(The Center Square) - Colorado paid out $73.1 million in unemployment benefits last year that were "likely or potentially fraudulent," according to an audit of the state's unemployment insurance program.
The audit, which was released on Monday, found that the Colorado Department of Labor and Employment (CDLE), the agency tasked with administering the unemployment insurance program, paid out at least 8,200 possibly fraudulent claims between March 2020 and April 2021.
The auditor recommended that CDLE improve its fraud detection and investigation measures. It also said the agency should implement processes to investigate fraud holds and customer requests for assistance to lift those holds. CDLE also needs to establish means of tracking customer complaints and setting policies to ensure prompt responses, according to the audit.
"When [CDLE] pays fraudulent unemployment claims, public funds are wasted," the audit said.
In all, CDLE paid out approximately $6.9 billion in benefits to more than 850,000 Coloradans last year, the audit found. The total payments account for a 1,625% increase from 2019, the year before the pandemic, and the claim totals represent a 1,100% increase.
It also identified several instances where CDLE paid out claims with at least one attribute that indicated fraud. For example, CDLE paid out more than $3.1 million to people who were legally deceased and another $5 million on behalf of nearly 700 people who were incarcerated.
More than $18.5 million was paid to bank accounts that had suspicious transaction details, while $45.7 million was sent to people with "suspicious email, foreign internet protocol, and/or mailing addresses," according to the audit.
"The Department did not have sufficient internal controls and fraud analytics in place to identify likely fraudulent claims paid on behalf of deceased claimants, like those that we identified," the audit concludes. "In addition, the Department did not require all claimants to complete a liveness check through ID.me until April 2021."
CDLE was only able to prove that it resolved 27% of the unemployment claims with fraud holds, the report noted. The agency also took an average of seven weeks to address the more than 70,000 claims that were placed on fraud holds.
The audit added that CDLE "lacks effective complaint management processes to track and resolve problems that claimants report, resulting in complaints not being resolved timely or at all."
For example, CDLE didn't start tracking complaints until February 2021, the audit said.