U.S. House backs bill to recover nearly $1 billion in suspected pandemic unemployment fraud funds

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House backs pandemic fraud bill

Highlights

The U.S. House passed the Recover COVID Unemployment Fraud in Banks Act, targeting nearly $1 billion in suspected pandemic unemployment fraud funds frozen in bank accounts.
A federal task force led by a National Recovery Coordinator will coordinate with state agencies to identify and return unclaimed or frozen COVID-19 unemployment payments.
The bill extends the statute of limitations for prosecuting pandemic unemployment fraud from five years to 10 years, addressing cases otherwise expiring from March 2025.

Recovery plan targets frozen bank funds

As reported by the House Committee on Ways and Means, the legislation, titled the Recover COVID Unemployment Fraud in Banks Act, is designed to help return hundreds of millions of dollars in taxpayer funds that have remained tied up in suspicious accounts for years.

The measure establishes a federal task force led by a National Recovery Coordinator to work with state agencies in identifying federal pandemic unemployment payments issued on prepaid debit cards and held by financial institutions, or transferred to agencies handling unclaimed property. The goal is to coordinate the return of those funds to the appropriate state agencies.

A recent finding by the Department of Labor Inspector General identified nearly $1 billion in unspent COVID-19 unemployment insurance money frozen across the country because of suspected fraud. Lawmakers say that without congressional action, a significant share of those funds may go unrecovered.

Longer enforcement window for fraud cases

The bill also extends the statute of limitations for criminal prosecution and civil enforcement in pandemic unemployment programs from five years to 10 years. That change responds to a timeline under which the prosecution window for some pandemic unemployment fraud cases begins to expire in March 2025.

Ways and Means Committee Chairman Jason Smith says states have not done enough on their own to reconcile the accounts and recover taxpayer money. He says closer coordination between federal and state governments, combined with more time for law enforcement, is intended to improve recoveries and support action against fraudsters who diverted funds from the unemployment insurance system.

Our earlier article covered the U.S. Department of Education’s finalized STATS and Earnings Accountability rule, which ties colleges’ access to federal student aid to whether graduates’ earnings clear specific benchmarks. It outlined how programs that repeatedly fail the earnings test could lose Direct Loan eligibility and, in some cases, broader Title IV funding, along with noted implementation delays and exemptions for certain institutions and programs.

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