The U.S. Justice Department recently announced an increased nationwide coordinated law enforcement effort aimed at combatting COVID-related fraud. The initiative seeks to identify and prosecute individuals and companies who have engaged in fraudulent activity related to the COVID-19 pandemic, especially schemes related to the Paycheck Protection Program (PPP) and other relief programs.
Since the beginning of the epidemic, the CARES Act and other federal and state level programs made various levels of relief available to help individuals and businesses affected by the crisis. Unfortunately, since their implementation, it has become increasingly clear that these programs have been a target for fraud with losses estimated by government accountability groups to be tens of billions of dollars. The Justice Department’s latest initiative is the most recent effort to identify and hold wrongdoers accountable. Highlighting these efforts are recent criminal charges against 18 defendants in 9 federal districts across the United States for their alleged participation in various fraud schemes resulting in over $490 million in COVID related false billings to federal programs and theft from federally funded pandemic programs. In connection with this particular enforcement action, the DOJ seized over $16 million in cash and other fraud proceeds.
The nationwide initiative involves collaboration between various government agencies, including the Department of Justice (DOJ), Department of Health and Human Services (HHS), the IRS, and the Small Business Administration (SBA). As announced, through coordinated efforts, these agencies will investigate individuals and companies suspected of fraudulent activity related to COVID relief programs followed by prosecution if such activity is identified. Examples of fraudulent activity include misrepresenting eligibility for PPP loans, falsely inflating payroll expenses, and use of PPP funds for personal expenses instead of qualifying business expenses. As part of the increased initiative, the Department of Justice will rely heavily on community involvement and has established a hotline and email address where the public can report suspected COVID fraud.
North Carolina COVID Fraud Task Force
Within North Carolina, the US Attorney's Office for the Eastern District of NC launched a task force in 2022 aimed at identifying individuals and companies suspected of defrauding government relief programs. Earlier this month, the US Attorney for the Eastern District announced that task force efforts have resulted in approximately 30 indictments with another 30 investigations pending. The focus is reportedly to identify and prosecute those who have engaged in fraudulent activities related to the COVID pandemic relief programs like PPP, EIDL, unemployment insurance, and the NC Housing Opportunities and Prevention of Evictions (HOPE) Program.
Following the launch of the COVID fraud task force, investigations within the Eastern District of North Carolina have resulted in numerous charges, pleas, and convictions of individuals and businesses that were identified and prosecuted by law enforcement for taking advantage of relief programs. Recently, a Texas couple now faces 20 years in federal prison for allegedly orchestrating a scheme to steal taxpayer money intended to help small businesses. Additionally, a Garner man recently pleaded guilty for bank fraud after filing 14 fraudulent PPP applications seeking $6.1 million.
At both a national and local level, government resources and attention continue to focus on identifying COVID relief fraud. These investigations combine the resources of multiple agencies and seek to root out wrongdoing at all levels. If you have questions or concerns and especially if you are contacted by law enforcement, it is advisable to work with an attorney experienced in these matters.
