Fraudsters claim $19 million in unemployment funds from Colorado, cause delays for legitimate claims

Local News

DENVER (KDVR) — First the bad news, the Colorado Department of Labor and Employment says it has paid out $19.37 million in fraudulent benefits since the beginning of the pandemic. But the state also says it has prevented more than $437 million in fraudulent payments.

In fact, Phil Spesshardt, the director for the Division of Unemployment Insurance said if the state hadn’t implemented 58 fraud triggers and ID.ME, an online identity verification system, the amount paid to criminals would’ve been staggering.

“If we did absolutely nothing we would have paid out $37 billion in fraudulent payments,” he said.

But that cautious approach to prevent massive fraud has also to massive delays in unemployment benefits for people like Kelly Hart.

“Yeah, the frustration is very high. This (unemployment benefits) is something that his supposed to be there,” she said.

The 62-year-old from Arvada has spent hours on the phone checking on his benefit status only to get hung up on or told to be patient.

“‘Hold tight and we’ll get back to you.’ Well, that was March 17, so that was 30 days ago, and I just get nothing,'” said Hart.

His problems begin in January when he was still employed.  Hart received a letter stating he had applied for unemployment benefits. It was fraud so he reported it but when he was laid from his job in the energy sector a month later in February his accounT has been flagged. Two months later, he’s yet to receive a penny in benefits.

“How long should this take?” asked Hart, who said he’s better off than most because he has savings/ “I’m very fortunate to be in the position that I’m in but for those that aren’t, how are they surviving?”

DLE Deputy Executive Director and Chief Communications Officer Cher Haavind said the state is doing everything it can to clear any unnecessary holds in the most responsible way possible.

“So people who are caught up in the fraud holds unintentionally, look there is no perfect answer. This is an imperfect solution to a global pandemic that has not only caused historic levels of unemployment but criminal activity preying on innocent victims,” said Haavind.

In 2019, CDLE encountered less than 90 fraudulent claims but since the start of the pandemic it has received a million bogus applications.

Haavind told the Problem Solvers the state hopes to catch up on the backlog of legitimate claims by sometime in May. 

“We are dedicated to making sure we are providing eligible claimants the funds they need to weather the financial impacts of the pandemic, while also fulfilling our duty to protect Colorado’s unemployment insurance program from criminals,” she said.

Claimants preparing to complete the verification process can find tips and how-to videos on the UI Daily Dashboard and If a claimant does not have the appropriate technology to complete the process, they can contact CDLE at 303-536-5615.

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