COVID federal fraud sweep recovers $836 million, produces 371 criminal charges

8 months ago 169

Deputy U.S. Attorney General Lisa O. Monaco, right at top of table, and at left Michael Galdo, Acting Director of the COVID Fraud Enforcement Task Force, lead a roundtable meeting of senior Justice Department officials and investigative partners in conjunction with the announcement of the results of a coordinated, nationwide enforcement action to combat COVID-19 fraud.

The COVID-19 public health emergency may have ended, but the Justice Department's work to identify and prosecute those who stole pandemic relief funds is far from over.

That was the message from U.S. Attorney General Merrick Garland this week, as the Department of Justice (DoJ) the results of a coordinated nationwide effort over the last three months to find those who illegally obtained coronavirus relief funds.

The available federal money, which Washington, D.C., lawmakers authorized starting in 2020 when COVID-19 pandemic health measures effectively shut down the U.S. economy, totaled roughly $5 trillion.

While much of it did go to the small businesses that closed and their workers who suddenly were without jobs, criminals also took advantage of the relief options.

Criminal, civil COVID enforcement actions: On Aug. 23, Garland and a gathering of senior Justice Department officials, law enforcement partners, and Office of Inspector General (OIG) executives, announced the filing of wide range of criminal charges and other sanctions against those who allegedly acquired relief money for which they weren't eligible.

The months-long effort produced 718 enforcement actions, including 371 criminal charges, for offenses related to more than $836 million in alleged COVID-19 fraud. Those actions included 371 criminal charges brought by federal law enforcement, as well as civil charges and forfeiture actions.

Of those charged with criminal COVID fraud, 119 defendants pleaded guilty or were convicted at trial. The DoJ said more than $57 million in court-ordered restitution was imposed in connection with the resolution of these criminal charges.

As for the 117 civil COVID charges, the DoJ reported they produced more than $10.4 million in judgments. The three-month sweep also resulted in forfeiture collections of more than $231.4 million.

Many of the charges related to pandemic unemployment insurance benefit fraud, and fraud against the two largest pandemic Small Business Administration programs: the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans.

Additional cases involved pandemic healthcare billing fraud, fraud against the Emergency Rental Assistance program, and fraud committed against the Internal Revenue Service Employee Retention Credit (ERC), a refundable tax credit for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic.

Michael C. Galdo, Acting Director of COVID-19 Fraud Enforcement, also noted that 63 of the defendants had alleged connections to violent crime, including violent gang members also accused of using pandemic funds to pay for a murder for hire. Twenty-five defendants have alleged connections to transnational crime networks.

Expanding strike forces: Since the beginning of the pandemic, the DoJ reports that it has brought criminal charges against nearly 3,200 defendants with alleged losses of nearly $1.7 billion. Civil investigations were launched into more than 3,000 individuals and entities for alleged misconduct in connection with pandemic relief loans totaling more than $7 billion.

"The Justice Department has now seized over $1.4 billion in COVID-19 relief funds that criminals had stolen and charged over 3,000 defendants with crimes in federal districts across the country," said Garland. This latest action should send a clear message that federal law enforcement agencies will continue their efforts to identify and prosecute those who stole pandemic relief funds, he added.

Part of those ongoing efforts will be by members of the expanding federal strike force program.

Deputy Attorney General Lisa O. Monaco on Aug. 23 also announced the launch of two additional COVID-19 Fraud Enforcement Strike Forces. One is based at the U.S. Attorney's Office for the District of Colorado, and the other at the U.S. Attorney's Office for the District of New Jersey.

These two strike forces join the three strike forces launched in September 2022 in the Eastern and Central Districts of California, the Southern District of Florida, and the District of Maryland.

"The law enforcement actions announced today reflect the Justice Department's focus — working with our law enforcement partners nationwide — on bringing to justice those who stole from American businesses and families at a time of national emergency. The two new Strike Forces launched today will increase our reach as we continue to pursue fraudsters and recover taxpayer funds, no matter how long it takes," said Monaco.

And that time frame gets a bump. Monaco noted that the DoJ has an extended statute of limitations for many of these offenses, and its investigative teams are employing sophisticated techniques to generate new leads every day.

Tax Felon Friday: Unfortunately, it seems that the COVID-19 pandemic just won't go away, either medically (cases of a new variant are spreading) or when it comes to related crime.

While IRS investigators weren't specifically cited in the COVID fraud sweep announcements, the tax agency is part of the relief programs that were abused. Note the reference to ERC schemes.

And the pandemic associated fraud costs all us taxpayers. You can help stop it. If you have information about allegations of COVID-19 fraud, report it by calling the DoJ's National Center for Disaster Fraud (NCDF) Hotline toll-free at (866) 720-5721. Or you can submit a report using the online NCDF Web Complaint Form.

That's enough for me to add the just-completed coronavirus fraud enforcement announcements to the ol' blog's new end-of-week feature Tax Felon Friday.

You also can catch up on previous tax crime posts, including those that were published long before I gave them a special designation, in the, what else, tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.

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