billion was secured and the appropriations act of 2023 to protect and strengthen the federated ui
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system under the department of labor. can you tell us have these investments could be used to improve the unemployment insurance system? >> absolutely. thank you congresswoman. we have held hearings about the value of the unemployment insurance program and other programs to help communities as you said. but also heard about the challenges community had to get money to the right place. first and foremost the money needs to be modernized it systems are as different state to state. some have older systems than others. it seems to me the first thing that has to happen is the funding needs to be is to modernize antiquated state systems. >> thank you. i can certainly attest that through ours was a system totally ill-equipped to handle this. by march of 2020 almost a million pennsylvanian found themselves on the unemployed. with that in mind i have the
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same question again how these investments could improve the federated unemployment insurance system? >> out echo the first comment that mr. horowitz made. the modernization systems need to be put in place in each state. there are eligibility requirements are different so it has to be tailored systems. secondly though there ought to be more data sharing agreements made on the part of the states to work together. mr. horowitz gave an example before the social security number used by 29 states. that should not be able to happen with the use of modern technology. i also think labor department ought to try to have states of voluntarily implement fraud deductions. fraud rate these unemployment
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investment fraud in these burdens for a number of years. the federal agencies to the framework as federal agencies and does not cascade down to the state level. which is something congress ought to consider labor department check fraud prevention programs. they have to make sure they are adequately staffed properly as well. they probably are historic low unemployment rates. states had reduced their staffing systems. had old it systems. not a prescription for success. something thinning to give those issues. >> thank you and thank you, mr. chairman yield back. >> a chair now mr. timmons for five minutes. >> i 12 begin by thanking you for your work on modernization.
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we were able to sign into law in december improving government for taxpayers act. we don't get the executive branch to act on your recommendations and probably save taxpayers billions and billions of dollars. i want to thank you for that. it seems there is likely tens of billions of dollars in loan fraud that has yet to be uncovered, is that fair? >> there is likely tens of billions. 100 billion we can just agree on tens of billions that's fine. it seems to me of all the information necessary at your disposal to identify this fairly rapidly. you look at q4 get the business tax id number you can. the q for w-2 employees versus the amounts of the ppp loans and
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q to q32020 was holding. there should be an algorithm proportionality between us different numbers. that should be some sort of report that you can run and then you start arresting people. is that not how this should happen customer. >> or might be a little more sophistication to them perhaps. but, but we don't have access to that data. ask what you need from congress? it is literally a report for you should be able to run a report on this for data points. then you're going tens of thousands of businesses they got ppp loans fraudulently. the metrics don't match up then they lie and they stole and they need to go to jail. so what do you need? >> a clear congressional action and legislation that said that by the fraud alert we issued this week matching our information. always it was name, date of birth and social to social
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security don't send us back your data just gives a yes/no answers are these the real names? it took us 10 months to do that. q4 withholdings plus the amount of ppp loan those numbers should have a proportional correlation that we can all agree is fairly straightforward for it's going to be up and down a little bit depending on what your rent is what utilities are but those numbers should all match up. there's a huge discrepancy whatever that correlation is then they probably stolen it was fraudulent. do you just need us to force everybody to create that report? >> what we need is access to data. about the master file index breakers you need that report run you to have on the list the
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discrepancy and the correlation of those four metrics. then you start putting people in jail. >> many of the platform to continue we need access to all this data congress has to legislate that requesting access to the data or treasury to run a report? proximal run the report. >> we can make them run the report. it is not a partisan issue. people stole tens of billions of dollars in covid relief. what possibly denying benefits to people who needed those people need to be held accountable. the fact that here we are here us we still have not done something should literally be running a report at the treasury department. you need to pass a law. >> we would love to get employee identification number
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information. >> why would treasury not do this? certain federal laws section 610 through the tax code that restricts the sharing of tax information not talking is for the public's benefits not individual income tax returns and what were talking about. 6103 is written broadly for variety for very good reasons to limit where the information. >> is four pieces of data attached to every business tax id number. this should be easy i will work on legislation with everyone who is willing. we'll try to get to the information as quickly as possible thank you yield back. chair recognizes for five minutes. >> thank you chairman thank you ranking member. i am so glad we are having this hearing after years old, we need
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to save lives and jobs in texas. i have this opportunity to thank the congress for bipartisan work on the cares acts thank you two congressional democrats from the american rescue plan. congress should be proud of the way those bills help save people's homes. cap people in their jobs and cap people alive. i want to be clear no one in the countries were strongly against fraud them at working class constituents who needed those covered dollars to make to the small businesses kept running. tim actually got ppe at work. to make got maxine's >> to the house was not foreclosed on. any dollars taken by fraudsters is a dollar taken away from people who needed supports. and similarly must be against relief programs and ultimately aim to reduce aid for these programs and other programs.
