In Colorado, unemployment fraud is defined as knowingly making a false statement or withholding information in order to receive benefits to which you are not legally entitled. This subjects a person to criminal theft charges. In addition to possible jail time and fines, a conviction may require you to remit penalty payments in addition to the overpayments received through the fraud.
In this article, our 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. Why are unemployment fraud cases increasing in Colorado?
- 8. How is the state stepping up enforcement during COVID 19?
- 9. Related Offenses
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:
- Underreporting hours and earnings
- Failing to report employment
- Claiming to be an employee when the claimant is 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 is a violation of the state’s laws against larceny or theft. Under CRS 18-4-401, a person commits theft when they knowingly obtain anything of value without authorization or through deception.1
Under CRS 18-4-401, the penalties for unemployment fraud depend on the extent of the fraudulent claim and value of the benefit payments unlawfully received. Fraud can be a misdemeanor or felony offense, depending on the amount of fraud involved.
|Value of Unemployment Fraud||Class of Criminal Offense||Penalties|
|$50 or more but less than $300||Class 3 Misdemeanor||Up to 6 months in jail and a fine between $50 and $750|
|$300 or more but less than $750||Class 2 Misdemeanor||3 to 12 months in jail and a fine of up to $1,000|
|$750 or more but less than $2,000||Class 1 Misdemeanor||6 to 18 months in jail and a fine of up to $5,000|
|$2,000 or more but less than $5,000||Class 6 Felony||12 to 18 months in prison and 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 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 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 a fine of up to $750,000|
|$1 million or more||Class 2 Felony||8 to 24 years in prison and a fine of up to $1,000,0002|
In addition to prison time and fines, there is a mandatory penalty for receiving overpaid unemployment insurance. If any person receives an overpayment because of his or her false representation or willful failure to disclose a material fact, they shall pay to the Division of Unemployment Insurance the total amount of the overpayment plus a 65% monetary penalty.3
A person who receives overpayment may also be denied benefits for a 4-week period for each week they unlawfully received benefits.
In some cases, alleged fraudsters prosecuted for unemployment fraud may be listed on the Colorado Department of Labor and Employment fraud prevention website. This includes listing the individual’s name and county of residence.
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 because of administrative error.
Overpayments can be paid back using the online MyUI system or through the mail. If you are unable to pay back overpayments, contact the Division of Unemployment Insurance to find out about a repayment agreement.
If you received overpayments due to fraud or knowing 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
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
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. If you receive a Notice of Decision that reduces or denies your benefits, you may file a written appeal.
The CDLE also reviews cases of reported fraud. The CDLE provides online fraud reporting forms that allow individuals to confidentially report fraud.
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.
Colorado is seeing a spike in unemployment fraud now that the Pandemic Unemployment Assistance program (PUA) and Pandemic Emergency Unemployment Compensation program (PEUC) ended on December 26, 2020. Alleged fraudsters who previously made false PUA claims and PEUC claims have reportedly turned to Colorado’s regular unemployment insurance system.5
Colorado’s Department of Labor and Employment (CDLE) is implementing more anti-fraud controls in its system, which is also being upgraded. In the meantime, CDLE is warning people that alleged fraudsters are targeting for-sale and rental listings to get addresses. Therefore, property owners should be checking their mailboxes often for unsolicited ReliaCards and then reporting them to the CDLE.6
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.
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.5
A large number of people including many Coloradans are applying for unemployment benefits during the COVID-19 / coronavirus pandemic. If you have been accused of fraud, contact us. Our office is based in Denver, but we represent clients throughout the state, including Denver, El Paso County, Colorado Springs, and more.
Arrested in California? Go to our information page on California Unemployment Insurance Code 2101.
Arrested in Nevada? See our article on NRS 612.445.
- See, e.g., 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).
- Colorado Department of Labor and Employment – Overpayments.
- Tamara Chuang, Colorado labor department blames fraud for 63% spike in new unemployment claims, The Colorado Sun (January 7, 2021).
- 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).