Law enforcement joining forces to crack down on unemployment fraud

Colorado attorney general, local district attorneys, CBI and labor department establish task force

The Colorado attorney general, the Colorado Bureau of Investigation, the Colorado Depar tment of Labor and Employment and district attorneys from across the state are teaming up to halt and prosecute a massive surge in identity theft cases related to the state’s unemployment insurance program.

“We need to go after these scammers. This activity is criminal, it is reprehensible and we will do all we can to find the people practicing it and bring them to justice,” said Colorado Attorney General Phil Weiser on a joint press call Thursday announcing the creation of the Colorado Unemployment Fraud Task Force.

The state labor depar tment has flagged about 1.1 million unemployment claims as fraudulent since the pandemic began, a count that surpasses the number of legitimate claims made in the state, executive director Joe Barela, said.

Prior to the pandemic, in 2019, the state investigated about 90 suspected cases of unemployment insurance fraud.

Potential losses of around $7.5 billion in federal and state funds have been averted, Barela said. But the labor depar tment estimates scammers have claimed about $6.5 million, of which authorities have recouped $1 million.

Organized crime rings in Russia, Nigeria and other countries are believed to be behind many of the false claims, which makes it dif ficult for local law enforcement to pursue cases. Scammers are believed to be purchasing identity information on the dark web stolen during past cybersecurity breaches and using it to file claims in multiple states.

But some of the identity theft happens locally, including by people already in prison and others who view it as a crime of opportunity. Weiser said scammers outside the state sometimes recruit local par ticipants to diver t debit cards loaded with unemployment payments. Those individuals need to realize they are not safe from prosecution, he said.

Mailing the initial debit card to the addresses of recipients who didn’t file claims is an essential way that the state labor depar tment gets tipped of f that someone has had their identity stolen and used to make a false claim. Employers also represent an impor tant line of defense when it comes to detecting fraudulent claims within the state’s traditional unemployment system.

Using another person’s identity to claim unemployment benefits is a class 4 felony, which can carry a prison sentence of two to four years, more if the person has had a prior conviction for identity theft, said Alexis King, the Jef ferson County district attorney.

Penalities are much more severe if the fraud is conducted by a larger organization in violation of racketeering and organized crime laws.

King said falsely claiming unemployment benefits is not a victimless crime. Victims of identity theft can have their credit scores destroyed, struggle to obtain financial aid for children in college, have their tax refunds diverted, and run into trouble when applying for Social Security benefits years down the road.

“Ever ything gets harder.

There are real long-term consequences,” she said.

The crime wave also complicates life for those making legitimate claims for unemployment benefits. They can get caught up in the stricter security measures and face delays in receiving the money they desperately need to meet their bills.

Weiser urged individuals and employers to take the crime seriously and not let up when it comes to reporting fraud, which should be done at a website maintained by the labor depar tment.

“Ever ybody is at risk in all par ts of our state. The consequences of being a victim of identity theft can be severe. We will keep going after these scammers in the best way we can,” he said.