DENVER (CBS4) – 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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“Somewhere between $20 and $30 million,” acknowledged Haavind. “That’s probably somewhere close.”

She said the department was planning to release more details at a news conference later this week.

Most of the money was stolen from the Pandemic Unemployment Assistance program last spring and summer, said the CDLE officials.

Phil Spesshardt, Colorado’s unemployment insurance director, said the state programs were initially set up with very few checks and balances in the system so quick payment could be provided to the unemployed during the pandemic.

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“Unfortunately that created a grand opportunity for fraudsters,” said Spesshardt.

He said Colorado, like other states, was not prepared for the volume of unemployment claims and corresponding fraudulent claims that accompanied the pandemic’s impact on the economy.

In all of 2019, Colorado 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, according to state authorities. States were not prepared for the level of fraud and did not have the staff to address the bogus claims.

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Spesshardt described the fraud rings as sophisticated and constantly evolving with their attempts to cheat the state unemployment claims systems. He said some of the fraud likely emanated from crime rings in other countries like Nigeria, China and Russia.

Haavind said when the state rolled out a new system in January, in the first five minutes, 36 users from Nigeria tried to file unemployment claims.

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As the state has implemented new measures to fight the fraudulent claims, paying out some legitimate claims has slowed down, as the CDLE has placed holds on accounts to make sure the recipients are legitimate.

That has left a trail of frustrated claimants.

The U.S. Department of Labor estimates $63 billion has been paid out improperly through fraud or errors in pandemic related unemployment programs across the country.

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

Colorado officials expect their fraudulent claim numbers to climb higher.

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“This version of fraud is here to stay,” said Spesshardt. “Here, now and forever at this point in time.”

Brian Maass