One Pay Out Too Many

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Man writing resume and CV in home office with laptop. Applicant searching for new work and typing curriculum vitae for application. Job seeking, hunt and unemployment. Mock up text in computer screen.

Colorado Department of Labor and Employment (CDLE) administrators have stated they believe that fraudsters have gotten away with as much as $30 million in unemployment benefits since the pandemic began. Unfortunately, these fraudulent claim numbers are expected to continue to rise.

According to CDLE officials, most of the money was stolen from the Pandemic Unemployment Assistance program last spring and summer. This state program was initially set up with very few checks and balances so that payments could quickly be provided to the unemployed during the pandemic. This created an opportunity for fraudsters. (They saw these programs as a pot of gold at the end of a rainbow.)

Like many other states, Colorado was not prepared for the volume of unemployment claims that was caused by the pandemic’s devastating impact on the economy. (With a rise in legitimate claims, also came an influx in fraudulent claims.) 

In all of 2019, Colorado only recorded roughly 90 fraud claims on its unemployment system.

By the end of 2020, there were nearly a million fraudulent claims made on Colorado’s unemployment system. Colorado did not expect this exorbitant level of fraud and did not have the staff to address the bogus claims. (Everyone was focused on helping struggling families and individuals stay afloat. Fraudsters knew they weren’t the priority.) 

Throughout the past year, fraud rings became more sophisticated and constantly evolved with their attempts to defraud Colorado’s claims systems. Some of the fraud originated from crime rings in other countries like Nigeria, China and Russia. (Nothing says ‘democracy’ like foreign entities trying to meddle in our affairs.) When the state rolled out a new system in January, 36 users from Nigeria tried to file unemployment claims within the first five minutes.

Colorado has implemented new measures to identify and fight fraudulent claims. One of these tactics is placing holds on accounts until it can be confirmed that the recipients are legitimate. Unfortunately, this has made it so the payment of some claims have been slowed down. (This has caused claimants to become understandably frustrated.)

Colorado’s unemployment program is not the only state that has been targeted by fraudsters throughout the pandemic. The U.S. Department of Labor estimates $63 billion has been paid out improperly through fraud or errors in pandemic unemployment programs across the country.

It is estimated that California has paid out $11 billion in fraudulent unemployment claims. Ohio is estimated to have paid more than $300 million in bogus unemployment claims. Washington state is also estimating it has paid out hundreds of millions of dollars in fraudulent unemployment claims.

Today’s Fraud of the Day comes from an article, “Fraud Losses For Colorado Unemployment Office Spike; Scammers Estimated To Have Stolen $20 To $30 Million,” published by CBS Denver on April 13, 2020.

Five weeks after announcing scammers had pilfered about $6.5 million from the Colorado unemployment system during the pandemic, state unemployment administrators dramatically ratcheted that figure up. They say they now believe fraudsters got away with as much as $30 million since the pandemic began.

“This number will grow exponentially,” said Cher Haavind, Deputy Executive Director of the Colorado Department of Labor and Employment. Haavind and other CDLE officials spoke to CBS4 Tuesday afternoon after CBS4 learned of the increase in dollars fraudulently stolen from the agency over the last year and not recovered.

 

 

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.