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DENVER - An imprisoned Colorado sex offender is being investigated for "fraudulently obtaining" more than $25,000 in unemployment benefits while behind bars, according to court records obtained by 7NEWS.
A Colorado Department of Labor and Employment audit determined that David Lee Mackey obtained the benefits between the dates of 8/14/2010 and 9/13/2011 by knowingly accessing the CDLE computer system and providing false information to conceal employment and wages, according to a search warrant filed by a criminal investigator for the labor department.
The 61-year-old Mackey is serving a 24-year sentence at Colorado State Penitentiary after pleading guilty in June 2010 to felony sexual assault on a "physically helpless" victim in Denver.
Simply put, the state accuses Mackey of filing for and receiving unemployment benefits "during the same period in which he was incarcerated and not able and available to work," the affidavit states. The inmate has not been charged at this stage in the fraud investigation.
"Fraud represents less than 5 percent of all unemployment insurance claims," said CDLE spokeswoman Cher Haavind.
When asked how much the state has lost to people gaming the system, Haavind replied, "Since 2011, the department has ordered close to $3 million in restitution for fraud. This year alone we've ordered more than $400,000 in restitution for fraud."
Haavind said those figures include the money that was given to people who were not entitled, plus investigative and recovery fees.
When asked how much the state will see back, Haavind said, "We've enacted a number of collection efforts over the last several years which have improved our ability to collect on these benefits."
Haavind told 7NEWS that during the recession, the department had only assigned three people to track fraud, because most of the staff was needed to help people who were out of work and entitled to benefits.
She said now that the recession is over, they've assigned eight people to work on tracking fraud.
Haavind also said that Colorado has joined a national group of labor departments specifically focused on developing new tools, processes and training to combat fraud.
She said Colorado now has a cross-match system of Social Security numbers and Unemployment Insurance records.
"We also have a tip and lead line," she said. "We work with other agencies, like revenue, and share information.
The effort seems to be working.
Haavind said that in 2013, the department collected $585,974 in restitution. So far this year, it has collected $507,000.
Haavind said she couldn't talk about specific cases, but she did say that fraud cases emanating out of prison represent less than 1 percent of all fraud cases. She added that, with new controls, they are now able to catch that type of fraud in six to eight weeks.
"We have weekly cross-matches now," she said, "where previously, we were doing quarterly audits."
In the Mackey case, a labor department criminal investigator obtained the search warrant in July to get Mackey's account records at Academy Bank in Thornton, where the unemployment funds were received through direct deposit. The records can reveal who -- besides Mackey -- is authorized to use the account, and who has been making ATM and debit cards withdrawals, transfers and other transactions.
The search warrant also authorized the investigator to review transactions at Mackey's prison inmate account and learn who made deposits into it.
Clearly, investigators are exploring whether Mackey had accomplices on the outside. The search warrant asks the Colorado Department of Corrections to "provide a list of the names of all visitors of Mr. Mackey" for the time period when the alleged fraud occurred -- from Aug. 5, 2010 through Sept. 30, 2011.
An agency audit determined the unemployment fraud had been committed in September 2011 and the case was referred for criminal investigation a month later. But the criminal investigation didn't begin until July of this year, according to the search warrant affidavit.
When asked why it takes so long to start and finish an investigation, Haavind said, "There are a couple of reasons. Number one, you want to make sure all your facts are pulled together before you take the documents to court. And two, the schemes are getting more complicated. The documents used to commit fraud are even getting more difficult for us to detect."
Labor department officials said they could not discuss details of the ongoing investigation, but did say that cases involving more than one individual are more complex and take more time.
Mackey has a long criminal history. He was first sentenced to Colorado prison for sexual assault in 1972 and served another stint in prison for burglar in 1985, according to Colorado Bureau of Investigation records.