The White House defended the record of Deputy Labor Secretary Julie Su, who President Joe Biden nominated to replace Labor Secretary Marty Walsh, despite the fact that she oversaw billions in pandemic relief fraud during her time as a senior official in California.
Su led the California Labor Department, which oversees the Employment Development Department, as one-tenth of the $114 billion in pandemic relief claims handled by the agency involved fraudulent activity. An additional 17% of the benefits were made to accounts that were frozen for an investigation, meaning that the total amount of fraud could have surpassed $31 billion, according to a January 2021 report from the San Francisco Chronicle.
One reporter raised the concerns with White House Press Secretary Karine Jean-Pierre during a Wednesday briefing; the official justified the phenomenon by noting that Su was forced to handle one in five unemployment relief claims nationwide.
“It was a historic crush of unemployment claims at the onset of the pandemic. That’s what we were seeing,” she told the reporter. “The design of the initial pandemic unemployment systems and years of national investments in UI modernization led to challenges, including fraud attacks, as you were just stating, across the nation in red and blue states alike. That was happening across the country during the very early stages of the pandemic.”
Jean-Pierre added that Su “took important steps to process a number of claims” and remarked that the Biden administration intends to combat pandemic relief fraud. “This is an issue that’s important to her, strengthening those safety nets, and also an issue that’s important to the President that he’s actually taken action on,” she continued.
Fraudsters may have stolen as much as $60 billion from the various federal unemployment programs enacted by lockdown-era stimulus bills, according to a report from the Government Accountability Office. Other estimates say that $400 billion, or half of the total unemployment funds approved by the federal government, was lost to fraud.
Su told journalists two years ago that “there is no sugarcoating the reality” of the rampant fraud which occurred in the Golden State, according to a report from the Los Angeles Times. “California has not had sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation,” she added.
Su nevertheless blamed officials in the Trump administration for purportedly neglecting to offer sufficient guidance on distributing the resources. “It should be no surprise that EDD was overwhelmed, just like the rest of the nation’s unemployment agencies,” she continued. “And we now know that as millions of Californians applied for help, international and national criminal rings were at work behind the scenes working relentlessly to steal unemployment benefits using sophisticated methods of identity theft.”
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Walsh, who previously served as mayor of Boston, plans to depart the Labor Department to lead the National Hockey League Players’ Association. His tenure was characterized by rail unions threatening to enact a nationwide strike ahead of the midterms, which led to the Biden administration negotiating an agreement granting workers pay raises and more health benefits.