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Colorado unemployment audit finds $73.1 million of 'likely or potentially' fraudulent payments

State auditors looked at more than 4 million claims from March 2020 to April 2021 and found more than 8,000 were likely or potential fraudulent.

COLORADO, USA — One of the big stories during the first year of the pandemic was the number of people getting unemployment assistance. Now, a state audit found that more than $73 million may have gone out to people who shouldn't have received that money, like those who were claiming to be others, who were dead or who were behind bars.

The Colorado Department of Labor and Employment (CDLE) released a report in November in which a performance audit identified "$73.1 million in likely or potentially fraudulent benefits payments between March 1, 2020 and April 30, 2021, for 8,200 claims that each had one or more attributes indicating fraud."

 Those incidents include: 

  • $3.87 million paid on behalf of 1,065 individuals who were deceased.
  • $5.04 million paid on behalf of 696 individuals who were incarcerated.
  • $101,630 paid to 18 claimants who did not appear eligible because they were not of working age.
  • $18.5 million paid to 2,919 claimants who had suspicious bank account information associated with their claims.
  • $45.78 million paid to 3,308 claimants whose claims had multiple indicators of fraud, such as suspicious email, foreign internet protocol (IP), and/or mailing addresses.

At the beginning of the pandemic, the department did not track most of the complaints, the report says. According to the audit, it "did not begin tracking complaints about contracted call center staff until February 2021."

According to the report, the audit found that in addition to not tracking customer complaints, the department didn't resolve them in a timely matter. 

It took an average of seven weeks "to address issues raised in the 70,134 fraud hold assistance requests that it documented as resolved," the report says.  

"The Department lacks effective complaint management processes to track and resolve problems that claimants report, resulting in complaints not being resolved timely or at all," according to the audit.

The report also shows that the state has seen an increase of 1,625% in unemployment benefits paid out due to the COVID-19 pandemic. 

According to the report, the state paid $6.9 billion in 2020 compared to $400 million in 2019.

According to CDLE, about 852,000 Coloradans received benefits payments in the 2020 calendar year and 577,000 received them for the 2021 calendar year, as of October.  

Credit: CDLE

According to the Congressional Research Service, the significant increase in unemployment has impacted every state in the nation. In April 2020, the national unemployment rate peaked at almost 15%, which was a level not seen since data collection started in 1948, according to the report.

The increase in unemployment during the pandemic and the loosening of eligibility requirements led up to a significant increase in claims and benefits payments processed by the state, the report says.

The department received about 104,220 new claims for the week ending April 11, 2020, which, according to the report, "is more than the total number of claims filed in the 2019 calendar year."

To address the unprecedented level of unemployment during the pandemic, Colorado provided state and federal benefits. 

The state-funded benefits included two types of benefits: The regular benefits, which gives up to 26 weeks of benefits to eligible claimants, and the extended benefits, which went beyond the 26 weeks and were available from August to November 2020 due to higher unemployment during the pandemic. 

The maximum payment for regular and extended benefits that eligible Coloradans could receive each week ranged from $618 to $649 from July 2019 through June 2021 and has been $700 since July 2021. 

Federally funded pandemic benefits included the Pandemic Emergency Unemployment Compensation (PEUC) which provided an additional 53 weeks of benefits, Pandemic Unemployment Assistance (PUA) which provided up to 79 weeks of a new type of unemployment benefits to self-employed Coloradans. It also included Federal Pandemic Unemployment Compensation (FPUC), which provided a $600 supplemental payment for weekly benefits up to four months from March through July 2020 and $300 weekly from December 2020 to Sep. 6, 2021. 

Lost Wages Assistance, also federally funded, provided $300 weekly payments from the end of July 2020 and to the beginning of September 2020 when FPUC payments were not active. 

In December 2020, the Mixed Earner Unemployment Compensation (MEUC) went into effect and was in place through Sep. 6, 2021 for eligible individuals if they claimed regular benefits as a former traditional employee and also made more than $5,000 in self-employment income in the year before the pandemic, according to the report.  

The states unemployed workforce during the pandemic increased significantly beginning March 2020 and peaked at 12.1% in April 2020. 

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