New York is facing a fraud crackdown after the Trump administration deployed a “strike force” of investigators this week to the state to recover hundreds of millions in unemployment bogus payments.

The U.S. Department of Labor and its Inspector General's office announced this week a joint effort to "confront serious unemployment‑insurance fraud and performance breakdowns across one of the nation’s highest‑risk states." The agencies said fraud and improper payments in the system is fleecing New York taxpayers of an estimated $2 million a day.

Anthony D’Esposito, the agency's inspector general, said it is "taking a tough-on-crime approach to dismantle this fraud, hunt down every stolen dollar, and prosecute those responsible."

“New York is stealing from the American people every single day — draining their hard-earned tax dollars through rampant unemployment insurance fraud and improper payments,” D’Esposito, a former NYPD detective and Long Island congressman, said in a statement.

New York has the highest unemployment insurance fraud rate in the country at 15%, with an estimated $507 million in bogus payments in 2025, according to the Labor Department. It also has the highest improper payment rate at 23%, DOL said, which cost taxpayers $750 million last year. That's roughly a loss of $2 million per day to fraud and improper payments, the agency claimed.

"Backed by the full strength of President Trump and Vice President Vance’s Fraud Task Force and our coordinated OIG and Departmental efforts, our joint federal Strike Team will deliver the swift justice that hard working Americans deserve," he added. "Accountability is not an option."

In a statement, Democratic Gov. Kathy Hochul's office defended the state's anti-fraud protections and said the governor has been taking steps to safeguard taxpayer dollars from abuse.

"Governor Hochul and the State Department of Labor take fraud and abuse very seriously. That’s why the Governor has led the way in implementing several changes since the pandemic to fight waste, fraud and abuse," the statement said. "We will continue to work with our law enforcement partners to pursue criminals and hold perpetrators accountable while ensuring workers receive the benefits to which they are entitled under law efficiently."

To be sure, New York is facing increasing scrutiny from the Trump administration over claims of waste and fraud in its public benefits programs. The criticism comes amid President Donald Trump’s “war on fraud” campaign.

Trump has threatened to cut off federal funding for Democrat-run states if they do not provide proper oversight of Medicaid, food stamps, and other public benefit payments.

In Congress, the Republican-led House Committee on Energy and Commerce recently launched a probe into Medicaid fraud in 10 states — including New York, Vermont and Maine — demanding records from governors and state agencies related to their anti-fraud protections.