Key Facts

Timeline of Colorado’s Unemployment Fraud-Control Failures

Colorado’s unemployment system came under extraordinary pressure in 2020. According to the <a href="https://content.leg.colorado.gov/sites/default/files/documents/audits/2056p_unemployment_benefits_report_public.pdf">Office of the State Auditor’s performance audit</a>, the department received 1,100% more claims during calendar year 2020 than it received in 2019.



Colorado paid approximately $6.9 billion in unemployment benefits to about 852,000 people during 2020. By October 2021, another $4.6 billion had been paid to approximately 577,000 people during that calendar year. These amounts describe total program payments and recipients. They are not fraud totals.



Within the larger payment population, auditors identified $73.1 million paid through 8,200 claims carrying one or more fraud indicators between March 1, 2020 and April 30, 2021. The auditor classified these payments as likely or potentially fraudulent, which placed them under investigation.

What Colorado Auditors Found

The March 20, 2020 executive order required unemployment benefits to be paid within 10 days after a claim was received. Before the pandemic, processing generally took four to six weeks, giving staff more time to contact employers and verify employment and wage information.



From March 2020 through early August 2021, the department did not complete employment and wage checks before paying many claims. It screened claims for certain indicators, including duplicate filings, but some verification occurred months after payment.



The State Auditor connected this sequence to a clear control problem. Money moved before a core eligibility check was complete, creating a larger recovery burden when later review uncovered false information or identity misuse. The resulting payments remained under investigation until the department could resolve each claim.



The expedited-payment mandate ended on August 6, 2021. The department then returned to conducting employment and wage checks before payment.

How Expedited Payments Weakened Verification

How Technology Limited Fraud Screening

The Institution’s Response

What the Financial Labels Mean

What Records Are Still Needed

What this means for Arizona

What this shows about Democratic governance

Frequently Asked Questions

The Bottom Line

&#8211; <a href="https://content.leg.colorado.gov/content/unemployment-insurance-benefits-public-report">Colorado Office of the State Auditor, Unemployment Insurance Benefits Public Report, report 2056P, released December 1, 2021</a>



&#8211; <a href="https://content.leg.colorado.gov/sites/default/files/documents/audits/2056p_unemployment_benefits_report_public.pdf">Colorado Office of the State Auditor, full Unemployment Insurance Benefits performance audit</a>



&#8211; <a href="https://content.leg.colorado.gov/sites/default/files/2056p_unemployment_benefits_report_public_highlights.pdf">Colorado Office of the State Auditor, Unemployment Insurance Benefits report highlights</a>



&#8211; <a href="https://content.leg.colorado.gov/content/statewide-single-audit-fiscal-year-ended-june-30-2025">Colorado General Assembly, Statewide Single Audit for the fiscal year ended June 30, 2025</a>

Sources

Colorado auditors identified $73.1 million in likely or potentially fraudulent unemployment payments. See what failed, what changed, and what Arizona can learn.

Do Democratic Policies Make Public-Benefit Programs More Vulnerable to Fraud? What Colorado Records Show

Key Facts

Timeline of Colorado’s Unemployment Fraud-Control Failures

What Colorado Auditors Found

How Expedited Payments Weakened Verification

How Technology Limited Fraud Screening

The Institution’s Response

What the Financial Labels Mean

What Records Are Still Needed

What this means for Arizona

What this shows about Democratic governance

Frequently Asked Questions

Is this an example of Democratic corruption?

How much unemployment fraud did Colorado confirm?

Was the entire $73.1 million confirmed as fraud?

Why did Colorado pay claims before completing wage checks?

What happened to the additional $35 million recovered by banks?

How did Colorado respond to the audit?

What should Arizona learn from Colorado?

The Bottom Line

Sources

RioSlum Studio

Do Democratic Policies Make Public-Benefit Programs More Vulnerable to Fraud? What Colorado Records Show

Key Facts

Timeline of Colorado’s Unemployment Fraud-Control Failures

What Colorado Auditors Found

How Expedited Payments Weakened Verification

How Technology Limited Fraud Screening

The Institution’s Response

What the Financial Labels Mean

What Records Are Still Needed

What this means for Arizona

What this shows about Democratic governance

Frequently Asked Questions

Is this an example of Democratic corruption?

How much unemployment fraud did Colorado confirm?

Was the entire $73.1 million confirmed as fraud?

Why did Colorado pay claims before completing wage checks?

What happened to the additional $35 million recovered by banks?

How did Colorado respond to the audit?

What should Arizona learn from Colorado?

The Bottom Line

Sources