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we can talk all day in d.c. about covid programs theoretically. as a former city leader put these programs in place i can tell you thanks to the work of congress and president biden, local leaders in my community want to save people's home break to compensate global economies and three, save lives. i just want to share some facts may not have heard from texas. a one we kept people from losing their homes. through protections with evictions and foreclosures plus the federal housing relief dollars. the city and also reduce evictions in 2021 by 75%'s. keeping thousands of people in their homes. conservative estimates are covid housing programs capped over 1 million americans from losing their homes. two, we save local economies because these economies and sending tony district was able to support over 1200 small family businesses keeping them
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from closing provided hundred 60000 residents and needs trained over 5000 struggling workers putting thousands of people to work. cap 12 million people out of poverty pandemic relief programs cap gdp up eight percentage points. save liza funding for vaccination public health programs plus covid rules the city of austin has a low slung with travis county had the lowest covid-19 death rate among start major texas cities. every death in our community was a tragedy. for able to achieve that same great rate across texas would have 45000 more texans who with sobriety pandemic. president biden's strategy loans local leaders efforts cap nearly half a million people forming hospitalized. i just want to be clear you cannot fraud cure to lower death numbers you cannot cook the books say in the summer people
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from losing their homes, their jobs or the businesses for the hospital beds, the food lines, the morgues do not lie. these covid relief programs and powerful work even while we continue to root out any instance of fraud. so, what i want to ask our panel here today is of course we need to focus on getting rid of fraud but without telling stories of success wicked weapons accountability efforts to undermine help struggling americans. so in your time targeting fraud can you give us examples of programs you've looked into that function well to serve the american people and ensure the dollars actually got to the people who needed them the most? >> we have not heard stories from people is that these programs are a complete waste. that is not what we have heard from we have heard success stories from many of the programs.
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talked about ppp and unemployment insurance. restaurant revitalization program help restaurants and various state and local funding vehicles had a substantial impact. we have visited six communities is part of our oversight work and working on a report on to see how they use covid related funds. what impact it had on those communities. we've gone to communities around the country to get that information. the challenge has been making sure large percentages of that money went to the people was intended for. and went to the communities it was intended to help. so i would not come here and say we are testimony these were bad. what we heard was these programs were helpful and how to fix the fraud to make sure the money because the right place? >> thank you for that.
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helping folks out an 8-mile long food lion they are not committing fraud we're trying to do is make sure covered dollars and were getting to those folks for. >> i agree with what michael said. i would also add operation warp speed i thought was a very effective program. we were able, or for the private sector and government to develop the vaccines in record time. normally take 10 -- 15 years to develop a vaccine operation warp speed worked extremely well. the programs provided funding to help support healthcare workers, was very effective as well all these programs had some level of effectiveness but it could have been even more effective is what we are saying all the money that was allocated was used properly could have maybe saved more people, helped more people out. and that is our goal. >> there was time expires
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recognizes ms. mclean for five minutes for. >> thank you, mr. chairman thank you all for being here today, i appreciate it. a little bit of background i come from financial services background. and i really want to focus on that waste, the fraud and abuse and to represent the american people. and my background if i were to defraud a client probably two things would happen. one, i have to pay the money back into i would probably do little time for that and rightly so. so i want to really focus on what are the consequences and what are the penalties? what is the relationship? if i understand correctly mr. smith to make a preliminary case in hand it over to the d.o.j.
