In Colorado, unemployment fraud is knowingly making a false statement or withholding information in order to receive benefits to which you are not legally entitled. This subjects you to criminal theft charges that carry jail, fines, and restitution for any over-payments received, plus a penalty of 65% of these over-payments.
The following table presents the sentencing ranges for unemployment fraud offenses in Colorado.
| Value of Unemployment Fraud | Crime Class |
Incarceration and Fines |
| Less than $300 | Petty Offense | Up to 10 days in jail and/or a fine of up to $300 |
| $300 or more but less than $1,000 | Class 2 Misdemeanor | Up to 120 days in jail and/or a fine of up to $750 |
| $1,000 or more but less than $2,000 | Class 1 Misdemeanor | Up to 364 days in jail and/or a fine of up to $1,000 |
| $2,000 or more but less than $5,000 | Class 6 Felony | 12 to 18 months in prison and/or a fine of up to $100,000 |
| $5,000 or more but less than $20,000 | Class 5 Felony | 1 to 3 years in prison and/or a fine of up to $100,000 |
| $20,000 or more but less than $100,000 | Class 4 Felony | 2 to 6 years in prison and/or a fine of up to $500,000 |
| $100,000 or more but less than $1 million | Class 3 Felony | 4 to 12 years in prison and/or a fine of up to $750,000 |
| $1 million or more | Class 2 Felony | 8 to 24 years in prison and/or a fine of up to $1,000,000 |
In this article, our Denver, Colorado criminal defense lawyers will address:
- 1. What is unemployment fraud?
- 2. What are the penalties for fraudulent unemployment claims?
- 3. Can I pay back my unemployment to avoid penalties?
- 4. What are the defenses?
- 5. What if I am being investigated?
- 6. How does unemployment fraud get reported?
- 7. What if someone is collecting benefits in my name?
- 8. Related Offenses
- 9. In Sum
- Additional Reading
1. What is unemployment fraud?
Colorado unemployment insurance (UI) fraud involves making a false statement, filing a false claim for being unemployed, or withholding information in order to receive benefits. This includes:
- Under-reporting hours and earnings
- Failing to report employment
- Claiming to be an employee when you are an independent contractor
- Obtaining regular unemployment payments from multiple states
- Failing to report other types of compensation
- Cashing another person’s unemployment check without authorization
- Falsely reporting looking for a job
- Falsely reporting the reason for losing your job
- Failing to report work refusal
- Using a fake U.S. Bank Reliacard (debit card)
Most fraudulent activity in Colorado violates the state’s laws against theft under CRS 18-4-401. For Colorado prosecutors to convict you of theft, they must prove the following elements of the crime beyond a reasonable doubt:
- you knowingly obtained anything of value
- without authorization or through deception.1
The following graphic shows some of the types of unemployment fraud in Colorado:
2. What are the penalties for fraudulent unemployment claims?
As shown above, the incarceration and fines for committing unemployment fraud in Colorado depend on the value of the benefits unlawfully received.2
In addition to prison time and fines, there is a mandatory penalty for receiving overpaid unemployment insurance because of your false representation or willful failure to disclose a material fact. You will have to pay to the Division of Unemployment Insurance the total amount of the overpayment plus a 65% monetary penalty.3
If you receive overpayment, you may also be denied benefits for a 4-week period for each week you unlawfully received benefits.
Sometimes, you may be listed on the Colorado Department of Labor and Employment fraud prevention website. This includes listing your name and county of residence.
3. Can I pay back my unemployment to avoid penalties?
If you received an overpayment through no fault of your own, you may be required to pay back the overpayments. Overpayments can occur because:
- a hearing officer reverses a previous award,
- you are disqualified because you are responsible for losing your job, or
- of administrative error.
Over-payments can be paid back using the online MyUI system or through the mail. If you are unable to pay back over-payments, contact the Division of Unemployment Insurance to find out about a repayment agreement.
If you received overpayments due to fraud or misrepresentation, you may still face criminal charges even if you offer to pay back the benefits. You may also be charged an additional penalty for receiving overpayments.4
Violating CRS 18-4-401 can be a petty offense, misdemeanor or felony in Colorado.
4. What are the defenses?
There are many defenses to charges of state unemployment insurance fraud. This includes:
- You did not intend to submit a fraudulent unemployment insurance claim
- You believed you were submitting an accurate and legitimate claim
- Incorrect information was entered by mistake or was a typo (such as a wrong social security number)
- You were a victim of identity theft
- Law enforcement committed police misconduct when investigating the claim
5. What if I am being investigated?
Labor Department officials at Colorado’s Division of Unemployment Insurance conduct random audits to reduce fraud and detect overpayments. This includes a review of
- employer records,
- payroll,
- work-search contacts,
- employment office records, and
- statements for individuals filing for unemployment compensation.
