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Unemployment fraudsters have cost Colorado at least $19.37 million

The Colorado Department of Labor and Employment has been able to prevent another $437.16 million in fraudulent claims from being paid out, officials said Friday

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The state of Colorado has lost nearly $19.37 million to unemployment fraudsters since last year, officials from the Colorado Department of Labor and Employment said Friday. That’s up from the $6.5 million in total fraud losses the department previously reported. 

The department has documented $437.2 million in fraudulent claims that it has prevented from being paid out to fraudsters since last year, CDLE officials told reporters.

“When we reported our previous confirmed and suspected fraudulent payments amounts earlier this year, we knew that the number would keep going up,” said Joe Barela, executive director of the Department of Labor, during a virtual news conference Friday morning. “We have no intelligence or technology that would prevent people from taking stolen personal identifiable information and putting that into our system.”

The numbers represent instances of fraud that have been fully investigated and confirmed by the agency. State labor officials won’t comment on the amount of suspected fraud they are still working to confirm, citing ongoing investigations and attempts by authorities to recover funds that have already been paid out to scammers. 

“The numbers are very fluid and constantly changing, especially as we implement new prevention measures,” said Phil Spesshardt, acting director of the state’s Unemployment Insurance Division. 

Colorado and a number of other state labor agencies have faced an unprecedented increase in fraud attacks on their unemployment systems during the coronavirus pandemic. Initially, fraudsters were targeting federal, pandemic-era unemployment programs for gig workers and the self-employed. But now scammers are also going after the state’s regular unemployment system. 

The Colorado Labor Department went from 90 fraud cases in 2019 to more than 1 million suspicious claims since the pandemic began last March, Barela said Friday.

“I’d like to emphasize that all of our work to detect and prevent fraud has resulted in us preventing an estimated $37 billion in fraudulent payments from going out the door,” said Barela, referring to the department’s estimate of how much scammers have attempted to steal from the state since the start of the pandemic. 

Last month, labor department and the Colorado Attorney General’s office announced a new task force to investigate the rampant fraud, and officials now have added 58 different fraud indicators to their screening system, said Spesshardt. 

The state is also requiring all applicants to verify their identities through IDme, although some have reported hours-long delays in getting their verification processed or fraud holds keeping their claim from moving forward. 

Cher Haavind, deputy executive director and a spokesperson for the labor department, said the state’s vendors are working to add staff to reduce wait times and clear fraud holds more quickly. 

“There is no perfect answer,” Haavind said. “This is an imperfect solution to a global pandemic that has caused not only historic levels of unemployment, but criminal activity preying on innocent victims.”

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