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in your testimony you mentioned the department has recovered over $1 billion which is a good start. however we still have 500 billion in potential fraud out there we just identified and who knows there might be more. i am curious how many pandemic fraud cases your office is actually referred to the d.o.j.? do you know that? >> to give you some background we have opened over 5000 cases since march of 2020. we obviously fell the evidence once we feel like there's investigated merit we take those cases to the department of justice u.s. attorneys offices. this u.s. attorneys offices look at those cases the prosecutor will merit of those along other federal law enforcement entities raise not just the secret service but other federal law enforcement entities bring it as
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well they have to be conflict and prioritize. >> a stick with that theme i'm trying to get some answers. they have over 5000 cases have and referred to the d.o.j.? give or take. >> we open the case once we feel like there is enough evidence we present that case to the u.s. attorney's office. i do not on the breakdown of how many were present in jet and get that number back to velvet box if could directionally have an idea? >> we open a case is in at 90% except rate is in a 20%? >> except rate is different than presentation rates. too eventually present the u.s. attorney's office. >> i am trying to make the correlation is you commit a crime there is a consequence. what i'm trying to for the american people to help justify
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for them their tax dollars being misused on fraudulent basis i appreciate and applaud your efforts. i'm trying to connect the dots on what is the number customer directionally you have no idea? is the d.o.j. except most of the cases? are most of the cases you find accepted? >> and mentioned in a previous response is a law enforcement entity we are by nature trying to grafting the most egregious act. we forensic institute in alabama to focus on a local level. we are confident our colleagues at the d.o.j. take as many cases as they can. >> with all the respect you may be confident but i don't know if the american people are confident with their tax dollars and i do not mean any disrespect that was why i'm trying to ask these numbers is to get some answers for the american people.
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let me rephrase it. how many of these are currently being prosecuted by the d.o.j.? you know that? was i do not know that overall number for the department of justice. i know we've made nearly 500 arrests. >> evade 500 arrests. what is the result of that then? you have recovered over a billion dollars, right? any jail time? >> yes, ma'am. >> can you talk to that effect? >> i have not compiled the number of years or months total for the 500 arrests i have not done that. click link you think at the end of the day just like we treat our children if there is a consequence to your action you talked earlier about deterrence. part of the deterrence process is if we publicly show the american people we are going
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after these criminals people are's dreaming americans hard earned monies not only are we were covering the money in their drink time in a hard time that may help on the deterrent. when can i expect some results for a report? >> i will give you a timeframe on that we get back to the team. we have been pursuing results since beginning of the pandemic. >> are like an accurate accounting of the results if at all possible. just to help on a positive note is we are good stewards of your money. we are trying to get your money back so i know i'm over time. >> in general it is time has expired but feel free to answer the question. >> thank you very much mr. chairman. safar according to the data we've analyzed the department of justice there been over 1000 people pled guilty or been convicted. there's over 600 charges pending another 600 people.
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there been at least 779 people who have been sentenced so far for this is on page six of my testimony written text testimony. the number of people it is gone from one year probation to 17 years in prison. sentences are significant. women number of individual examples sprinkled throughout our testimony. that is a broad accounting at this point michael has probably more precise accounting. >> is going to build on doubt. the members agree everything is on our public website. all of the cases where the inspector general could be involved and i cannot agree with you more. the publication of their consequences. crime does not pay. what we are going to do as inspectors in general is as long
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as that clock is running congress extended from five to 10 years and hopefully do it and others pretty going to keep going for it is going to go for seven more years or more. we are going to hold everybody can accountable. the smallest dollars to the biggest obviously prioritize. the multitier date for some people going to think they get out of jail free card one thanks he can help not only talk about fraud were trauma improper payments. and recovering money. that is where one of the things i mentioned earlier it is an administrative way we can get money back it's not criminal but the taxpayers never getting money back. right now the threshold to use is one or $50000.