National databases and credit bureau agencies may issue fraud alerts through an automated system following fraud detection. You may be contacted if your claim is selected for review. You may file a written appeal if you receive a Notice of Decision that reduces or denies your benefits.
The Colorado Department of Labor and Employment (CDLE) also reviews cases of reported fraud. The CDLE provides online fraud reporting forms that allow individuals to report fraud confidentially.
6. How does unemployment fraud get reported?
People can report suspected unemployment insurance fraud in Colorado by either:
- Calling the Colorado Department of Labor and Employment (CDLE) at 303-318-8225; or
- Submitting a fraud report online at the CDLE website.
7. What if someone is collecting benefits in my name?
If you are a victim of unemployment insurance fraud, first report the fraud to the Colorado Department of Labor and Employment (CDLE) through this online form.
If you received an unsolicited U.S. Bank Reliacard in the mail, deactivate it by contacting U.S. Bank immediately at 1-855-282-6161 and filling out this U.S. Bank fraud form.
Then put a fraud alert on your name and social security number with the three consumer credit bureaus:
- Equifax: 1-800-525-6285
- Experian: 1-888-397-3742
- TransUnion: 1-800-680-7289
You may also make an identity theft report with the Federal Trade Commission (FTC) and file a police report with your local law enforcement agency.
Finally, keep and compile any evidence of the fraud to provide to CDLE staff when they contact you.5
8. Related Offenses
Identity Theft CRS 18-5-902
In Colorado, it is a criminal offense to use another person’s personal or financial identifying information to obtain anything of value. This includes using another person’s identity to file a claim for benefits.
Identity theft is a class 4 felony in Colorado. Penalties for identity theft include 2 to 6 years in prison and a fine of up to $500,000.
Computer Crime CRS 18-5.5-102
In Colorado, it is a computer crime to access any computer, computer network, or computer system for the purpose of executing any scheme to defraud. This includes reporting false information to the Division of Unemployment Insurance to receive benefits.
The criminal penalties for computer crimes depend on the value of theft or loss.6
Falsely claiming to be unemployed while receiving benefits is fraud in Colorado.
9. In Sum
Here are five key things to know about unemployment insurance (UI) fraud in Colorado:
- UI fraud can take many forms, such as lying about looking for work, not reporting employment, or cashing in someone else’s UI check.
- You still face criminal charges even if you pay back all the UI money with interest.
- Wrongfully receiving $2,000 or more in UI benefits is a felony; wrongfully receiving $300 to less than $2,000 is a misdemeanor; otherwise, UI fraud is a petty offense.
- For every week you unlawfully receive UI benefits, you can be denied UI benefits for four weeks.
- A common UI fraud defense is that you had no intent to defraud and that any misinformation you gave was an honest mistake.
Additional Reading
For more in-depth information, refer to these scholarly articles:
- Unemployment Insurance Fraud and Optimal Monitoring – American Economic Journal.
- Unemployment without Fault: Disqualifications for Unemployment Insurance Benefits – Villanova Law Review.
- Unemployment Insurance in the United States: Analysis of Policy Issues – University of Pennsylvania Journal of Labor and Employment Law.
- Unemployment Insurance – Wayne Law Review.
- Lessons from the Unprecedented Fraud and Abuse of the Unemployment Benefits System during the Pandemic – American Enterprise Institute.
Legal References
- See People v. Chesnick, 709 P.2d 66 (Colorado Court of Appeals, 1985).
- CRS 18-4-401; see also People v. Welliver, 317 P.3d 1192 (Colorado Court of Appeals, 2012).
- CRS 8-81-101(4)(a)(II). Prior to March 1, 2022, unemployment fraud valued at $50 to less than $300 was a class 3 misdemeanor, carrying up to 6 months in jail and a fine between $50 and $300; and unemployment fraud valued at $300 to less than $750 was a class 2 misdemeanor, carrying 3 to 12 months in jail and/or a fine of up to $1,000; and unemployment fraud valued at $750 to less than $2000 was a class 1 misdemeanor, 6 to 18 months in jail and/or a fine of up to $5,000. SB21-271.
- Colorado Department of Labor and Employment – Overpayments.
- See also the Colorado Attorney General’s Identity Theft Repair Kit. Many people discover they are victims of unemployment insurance fraud by receiving a 1099-G document or an unsolicited U.S. Bank Reliacard in the mail.
- Same. See also Allison Sylte, Scammers set up fake Twitter account to pose as Colorado Department of Labor and Employment, 9News-KUSA (January 8, 2021); see also Brandon Thompson, Colorado’s unemployment office seeing rampant fraud, FOX21 News (January 5, 2021).