Skip to Content
Local News

Colorado businesses see fraudulent unemployment claims using their names

​​​​​COLORADO SPRINGS, Colo. (KRDO) -- With more than a million unemployment claims filed last year in Colorado -- and a million more fraudulent ones -- Department of Labor officials have been sifting through the data to see which businesses have let people go due to COVID-19.

At the same time, business owners tell KRDO that they're seeing claims being filed by fraudsters who are falsely listing their business as an employer.

Pikes Peak Construction in Colorado Springs is a relatively small company. They only have 5 employees now, and long-time manager Gary Seabolt estimates they've never had more than 25 in the decades they've been around. Seabolt also said they've never fired or laid anyone off. That's why it was so perplexing when he started to receive letters in the mail notifying him that unemployment claims were being filed against the company.

Seabolt said the first letter contained a debit card to spend unemployment payouts. He thought it was just a mistake, so he contacted the bank. He said they told him to shred it.

Then, several more debit cards started showing up in the mail for different people -- Seabolt had never heard of any of them.

"Once we started getting more and more of them, I knew it wasn't a wrong address. It was somebody who is deliberately using our address for something," Seabolt said.

The letters kept coming, but this time, they asked him to verify wages and notified him that unemployment claims had been filed against his business.

Some of these claims were filed directly against the former owner of the company -- a man who passed away decades ago.

Again, all these documents had been filed under names he didn't recognize.

Then, a letter showed up with a name he did recognize -- his own. Someone had filed an unemployment claim for Seabolt, who was still very employed. Even worse, whoever filed it had somehow gained access to his birthday, the company's tax identification number, and his social security number.

"It was infuriating," Seabolt said. "I was I don't think I've ever been that mad about getting a piece of mail in my life."

Now, Seabolt estimates they have received upward of 70 letters like this.

While KRDO was speaking to Seabolt today, the mail arrived. 13 more letters showed up in his mailbox.

Some of these letters show that people have been paid out thousands of dollars using his company's address.

He's tried to reach out to the state dozens of times, by email, fax, and phone. He said he's never really gotten through.

When KRDO reached out the Colorado Department of Labor and Employment, they told us Seabolt's situation is starting to become more common.

Jessica Hudgins Smith, the Press Secretary for the Division of Unemployment Insurance, told us they’ve received more than 134,000 reports of fraud from individuals and employers recently, and that does not include reports of fraudulent 1099-Gs.

She also told us that unemployment fraud isn't just happening in Colorado, it's happening all over the country.

"We began noticing the increase in June, with the launch of the federal unemployment benefit programs. These federal programs are easier to target. They have less checks and balances than our typical UI systems. When those programs expired at the end of the year, we began seeing an increase in attacks to our state benefit programs," she said.

Hudgins Smith believes this increase in fraud is due in part to identity theft. She said that with several data breaches in recent years, people are having their personal identifying information stolen, causing millions of people's personal identifying information to become available on the dark web and other black market avenues.

"These are large-scale criminal rings who have stolen victims’ [personal identifying information] and are using the information to file fraudulent claims all over the nation," she said.

This means that the tools many states use to crosscheck unemployment fraud, like cross matching Social Security Numbers or with credit bureaus, would not catch these fraudulent claims.

"We have done a number of things to address and prevent these fraudulent claims," Hudgins Smith said. "CDLE has implemented an identity verification tool ( and utilizes software to identify fraud. We also continue to research, and when appropriate, procure new security features. We have more than 50 triggers that will place holds on claims that could potentially be fraudulent. Since the start of the pandemic, we’ve seen just over 1.1 million fraudulent claims. Assuming there is a full payout for the life of the claim, we estimate we’ve prevented more than $7 billion in fraudulent benefits going out."

For Seabolt, none of that matters. The letters keep coming.

"If they're paying out and sending this form this 1099 G, to an individual here at our office, that tells me that somebody is not doing their job at the state level," Seabolt said, mentioning that he believes the state could cross check employment and tax records to find out if any of these people had worked at his company.

Seabolt said he has reported each instance of fraud through the state's fraud reporting tool and sent back the fraudulent claims, and he keeps getting more letters in the mail.

Though it didn't work for Seabolt, if this happens to you, Hudgins Smith recommends filling out the CDLE's fraud reporting tool.

For more information on unemployment fraud in Colorado, click here.

Colorado Springs / News

Sydnee Stelle


1 Comment

  1. “Hudgins Smith believes this increase in fraud is due in part to identity theft.”
    Ya think? By definition, that’s using other people’s information to illegally access funds to which you’re not entitled.

Comments are closed.

Skip to content