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movement to raise it to $1 million so we can go after that. >> thank you. the chair recognizes mr. crockett. >> thank you mr. chair. i've changed my question a little bit coin to go to my roots. the criminal defense attorney aligned times one of the questions is it better to convict an innocent person or let a guilty one go free? often times the look i'm seeing mr. smith's face is a look i will get from potential jurors. neither one of them sounded like a good resolution. i bring this up because what we are talking about his government what happened to meet less than perfect. talk about once-in-a-lifetime pandemic. and so i want to better understand is i want this to be
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a real prick you like and this year end we talked a lot as if we can erode all bad guys in the opening remarks talk about the fact basically there are those sitting and ready to pounce but not necessarily the pandemic are fraudsters. many of them had a record when you talk about the sentences one can presume the higher preferences that most likely been in trouble at some point in time i applaud the effort that all of you have made in your respective areas to make sure we are doing our part. losing sight of we save lives
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were still trying to recover from the pandemic we minimized some of that. this was a mitigation exercise that congress had. so while it may not have been perfect there is not a playbook for the previous pandemic because i am guessing most you overnight here 100 years ago. i'm trying to find out when you look at overall he wanted to be realistic about the imperfect system if we were to throw out percentages of fraud or because i know right now you don't have a crystal ball how much fraud has occurred. look at other programs that have been rolled out what is a good threshold for what we should anticipate as kinda part of the business that we unfortunately may endure when we are talking about such a large -- government
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is big. to get the money illegally but i think most of us think that a percentage of fraud could have
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been much smaller wherever we end up had there been preparedness and action taken in advance. part of the framework we use to put in law in 2016 requires a fraud risk assessment, a profile in the tolerance level for risk that would be set for every individual program so you would make a conscious decision upfront of what you're willing to tolerate and to have the trade-off for getting delivery of services out there as fast as possible to save lives and to hp deal with economic consequences. right now it's just whatever happens and we deal with the consequences. and i've been involved in gao there've been a lot of disasters and that period of time,
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katrina, the american rescue act and the great recession, the $700 billion to unfreeze the credit markets during the global financial crisis. in this situation, there is more fraud than we have seen in the equivalent type of things over the years recognizing that this was the biggest american rescue and history in our history. but had we been better prepared and actually implemented the requirements for managing fraud consciously upfront we would have reduced the amount of fraud and made a better use of that money to help achieve the objectives of the legislation. >> as i said in my opening remarks, i always think that collaborating, sharing information on the front and will lead to some mitigation of criminal behavior but obviously my experience as a law enforcement professional there's always going to be an element of
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criminal activity. >> thank you so much. >> the chair recognizes you for five minutes. >> thank you to the witnesses who are here today. appreciate your time and willingness to be here to answer these important questions. i'm going to get right to it. american taxpayers were defrauded the possible $560 billion as a result of the federal government's negligence in carrying out these federal covid release funding programs and i'm going to start with a rhetorical question but does anyone know of an organization in america or around the world public or private that has been scammed out of $560 billion and simply is that okay? i can't think of one and i don't think it's okay either so after what was the largest policing in american history and possibly
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world history, can any one of the witnesses today give me the name of one administrator, one director, a supervisor that was fired, demoted or put on leave because they failed to keep hundreds of billions of dollars from being stolen and i will yield to each of the witnesses for a simple yes or no and i will start with you, director smith. >> that's pretty insane $560 billion we are projecting and we have hundreds of billions of dollars lost causing massive inflation, 70% of the money according to the ceo the
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solutions ended up lining the pockets of crimes against countries like china, nigeria, russia and not a single person in charge of distributing the money has been held accountable so here's how badly the american taxpayer was conned. the united states federal government has reportedly been defrauded of more money in the last two years within the entire 2022 tax revenue of england, italy, mexico, ireland, greece, israel, canada, poland and brazil combined. the american taxpayers have one question. how the heck were these bureaucrats so dang incompetent that they were being scammed out of $35 million every hour for nearly two years? absolutely insane and what is equally concerning is the fact for years congress has known the size and scope of the american
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taxpayers were defrauded but the committee refuses to act until now now that republicans hold the gavel in an attempt to protect the big tech industry, the democratic party, the mainstream media has tried to discredit the committee before the work has even begun. there should be nothing more bipartisan than ensuring american tax dollars are not stolen by fraudsters but sadly it's taken the committee to be willing to get to work on it so here we are the american people have their businesses shut down. they lost their jobs, their livelihoods, their work because of government mandates and shut down and the same government spent trillions, lost hundreds and the result is skyrocketing inflation and interest rates for the american people. our role is to ensure we find out how this happened and make sure it never happens again and
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hold those that stole the money accountable. i would like to ask you under the biden administration, we have seen the doj wage a full out attack against the american people from accusing parents concerned about their children's education, being domestic terrorists who bring the wives livesto pressuring companies to censor as republicans have continued to mention throughout the hearing there is a clear difference between people who were issued improper payments versus fraudsters who'd stolen hundreds of billions of dollars collectively from the american taxpayer with malicious intent. the chair horowitz what is the department of justice doing to ensure that the federal government is targeting criminals and those who knowingly took millions of dollars from the federal government to fund criminal
