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Colorado Unemployment Fraud and Consequent Theft Charges – Understanding the “Fraud”

As a result of recent economic downturn unemployment insurance fraud has taken off. A nationwide crackdown is now occurring targeting people fraudulently drawing unemployment payments — those who were never eligible and workers who keep getting checks after they return to work.

With the poor economy lingering and the jobless rate remaining high, states, including Colorado are stepping up efforts to stop the fraud and improper payments.

“As much as 30 percent of the wrong payments in 2010 went to people who had returned to the workforce but continued to claim benefits, according to Dale Ziegler, deputy administrator for the Office of Unemployment Insurance at the U.S. Department of Labor. Those payments came even after a 2009 executive order by President Obama seeking new policies to cut payment errors, waste, fraud and abuse.

The Colorado State Unemployment Insurance (UI) Integrity Fraud is empowered to conduct criminal investigations involving crimes affecting the UI Program of the Colorado Department of Labor and Employment (CDLE).

Crimes investigated include UI claimant and employer fraud.

Criminal convictions in fraud cases often result in court ordered restitution to CDLE. Most of those convicted make regular payments through the district courts’ registry offices.

Colorado Department of Labor and Employment Unemployment Insurance Integrity Fraud

Ohio, Colorado, New Jersey, Utah and Georgia have developed a web-based system to share unemployment insurance information with states, multi state employers and others, Ziegler said

How Unemployment Benefits Work – An Overview

The UI Program provides temporary and partial wage replacement to workers who have become unemployed through no fault of their own. The program is funded by employer paid taxes and provides benefits to those who meet the eligibility requirements of the Colorado Employment Security Act. The intent of the program is to aid in maintaining the economic stability within a community by safeguarding the income and purchasing power of the unemployed worker. The program is administered by the Division of Employment and Training of the Department of Labor and Employment.

Colorado Unemployment Insurance Overpayments

An overpayment occurs when the claimant has received unemployment benefits, and the Division of Employment subsequently determines the claimant was not entitled to those benefits. One of the most common situation in which this occurs is when the claimant is awarded benefits in a decision, but that decision is then reversed on appeal.

At that point, the claimant is disqualified from unemployment benefits attributable to that employer, so any benefits the claimant has already collected must be paid back, because the disqualification essentially means the claimant was not entitled to receive those benefits at all.

Another situation that often occurs is when the claimant receives unemployment benefits for certain weeks, but it is later determined that the claimant was working during those weeks, or was otherwise not eligible to receive benefits for those weeks because they were not able or available for work, were not seeking employment, etc. The claimant must then pay back the benefits. In certain circumstances, a penalty may be assessed against a claimant who falsely misrepresented the facts in order to receive benefits (such as claiming unemployment benefits for a week the claimant was working).

The claimant may appeal the decision that caused the overpayment, and if that decision is reversed and benefits are awarded, the overpayment disappears and the claimant may once more receive unemployment benefits. Otherwise, the claimant may request that the requirement to repay the benefits be waived. If the waiver request is denied, the claimant may appeal that decision. The claimant may also appeal a decision in which penalties were assessed.

Colorado Fraud Amnesty Program Ends December 2011: The Fraud Amnesty Program

Colorado State is offering a temporary fraud amnesty program that will waive time and monetary penalties for claimants who report that they fraudulently collected unemployment benefits while working.

Who Is Eligible for Amnesty?

 Unemployment claimants who:

 •Wish to report that they continued to incorrectly collect unemployment benefits while working

 •Knowingly did not correctly report their hours and earnings while requesting payment of unemployment benefits

•Report their potentially fraudulent activities during the open program from October 1 through December 31, 2011

•Are willing to enter into a binding repayment agreement

 Who Is Not Eligible for Amnesty?

•Unemployment claimants with an existing overpayment that was due to fraud

How do I Sign Up for Amnesty?

•Call the UI Benefit Fraud Amnesty Program hotline at 303-318-9035 ext. 83335.

Program Dates: October 1 through December 31, 2011

The Colorado Employment Security Act 8-81-101 (4)(a)(II) has severe penalties for unemployment claimants who continue to collect unemployment benefits for weeks during which they were working and ineligible to receive payment. Program participants must meet certain eligibility requirements.

Colorado Unemployment Insurance Fraud Penalties

When you request payment on CUBLine Online or CUBLine, you must report any hours you worked and any money you earned. Not accurately reporting hours worked and money earned, is misrepresenting the truth or making a false statement. Simply put, you are committing fraud.

When you commit fraud, you must pay back the unemployment benefits that were paid and you will also receive additional fraud penalties. You must pay an additional 50 percent of your overpaid benefits and for every week you misrepresented the truth or made a false statement about hours worked and money earned, four weeks of benefits are withheld.

