Report Rips Biden–Harris Labor Secretary Julie Su

“Gov. Gavin Newsom’s staff at one point emailed LWDA [Labor and Workforce Development Agency] Secretary Julie Su to notify her that an individual was using the governor’s Social Security number to file fraudulent claims,” explains “Examining Widespread Fraud in Pandemic Unemployment Relief Programs,” a recent report from the House Oversight Committee that is packed with bombshell revelations.

One individual used the name “Mr. Poopy Pants” on his official application and “received an approved claim.” Rapper Nuke Bizzle filed “92 fraudulent applications” and posted a video about the ease of ripping off California’s Employment Development Department (EDD) that gets a lot of attention in the “Widespread Fraud” report.

“EDD, under leadership of Labor and Workforce Development Agency (LWDA) secretary Julie Su, made the decision early in the pandemic to ‘pay and chase’ after she was informed that keeping integrity checks in place would lead to a backlog in processing claims largely due to EDDs outdated IT,” the report says.

California’s EDD also “failed to cross-reference applicants with databases of incarcerated individuals and lost around $810 million to these fraudulent claims.” Convicts who made fraudulent claims included convicted murderers Scott Peterson and Cary Stayner. Death row inmates accounted for at least 158 claims landing more than $420,000 in benefits.

As the “Widespread Fraud” report notes, “while EDD seemed able to get benefits out to fraudsters and identity thieves without delay, EDD unnecessarily delayed benefits for several million applicants, allegedly due to missing documents.” And, according to the report, “EDD wrongly denied claims to at least one million beneficiaries at the same time they were paying billions of dollars to fraudsters. In one case, EDD continued to garnish wages and freeze the state tax return of a victim of identity theft for six months after EDD had verified the individual’s identity.”

Under Labor and Workforce Development Agency boss Julie Su, EDD “did not make substantive changes to its fraud detection practices until July 2020 when it finally began stopping automated payments on fraudulent claims. However, EDD still delayed in responding when there was clear evidence of fraudulent activity and even when state auditors identified claims as suspicious.” And so on. It’s hardly the profile for a federal labor secretary, but the Biden–Harris administration wanted Julie Su for the post.

Last September, a ruling by the Government Accountability Office (GAO) allowed Su to continue as acting labor secretary without confirmation by the Senate, a troubling development for independent workers. As California’s Labor Commissioner, Su supported Assembly Bill 5, an assault on workers from rideshare and truck drivers all the way to freelance writers and editors. Asked if AB-5 was a good law, Su said “I don’t know what you mean.”

In June of 2023, when Su was asked if she accepted responsibility for more than $30 billion in unemployment fraud, Su replied, “I think an unemployment insurance system that truly delivers in times of crisis should be the goal of everybody.” During the pandemic crisis, Su failed to deliver, and she hasn’t learned the lesson.

As Thomas Buckley of the California Globe warns, Julie Su is proposing a permanent system “eerily similar” to the federal pandemic unemployment plans kicking in “extra” pay every time a recession is declared. As this plays out, the massive unemployment fraud from the pandemic has yet to be adjudicated, and it’s not just about California. As “Widespread Fraud” notes, a full $191 billion could have been improperly paid out nationally, but only $6.8 billion has been recovered.

When Julie Su became acting labor secretary, the report recalls, “she moved to forgive herself for the debt she could have prevented but failed to do so. Julie Su has been avoiding accountability since before the pandemic and will continue to do so until she is forced to face consequences for her negligence.” As taxpayers should know, such an accounting has yet to take place.

The incoming Congress should make it a priority, and also remove the power of GAO bureaucrats to keep officials like Julie Su in office without Senate confirmation. The people will be watching.

Lloyd Billingsley is a policy fellow at the Independent Institute in Oakland, Calif.

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