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gangs in russia, china and nigeria? >> we've worked with the department on these investigative matters. they set up a fraud task force where a member of the secret service we worked closely with law enforcement partners across the federal government. it's going to take a substantial amount of time, effort and resources because there are so many cases. we've had of the partnership working and we will continue to refer cases to them and they will have to make assessments on which cases to bring criminally. we are also working for the payments with civil lawyers as well to get the money back for the taxpayers. >> thank you mr. chair and i will yield back. >> of the chair recognizes mr. goldman for five minutes. >> thank you to the witnesses for your service and being here today. after that effort to blame the victim for fraud by bad actors
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let's go back to the undisputed premise that the money appropriated by congress including by nearly all of my republican colleagues on the other side during the past two congresses was both life-saving and economic savings as we faced the worst pandemic in history. as a prosecutor i persecute rampant mortgage fraud that resulted in the subprime mortgage crisis and we know there was significant fraud arising out of the t.a.r.p. program following the financial crash. but i was shocked to learn in preparing for the hearing that many of the benefits or at least some of them were available on a self certification process. in my correct that means individuals could receive covid relief fund is simply by certifying their eligibility without any independent review? >> that's correct. >> would you agree also as a former federal prosecutor and current ig of doj that self
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certification process is a recipe for fraud? >> absolutely. >> i read your opening statement closely and i appreciate the call for resources for data and data and analysis which in my experience is the most effective way of rooting out identity theft yet the biggest cause as most other fraud has the department received enough money to prosecute fraud related to covid relief funds to the very fullest extent? >> that's going to be a question over time because they are ramping up dramatically as we are. they will need additional resources. particularly this year and the coming years to deal with what i think will be a continued substantial number of cases. >> you would agree the
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department would benefit from more funds. >> i believe they will need that this year and in the years to come. >> i would ask you to switch your hand back to the inspector general for the department of justice and i'm going to direct your attention to a recent "new york times" article entitled how the quest to find flaws in the russia inquiry unraveled which is dated january 26, 2023. did you read this lengthy article last week? >> i did. >> i ask unanimous consent to introduce this article into the record. >> without objection. >> this article was based on a month-long investigation by the times exposing a tremendous amount of waste and abuse but no fraud by special counsel assigned by former ag bill barr to investigate the origins of the investigations.
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it's been referred to as the russia investigation. >> and you concluded that the initiation of a full russia investigation by the fbi was legitimate and supported by the evidence, is that correct? >> i would want to go back and find the words in that report but we've determined we didn't find evidence of inappropriate decision-making in that regard but i would want to use the precise language in that.
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do you know and how many cases they charged as to its public i have no idea if there's anything i am assuming not but i don't know the answer to that. there are two public keys is beyond that. >> and how many convictions the others the jury found the individuals not guilty. >> last night congressman ted lu and i sent you a letter requesting that you conduct an investigation into the special counsel's investigation to see if mr. barr violated any department policies, regulations or law. have you reviewed the letter yet? >> i was not aware but i certainly will read it and review it. >> i would ask unanimous consent to enter into the record -- >> of the gentleman's time is
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expired. can you just commit to -- >> we appreciate the passion for the investigations. thank you for the next few questions. the chair recognizes stirfry for five minutes. >> first mr. chairman thank you for holding the hearing today and to the witnesses. i'm going to highlight an example of covid fraud in my very own district. just last year to members of the myrtle beach family were sentenced in federal prison in a third to probation for their role in the scheme to defraud the government out of more than $500,000 in a series of fake tax returns and stealing stimulus checks sent to other americans under the cares act while many people are struggling to make ends meet during the pandemic these critical's went on a shopping spree with money stolen from the american people. this is in my very own community
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so i want to thank you for holding this because this also touches home as it does for many americans. i would imagine this is by no means the only place that this is happening. can you talk about or touch on a similar instance that is occurring around the country? from a factual standpoint? >> we talked somewhat about the organized groups, our experience in the 5,000 plus criminal investigations that we've opened is overwhelmingly homegrown actors. you talk about the home district, columbia offices especially when it comes to the task force partners. they actually have a lot of
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capacity, law enforcement but as you mentioned in the question that is a similar footprint that existed in the other cyber fraud task forces out of the 41 others in the country and what we do is an employee not just agents with guns but analysts and other professionals that collaborate together with those financial institutions and local banking communities and law enforcement professionals to detect and arrest people. >> can you touch on how you are identifying new cases of fraud or abuse moving forward? >> so early as i mentioned, the oig and reassign the mo use as a memorandum of understanding where we share information and anomalies and indicators of
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compromises. overwhelmingly, our investigations focus on folks that are looking to enrich themselves through illicit activities once you start knocking on doors asking questions and looking into bank accounts, you're usually going to get some answers from the law enforcement perspective. >> once the improper payment has been made how difficult is it to recoup that money? >> it's important to recognize the improper payment estimates projected but it's always difficult to recover the money. i think in the last two years there've been improper payments of over $200 billion. recoveries have been about 20, 23 billion.
