The state of Colorado may have lost $73 million to unemployment fraud from March 2020 through April 2021, according to a new report from the state auditor’s office.
The report identified about 8,200 potentially fraudulent unemployment claims filed since the start of the pandemic. Most were marked by digital clues, such as a foreign internet protocol address, while others were paid to people who were dead or incarcerated.
“Despite the numerous steps that the Department has taken to prevent and detect fraudulent unemployment claims, our audit identified potentially fraudulent claims that the department did not identify, as well as improvements that the department should make to better mitigate and address the risk of fraud,” the report stated.
The auditor’s office hired an outside firm, BKD, LLP, to analyze about 842,000 unemployment claims for signs of fraud. The state department itself runs similar fraud checks, but they identified fewer suspect claims.
In all, fraudulent claims may have accounted for about 2 percent of the state’s unemployment payouts for the audit period. The Colorado Department of Labor and Employment has shared a smaller number, about $30 million, for confirmed fraud.
“Fraud as a whole for us has been kind of a ‘build the plane as you fly it,’” said Daniel Chase. “We both must stop all fraudulent payments … while also ensuring legitimate claimants are paid as quickly as possible. That becomes a dual job that competes against each other.”
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