Example: You collect $500 each week in unemployment benefits. You then return to work and do not report your hours and earnings for a period of eight weeks after you began working. You will have been overpaid $4,000 (8 weeks x $500). Because you committed fraud, you must now pay back a total of $6,000 ($4,000 + 50 percent [$4,000 x 0.5=$2,000]). In addition, you will be denied future unemployment benefits that you were otherwise eligible to receive for 32 weeks (8 weeks x 4).

These penalties are severe and are designed to discourage you from committing fraud.

More serious cases of fraud can also result in criminal prosecution for theft and other crimes.

Colorado Unemployment Insurance Criminal Prosecution of Fraud

Detecting and prosecuting fraud is a high priority for Colorado’s UI Program. As stated in the Colorado Employment Security Act 8-81-101, BPC has the authority to prosecute fraud.

A claimant who knowingly makes a false statement or withholds information to receive UI benefits is committing an act of fraud. The penalty for this type of fraud can include a 4-week postponement of future UI benefits for each week in which the person fraudulently requested the payment of UI benefits. A person who commits this type of fraud must also repay the entire amount of UI benefits fraudulently received and pay a monetary penalty of 50 percent of the total overpaid amount. Additional collection activities may include civil and criminal prosecution, including court costs, fines, and/or imprisonment.

Criminal Penalties for Theft – Depend on the Amount of the Taking

Theft in Colorado Can be a misdemeanor (M-2) for Theft from $500.00 to $1,000.00 – a Class Four Felony for Theft from $1,000.00 to $20,000.00 Or a Class Three Felony for Theft OVER $20,000.00.

An employer who knowingly makes a false statement or causes a false statement to be made as to the reason for a job separation from employment, which causes a delay in the proper payment of UI benefits to a claimant, is committing an act of fraud. An employer who commits this type of fraud is charged with one and one-half times the amount of UI benefits that should have been paid to the claimant during the period of delay and with 100 percent of all other UI benefits paid to the claimant thereafter during the claimant’s benefit year. These penalties are in addition to any civil and criminal prosecution, including court costs, fines, and/or imprisonment.

What is an overpayment?

An overpayment occurs when UI benefits are paid to a claimant who is later determined to have not been eligible for or entitled to the payment of UI benefits. Because UI benefit payments were made to the claimant before the decision or action that changed his or her eligibility or entitlement, the UI benefits must be paid back to the UI Program.

Some of the common causes of overpayments include:

A hearing officer’s decision reverses a previous award of UI benefits.

A claimant is disqualified from receiving UI benefits due to being responsible for a job separation.

A claimant’s weekly and/or maximum UI benefit amount changes (a monetary redetermination is made) because his or her wage information was incorrect when the claim was initially filed.

A claimant fails to notify the UI Program that he or she does not meet the eligibility requirements.

A claimant and/or an employer fails to disclose that the claimant received vacation pay, severance pay, or other similar pay after a job separation.

A claimant fails to accurately report earnings and hours worked while filing for UI benefits.

What Constitutes Unemployment Insurance Fraud? The Different Faces of Alleged Fraud

Here are a few of the most common ways in which you are held legally responsible for your unemployment benefits:

Personal Information – When you file an unemployment benefits claim your application is a legal document. You are expected by law to provide your name, social security number, current address, current and correct phone number and current and correct employment information. Any intentional misrepresentation of who you are, and your employment situation is considered fraudulent. It is a crime to provide intentionally wrong information about yourself or someone else when filing an unemployment insurance claim.

You cannot just use anyone else’s personal information to collect unemployment—this is identity theft. That means you cannot “borrow” your cousin Al’s personal information to collect money for yourself.

Looking for Work – Unless you’re on a temporary lay-off, or remain job-attached, or a union worker, you are required to actively seek work and be physically and mentally able to work as a condition of unemployment collection. You are required to attest to that fact each time you file a weekly payment claim. If, in fact, you do not look for work, lie about looking for work, or lie about being able to work…guess what? You’re committing a crime.

Reporting Income – Besides being able and looking for work, you must also disclose any extra income you earned in any given week. If you earn income from a new part-time job, or do some freelance consulting, you are required by law to disclose these wages. How does the state use this information? Any additional income you earn from part-time or freelance work is figured into your benefits claim. You earn partial benefits when you work part-time. Failure to report additional income while you are receiving state unemployment pay is a crime.

How is unemployment insurance fraud detected?

Possible or potential UI fraud is detected through various methods such as:

• Regular computer cross-match of employer wage records with weekly benefits paid in UI

• Utilizing the cross-match system in a cooperative effort with other states to detect illegal payments to individuals who claim benefits in one state while working in another

• Verify validity with employers listed on a claimant’s report of job search contacts

• Receive and follow anonymous tips and reports from the relatives of claimants, employers, fellow employees, and other members of the public.


Other Articles of Interest:

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___________________________
H. Michael Steinberg Esq.
Attorney and Counselor at Law
The Colorado Criminal Defense Law Firm of H. Michael Steinberg
A Denver, Colorado Lawyer Focused Exclusively On
Colorado Criminal Law For Over 30 Years.
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