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so ten, 12%. >> would you agree that in this instance improper payments are not always recoverable? you're going to run into a brick wall. >> absolutely and you will have the same issue with fraud. >> out of all of the improper payments that have been made and i know you collected 23 billion back how much can we realistically expect to recover? >> that has been about the consistent number that i have seen over time. of the main thing that i've been trying to do and convince congress to have some legislation to do this and oversight is to stop the improper payments in the first place and the same with fraud. unless you prevent this from happening, the prospect of recovering this money over to period of time are based on historical evidence.
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is it possible from a strategy standpoint to enlist the help incentivizing it to broaden that perspective is that a decent policy initiative to look into? >> absolutely. i've been trying to convince each administration and state auditors more effectively in that area medicaid program in particular. the medicaid program alone the last two years is at 98,000,000,080,000,000,000 in improper payments. a state auditors could help greatly. the state auditors could help out the unemployment insurance area and the federal government ought to support the state auditors and they can use them to hold people more accountable for third-party deliveries. >> thank you. i will yield back. >> the chair recognizes mr. moskowitz for five minutes. >> mr. chair man, thank you. and thank you for holding the
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hearing today on pandemic response, waste, fraud and abuse i think we can agree on a bipartisan basis that of course we want to find out about waste, fraud and abuse because in the emergency management business one of the things we do is after a disaster we do after action reviews what went right and what went wrong to not repeat the same mistakes and so when the country began we were facing a disaster. at the same time the trump trumpadministration was ill pred and several times wanted the states to take the lead instead of the federal government specifically when it came to ppe so we heard a lot about fraud and abuse today. i want to focus on the waste.
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the amount of waste that happened during the pandemic especially in the ppe space is something i want to discuss. the void created when the states had to step up and procure the resources they had to compete against anybody but antarctica but most importantly the federal government and while the federal government was raising prizes, companies were price gouging the federal government. while the federal government wasn't following their own procurement in fact $18 billion was spent by the trump administration procuring these goods. the 10 billion of that didn't go through procurement. so one of the things i want to talk about as the former director of emergency management for the state of florida is the inspector general's office , andthis question is for you, d the office ever look at anyone
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within the inner circle at the white house on whether they were involved in specifically selecting vendors and negotiating pricing for ppe? >> each inspector general has authority by law over the employees in their building, in their agency. we do not have authority to investigate individuals outside and there is no inspector general for the executive office of president or the white house. >> i appreciate that. let's switch over to the gao then. has the gao examined whether anyone within trump's inner circle including family members were involved in decisions on who should get what contracts and the $10 billion that didn't go through procurement into the pricing that was paid for all sorts of different ppe whether that be masks, ventilators. trust me i've read all the stuff but i just want to know did you specifically look at any of that? >> no we did not.
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>> so what if i offered to you the states couldn't get this out of fema or hhs that we had to call the white house to get this stuff released directly from his inner circle, would that sound like normal procurement process during an emergency? >> probably not. >> one of the questions that i think we should focus on, mr. chair man in this hearing is that covid was not a two year's event, it was a three year event and i am more than happy to join with the majority and look at the fraud and abuse that went on in the last two years and covid related programs but i think it's only fair for us to also look at the beginning of the disaster and the amount of government waste that existed by the federal government sole sourcing contracts and negotiating pricing within the
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white house, subverting the process from federal agencies because not only did the drive up cost and waste, that filtered down to the other 50 states because if the federal government was paying more money and i wanted to buy those supplies, i had to pay more money so it is in the 18 billion spent here it's the money now that fema has to reimburse those states for goods that were too expensive because the federal government drove up those prices. i yelled back. >> the chair recognizes ms. luna for five minutes. >> i want to thank the chair man in all the witnesses for participating. it's been a long day so i will try to keep this short. improper payments continue to be an area of concern that the federal government due to lack of oversight to the administration. as representative have stated, estimates range as high as $560 billion subject to fraud, waste and abuse. that's hard earned taxpayer
