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The New York state Capitol in Albany

ALBANY -- Fraudulent activity targeting the $2.1 billion Excluded Workers Fund (EWF) has prompted state officials to put a block on the ability of cardholders to get cash benefits from automatic teller machines, CNHI learned Monday.

The fund has been billed as a lifeline for individuals, many of them undocumented immigrants, who were ineligible for federal stimulus payments last year. Nearly all of the recipients of the program have received the state's maximum benefit -- $15,600 per applicant.

Recipients were issued Electronic Benefits Transfer cards, similar to debit cards, which at least initially could have been used at ATM machines for quick withdrawals of cash.

The state Department of Labor, responding to an inquiry from CNHI, acknowledged the ability of recipients to use those cards at ATMs was terminated Dec. 28.

"Out of an abundance of caution, we suspended the option to withdraw cash from ATMs for cardholders with a remaining balance on their prepaid cards," Aaron Fallon, a Labor Department spokesman said.

The move, he said in a statement, is designed to protect New Yorkers from "becoming a victim of fraud" and ensure the money goes to the intended recipients, while blocking "bad actors from preying upon New Yorkers."

"These cardholders have the option to make free withdrawals in-person at most banks and credit unions that accept Visa debit cards," Fallon added.

State Police, meanwhile, confirmed its detectives are assisting the Labor Department in an investigation into suspected misuse of the cards.

State officials provided no details on the extent of the suspected fraud in the distribution of the benefits.

Advocates for the fund have already initiated a new campaign seeking to convince Gov. Kathy Hochul and the Legislature that they should channel an additional $3 billion into the program this year after the state was swamped by applications for the benefits last year.

State Sen. Dan Stec, R-Queensbury, who opposed the creation of the fund, called the suspected fraud disturbing. He urged State Police and Gov. Kathy Hochul "to throw the full force of their authority behind this investigation so the taxpayers can find out what is going on."

Stec argued fraud within the program was inevitable as its beneficiaries include people who are in the country illegally. "This is taxpayer money, and they are throwing it around like it is not real," Stec said.

A coordinator for the campaign for additional funding, Bianca Guerrero of Fund Excluded Workers, raised no objections to move to end use of ATM withdrawals with the EBT cards.

"Our priority is making sure workers have access to the full level of benefits they are eligible for." Guerrero said. "We support this decision to protect workers. The safest option for workers is to withdraw cash using teller desks at VISA-participating financial institutions."

Guerrero said there are several reasons why her organization believes the fund should be replenished with $3 billion.

"There was overwhelming demand for the fund from the time it first opened in August, and after just nine weeks the fund had been depleted." Guerrero said.

She added that "geographic hurdles and outstanding policy issues have kept thousands of eligible workers from applying, especially in upstate New York and more rural areas of the state."

"Upstate organizations didn't have enough time to hire staff, do sufficient outreach, or assist workers with applications," she said. "Many consulates were slammed, and in many cases, it took workers weeks or even months to renew passports and IDs and get the necessary documentation ready."

Lawmakers, she said, have voiced "significant support" for sending more state money to the fund this year.

An additional 295,000 people would qualify for the EWF if the state provides the $3 billion now being sought, according to a projection from the Fiscal Policy Institute.

Labor Department data indicates that 130,536 people had their applications for EWF money approved out of the 350,823 claims that were submitted.

The state's rules for the program mandated that applicants could not be asked about their immigration or citizenship status. Those seeking the benefit had to be ineligible for unemployment benefits or other federal COVID-19 relief income. The recipients had to show they lost part or all of their income after February 2020 because of COVID-19. They also had to earn less than $26,208 over the past year.

On Sept. 3, five weeks before a surge in applications led to the shutdown of accepting new applications, Hochul announced payments were "going out ahead of schedule to provide these individuals with the financial relief they need and deserve."

On Oct. 8, state Labor Commissioner Roberta Reardon made reference to the rapid processing of applications and issuance of funds, thanking advocates of those seeking the benefits. "We could not have stood up this program as quickly as we did, or reach the amount of individuals that we did, without their continued support," Reardon said.

The program released documents in 13 different languages and a multi-lingual call center staffed by 600 workers assisted would-be recipients.

State Conservative Party Chairman Gerard Kassar, a critic of the Excluded Workers Fund, said it and other benefit programs being carried out by the state and federal government during the pandemic have been marred by a lack of proper oversight.

"Money should never be disbursed unless it can be accounted for," Kassar said.

The Labor Department advises that cardholders can continue to use their existing cards to purchase items at stories and online, provided those retailers accept Visa debit cards.

"The only change is cardholders’ ability to withdraw cash from an ATM; all other terms and conditions contained in the cardholder agreement remain unchanged," the Labor Department reported.

The state hired Navient, a company that runs call centers and collects student loans, to interact with applicants for the funds.

Cardholders who have questions about their benefits are being asked to contact the program's customer service center at (833) 458-4262.

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