State audit finds one-third of unemployment fraud investigations take a long time to wrap up

CDLE unemployment
Posted at 12:38 PM, Dec 08, 2021
and last updated 2021-12-08 14:38:36-05

DENVER — It’s hard to be patient when the patience is over a paycheck that can keep a family afloat financially.

For six months, Tonia May waited for the Colorado Department of Labor and Employment to accept her unemployment claim. For six months, May stressed over how she was going to pay the bills.

She lost her job in June and quickly filed for unemployment while she looked for new employment. However, she was one of thousands in Colorado to have her name and personal information used to fraudulently file an unemployment claim.

Ever since then, CDLE had been investigating her claim. While that investigation played out, May wasn’t able to collect any unemployment funds, so her husband took on overtime to try to make ends meet.

“I still have bills that we had to pay. We still had to pay our mortgage. We still have to live on a daily basis. My husband worked 12 hours a day for six days a week, and I felt like that was just mean to him,” she said. “I prayed a lot, and if I didn’t have a husband, I don’t think we would’ve made it because it was really hard.”

A state audit released Monday found that Colorado potentially paid out as much as $73 million in potentially fraudulent unemployment claims.

CDLE has only confirmed $30 million in fraud through its investigations but acknowledges that number will go up as it continues to look into counterfeit claims.

The audit also concluded that many fraud cases take a long time to investigate. Roughly one-third of the investigations wrap up within 30 days and another third conclude within 60 days.

However, the audit found the final third can take months to investigate. Sixteen percent took between 61 and 120 days to resolve; another 4% took between 121 and 180 days to wrap up; 5% took between 181 and 200 days to conclude and 1% took more than 210 days to investigate.

May finally saw her first unemployment check come in this week. While she is relieved that the investigation is behind her, May says she’s only been allowed to receive a fraction of the money she should be getting.

“(They’re saying), ‘We didn’t file your paperwork until November 17. This is all you’re going to get, and this is all the money we’re going to give you.’ I’m not the one that did the fraud. I’m actually the one — I worked hard,” she said. “That wasn’t my fault, so why make me pay the price for something that I didn’t do?”

She’s now asking CDLE to reconsider her case to backpay her through June.

Peggy Kraus, meanwhile, is still waiting for a fraudulent unemployment claim using her information to be cleared up. Kraus’ position was eliminated last December.

She was given several months of severance from her former employer but when the money ran out in March, she tried to file for unemployment. That’s when she was told someone already tried to file for her and had received several payments.

Since then, she has been waiting for the investigation into her account to wrap up.

“August, September, October, November have gone by. I’ve periodically called them to find out what the situation was,” Kraus said. “We’re now in December and I have not been able to file or even begin to collect unemployment benefits.”

Kraus has had to tap into her retirement savings to make ends meet. While she says all of the CDLE employees have been nice to her, she’s frustrated that it’s taking so long to get help.

“Obviously if money is going to people that don’t deserve it and money is not going to people that do and need it, it’s very frustrating that the state cannot act quicker to relieve the people that need the finances,” Kraus said.

She wishes there was a way for the state to pay people who have been waiting for months even while continuing the investigation on their claims.

Daniel Chase from CDLE says unfortunately it’s not that straightforward.

If the state were to start paying unemployment claims while continuing the fraud investigations, the claimants would be considered to be receiving an overpayment.

“Then their claim would start deducting their benefits to pay back that overpayment, which is not something we want to do,” Chase said.

Chase estimates that the state still has a little more than 1,000 people waiting for their investigations to wrap up.

He blames the complex schemes the fraudsters have created for the long investigations. Still, he acknowledges that the long investigations are an issue.

“I still have people waiting. That’s unacceptable for us,” Chase said. “For us it’s going to be a matter of staffing, it’s going to be a matter of process improvement and we’re always looking for other solutions out there.”

CDLE is looking at things like an in-depth analysis on claims to try to weed out the low-risk ones so people can be paid quicker without having to go through a full-blown investigation.

Despite the waits, Chase says CDLE has had some success. It’s blocked an estimated $600 million in fraud from going out the door due to security measures it put in place.

It has also recuperated roughly $40 million of suspected fraudulent payments back to the department.

Chase understands the frustration for the Coloradans still waiting on payments and says they are committed to wrapping each investigation up as soon as possible.

Meanwhile, people like Kraus are still left waiting for the help.