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dollars that could have been used to feed families, heat homes president biden continued to improve spending with no guard rails in place to make sure money was going where it's intended. we have seen the federal government spending and distributing to illegal immigrants, these mind you that did not take or pass the house screening process to come here and in addition to that they didn't pay to the taxpayer system. i would like to submit we can see the city of chicago is sending 71 million for financial assistance for underserved communities such as undocumented residents. the state of washington is handing out 340 million in grade payments for immigrants, illegal immigrants who are not otherwise eligible for federal stimulus into the city of boston, 1 million in direct cash transfers to immigrants who are unable to receive federal covid benefits. this rewords it into this process incentivizing people to come here illegally and some
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have estimated a shocking 60% of latin american children who cross the border largely because they are seeking the american dream and understand some of the benefits people offer in this country are caught by cartels exploited for child pornography and drug trafficking. at the arnold cherry picked facts or figures this is actually happening. my question is for mr. horwitz if illegal immigrants are prohibited from federal public benefits, then why are they allowed to receive federal covid dollars from programs like the american rescue plan? >> i would have to go back and look at each program and how the eligibility determinations were made, and i'm happy to follow up with you and provide information to you. we are looking at anybody that is ineligible frankly. we don't break it down between the categories as to why. we are looking for people that are ineligible in working with law enforcement partners on that
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whether you are here legally, not legally, you owned a business or never owned a business, you know, we are going to follow up and pursue that. >> before i yield back my time i want to put out that being part of oversight we want to ensure the taxpayer dollars are safeguarded but also that the government funds are not being used to largely incentivizing and hurt people in the process. so to finalize it may be just your personal opinion do you believe that because of this type of inappropriate spending that it is putting people in harms way that would potentially not be subject to this victimization? >> so as i said earlier, i don't think we've heard testimony that the programs were not helpful to individuals in fact for many of them like the ppe program we heard from small businesses that it saved them. for restaurants and the restaurant revitalization program, for unemployment insurance we heard testimony how it kept people afloat during
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this period so we haven't heard testimony that the programs were a waste and useless. what we heard is there was a lack of prepared, preparation to issue the benefits. it resulted in fraud. a lot of identity fraud and what we have heard is from how it victimized not just the public who lost the benefit of these programs to the wrongdoers, it harmed the person whose identity was stolen. that individual has to deal with that ended often harmed the individual it was intended to benefit because they often struggle to get the benefits because the fraud got there first and the programs they were for. >> before i leave, would you please submit for the record, the graphic for the record? >> without objection. thank you for your questions.
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just to note they just called for floor votes. we are going to get two more questioners in and then we will recess and reconvened ten minutes after votes. there's only two votes and we move a lot quicker than pelosi did, so the recess won't take long but now the chair recognizes mr. connelly for five minutes. >> i think the chair and welcome mr. dodaro and mr. horwitz. welcome to the committee. my questions are going to be to you mr. dodaro and mr. horowitz. on monday the pandemic response accountability led by you released a fraud alert fraudsters used nearly 70,000 questionable social security numbers to obtain as much as 5.4 billion from spa's, paycheck protection programs is that
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correct? >> that's correct. >> the fraud could have been stopped if the federal government invested in appropriate data analytics capacity and focused on sharing the data across agencies silos into various levels of government, is that fair? >> would you agree with that mr? >> absolutely. >> so, based on previous conversations we've had about improper payments and trying to curb that, which this committee has been talking about for a long time has been a high risk category for a long time as well, after these i introduced stop fraud act that in fact would by statute do just that. it would have used the data analytics and would have propagated the data analytics information sharing across federal agencies. a desirable goal that could very well have curved or prevented
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the fraud we are concerned about and the bill would also create a center of excellence to look at best practices and try to assist other agencies in achieving those goals. unfortunately not a single republican cosponsored that bill. today's hearing concern notwithstanding. so, i would invite the chairman to take a second look at the stop fraud act and maybe we can as he indicated yesterday his desire at the desirability of cooperating on a bipartisan basis. i do think the stop fraud act has real bipartisan potential and i would welcome you joining me in that effort but i do think there are steps we can take and could have and should have taken
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that might have made a difference. would you like to comment on that? >> i have since 2015 recommended the permanent creation of the data analytics capacity to support the ig community that says proven value and was disappointed that the treasury department did not pick up that option that congress gave them to take on the recovery operation center existing capacity and i was also disappointed congress didn't act on my recommendation back in 2015 but better late than never. so i hope that the congress does pass that. i think that it will have tremendous proven value and return many more dollars than the investment but it has to be made permanent so it's ready to go anytime. >> absolutely. mr. horwitz, would you like to comment?
