Colorado Recovers $21 Million Unintentionally Paid To Unemployment Fraudsters

DENVER (CBS4) - More than $21 million - $21,826,830 to be exact - has been returned to the Colorado Department of Labor, thanks to the help of federal agents with the U.S. Department of Labor Office of the Inspector General. CBS4 Investigates has learned that money was originally paid to 34,492 fraudulent Pandemic Unemployment Assistance claims filed in Colorado during the pandemic.

"The PUA system, the way it was rushed out by the federal government, because of the need to get resources in people's pockets, there was some oversight, if you will, on eligibility verification... it was very easy for them to process a claim without having substantiated documentation to verify it," said CDLE Executive Director Joe Barela. "The vast majority of PUA fraud claims are criminal rings that are based outside of Colorado, or globally, that took advantage of the lax verification process."

According to internal emails obtained by CBS4 Investigates, the number of PUA fraud claims in August was higher than valid claims, which officials said could force the department to spend time combating fraud when it could be spending more time to improve the user experience for valid claims.

The emails show by September, the department had caught nearly 300,000 claims before any money was paid.

"We were able to prevent about $500 million from going out the door," Barela said.

But, about 50,000 fraudulent claims were paid in some capacity before the department caught on.

Barela says the department is still working with federal agents and financial institutions to recover more funds that were paid to fraudsters.

The department also received a $2.1 million grant from the U.S. Department of the Interior to help combat fraud. A spokesperson with the department says all other states have also received some grant money for the same purpose, because the problem is so widespread.

The CDLE has implemented 23 fraud indicators in the PUA application that will catch fraudsters before they can be approved for a claim.

"A huge amount of resources are into fraud prevention and fraud recovery," Barela said.