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Colorado small business owners fight unemployment fraud

CDLE reports "uptick" in fraudulent filings
CDLE building
Posted at 5:13 PM, Mar 02, 2021
and last updated 2021-03-02 20:51:51-05

DENVER — Colorado small business owners wear many hats, but as Colorado rebounds from the pandemic, "Unemployment Fraud Fighter" is a new role. And in some cases, the state is not making it easy.

"It's not my job. It's not my job at all," said Brendan Zarnoch, the Chief Operating Office for Root Tree Service in Centennial about fighting unemployment fruad. "I mean, this should be a very simple system."

He is one of a growing number of Colorado business owners working hard on stopping potentially fraudulent unemployment claims, but running into obstacles from the Colorado Department of Labor and Employment (CDLE).

In Zarnoch's case, he said, an employee fired for repeatedly not showing up for work filed for unemployment benefits. While Zarnoch would like to dispute the claim, CDLE sent the claim letter on Feb. 23 with a deadline for response of Feb. 24. Zarnoch received the letter on the 25th.

"It didn't give us enough time to respond back to the situation," said Zarnoch, who said he could not reach anyone in person with CDLE about his concerns. "I've actually sent certified mail to them so that they had to sign it, send it back. And currently, as of this week, the tracking says that it's undeliverable. So, I'm feeling as though there's no one there to respond back to business owners about what's going on."

Meanwhile, Toni Brock owns an Aurora freight forwarding company, and said she had never seen a fraudulent unemployment claim in 24 years of doing business, until last month.

"We've had six in just the last month," said Brock, who said her claims are from people who never worked for the company. "If you don't fight them, then this money goes out. Whoever is behind this, you know, it's illegal, and it's in there, they're thieves. So for the state, it's very important for them to perhaps take a really hard look at this."

Contact Denver7 brought these small business stories to the CDLE's acting unemployment insurance director, Philip Spesshardt.

"The pandemic has created an absolute opportunity for fraudsters," said Spesshardt. "Right now, there's been an uptick in fraudulently filed unemployment insurance claims across the the platform."

Spesshardt said more than 50 fraud triggers catch the vast majority of fraudulent claims immediately, so it is likely that the software in the MyUI+ sytem has already flagged fraudulent claims and placed a payment hold on them.

When employers report the fraud to CDLE, the agency confirms the claim is fraudulent and shut it down completely.

"The problem is that these individuals or these businesses don't know we may have already closed down a good portion of those claims," said Spesshardt. "We do ask employers, however, to go online and click the links for report fraud immediately."

As far as Zarnoch's one-day missed deadline, Spesshardt said that should not have happened and it is being investigated. Meanwhile, CDLE has waived the loss of right to protest during the pandemics.

"We are accepting employer information well out of time, as long as it was received before we were processing the claim," he said.

He said that while Governor Polis signed an executive order requiring payment while processing an unemployment insurance claim, they will credit employers accounts for claims that are later disqualified.

"We still process the claim, and we ultimately make adjustments to the employers account," said Spesshardt. "So. if payments have gone out against their accounts upfront, and we ultimately decided that it was a disqualifying job separation, that employers account is really credited for anything that was charged against it at that point in time."

Zarnoch just wishes he could contact someone to discuss his issue.

"I'd love to just be able to call someone and say, 'Hey, here's the problem,'" said Zarnoch, who pointed out that these claims could affect everything from insurance rates to PPP loans. "There's times where people definitely should have unemployment. My concern is that you if they are auto-approving people, the wrong people, that it could be taking away from the people actually need it and deserve it."

To report fraud to CDLE click here.

This page includes the online form to report fraud specifically for employers. Click on the “I’m an employer reporting identity theft” button. This will put a hold on the claim and prevent any benefits from paying out.

CDLE also has a dedicated service line for employers: 303-318-9100 or Toll Free: 1-800-480-8299

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