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>> i would say ditto at some level, but as you know and remind congress, the rock was created with tens of millions of dollars of taxpayer monies. it was very effective. it went away in 2015. we had to start from scratch in 2021 with a new appropriation from congress and more money. we would have had not only, not only would we not have to do that, but i bet we would have found wrongdoing fraud and other recoveries in the intervening five years between the two because there were other disaster relief programs. >> the final point i would pick up on it's the culture. what's reworded is it puts your money out the door and funding programs that have metrics all worthwhile goals but wasn't really reworded comfortably, and when i say $4 billion, i avoided
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fraud. i took measures to make sure it couldn't happen and we have to change the culture and i'm hoping this piece of legislation is a big step in that direction but i think that your point is very well taken and i would yield back. >> the other culture that has to be corrected if i may mr. chairman is to make it clear to agencies, management for the programs that prevention of fraud is their responsibility. it's not just of the auditors coming in later, the investigators, secret service or whomever because unless it's prevented up front, it's not really going to be totally successful. we always need to have investigations afterwards but unless that culture shifts to the agency management and congress holds them accountable, you are not going to be as successful as we all want to be. >> thank you and before we yield
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back i would like to comment we are going to hold these agencies accountable. that starts today. i ask unanimous consent to enter into the record a letter from the social security administration dated 2023 this letter describes various activities that office has undertaken with respect to covid fraud notably in relation to the misuse of social security numbers which is an issue at the heart of what you all have discussed today in many of the covid fraud schemes and it also points out the social security never dedicated funds for oversight, never received funds for oversight. this is another step democrats could have taken in the american rescue plan but chose not to. without objection i will enter this into the record and my last question before recess. >> we were hearing a lot of testimony. it's fair to say we are talking about billions of dollars in
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fraud. the effect of the matter is we are discussing the largest case of fraud in the history of the united states and frankly this might be the largest case of fraud in human history as we've known about these extremes since early 2021 and it's absolutely an embarrassment to this institution to the executive branch, to all federal agencies involved. the government has been swindled by not only her own people, but criminals in russia, china, romania, nigeria to name a few. it's estimated 40%, 40% of pandemic unemployment funds of $400 billion in taxpayer money went to criminal organizations and the regimes like russia and china. to put this in perspective according to the world bank there's 194 recognized countries on earth and 171 of them don't even have annual gdp's that rise to that level of $560 billion.
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to add insult to injury democrats do not hold one, not one full committee hearing on oversight last congress on covid-19 fraud which begs the question what is this committee even for? quite frankly it's for hearings just like this when a potential amount, half a trillion dollars has been stolen. what do the democrats do in the rampant covid fraud they use the reconciliation process to go through $1.9 trillion of spending in the form of the rescue plan act that continue to fund the programs that we knew were systemically fraudulent so i ask again what did the democrats do for ten years in oversight instead of investigating the largest fraud in history, well they hold hearings on the dangers of flea and tick collars for pets. whether or not the postal service could handle packages during the holidays. the developments at a state stae cannabis laws and potential
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bipartisan reefer reform. they made ceos out of critical and essential american energy sectors who are the most effective and most efficient in the world and extracting natural resources. in fact they hope to guarantee the national security. so i wonder if democrats considered the massive spending in barring federal land leases and permits for drilling anything to do with a 40 year high in energy prices we are seeing. they hold hearings on protecting the free speech of environmentalist activists and others that agree with them while at the same time celebrating censorship of those who didn't share their views and get this, they hosted two depositions, one roundtable had one full committee hearing. why, because somebody had a b in their bonnet about dan snyder. we have hearings to tell us believe it or not that pollution is racist. the weather is racist, climate
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change, covid-19 by definition is an indiscriminate virus, maternal health care, racist. in america the land of opportunity and prosperity where millions of people come to this country every year both legally and illegally to live their dream. many democrats told us for two years that america is systemically and irrevocably racist. that white privilege runs amok. the hard data proves the leftist talking points to be categorically false. in the list of useless hearings goes on and on. the last few years when an egregious dereliction of duty. so mr. chairman with tremendous delight and relish i see this committee actually tackling serious matters to the country of our citizens. like for instance criminal transnational organized crime
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stealing half a trillion dollars from the american treasury and by extension the american taxpayers very pockets. thank you very much and i yield back. >> thank you. we are going to now without objection go into recess. we will reconvene ten minutes after the last vote. we only have two votes, so it won't be long and about eight or nine more questioners in a second panel so without objection we are in recess until ten minutes after the conclusion of the last vote.


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