The COVID-19 pandemic created an unprecedented strain on federal financial aid programs, leading to increased vulnerabilities for fraudsters and scammers to take advantage of the system.
A recent report from the Department of Justice (DOJ) COVID-19 Fraud Enforcement Task Force revealed a staggering level of fraud during the pandemic, with more than $400 billion in emergency funds stolen or improperly used.
The report detailed how fraudulent activities targeted multiple relief initiatives, such as unemployment benefits, Paycheck Protection Program (PPP) loans, and Economic Injury Disaster Loans (EIDLs), showcasing the extent of deceit and exploitation during this challenging time.
The report uncovered various fraudulent activities such as filing false claims with stolen identities, exaggerating payroll expenses, manipulating bank records, and submitting fake tax documents.
It suggests that criminals may have illegally obtained over $280 billion in emergency funds and misused an additional $123 billion, resulting in a total of more than $400 billion diverted away from assisting Americans during a critical period.
This information was reported by The Politics Brief.
Here are some examples of COVID-19 fraud cases that were reported:
A defendant was sentenced to seven years in federal prison for committing PPP, EIDL, and UI fraud, with actual losses of more than $1 million and attempted losses of $3 million. When the government executed search warrants in the case, agents recovered stolen identifying information and ghost guns, including one modified to function as a machine gun.
A defendant pleaded guilty to submitting more than $3.5 million in fraudulent COVID-19 PPP and EIDL applications and using fraudulently obtained funds to pay for a vacation, a Mercedes-Benz, jewelry, and luxury goods, including items from Luis Vuitton, Neiman Marcus, Dior, Cartier, Gucci, Chanel, and Hermes.
The SDFL indicted 17 employees of the Broward Sheriff’s Office were charged with obtaining fraudulent PPP/ EIDL loans. One former deputy was recently convicted at trial, several employees have pleaded guilty, and other defendants’ cases are still pending.
A defendant was sentenced to 71 months in prison for fraudulently obtaining PPP and EIDL loans and Shuttered Venue Operator Grants (SVOG), using the stolen funds to buy two Tesla S models, a Lamborghini, a Porsche, a diamond Audemars Piguet watch, a rose gold and diamond pendant with his company’s logo, a half-kilogram gold chain with 70 carats of diamonds, and a 1-kilogram gold chain.
A former contract detention officer at the federal Krome Detention facility who was the leader of a PPP fraud ring was sentenced to 32 months in prison for preparing fraudulent PPP applications in return for kickbacks.
A defendant was sentenced to 70 months in prison for laundering the over $2 million in fraudulently obtained PPP and EIDL loans and using the funds to gamble and to pay for cosmetic surgery, a Cadillac Escalade, and a Pomeranian puppy.
In the Southern District of Georgia, a Florida-based attorney was convicted at trial of conspiracy to fraudulently obtain almost $800,000 in Economic Injury Disaster Loans for herself and others.
In the Western District of Washington, the ringleader of a $6.8 million pandemic fraud ring was sentenced to five years in prison for fraudulently seeking funds from various relief programs.
In the Eastern District of Washington, an Arkansas-based business owner pleaded guilty to fraudulently receiving more than $16.5 million in SBApandemic relief funds for himself and others.
In the Eastern District of Virginia, a former VA nurse was sentenced to 18 years in prison for conspiring to fraudulently obtain more than $3.5 million in UI benefits from at least five states. She and her co-conspirators filed more than 220 false applications for unemployment insurance benefits using stolen identities and the identities of state and federal prison inmates.
In the Middle District of Florida, a defendant was sentenced to eight years and six months in prison for obtaining more than $7.2 million in PPP loan funds, which he used to purchase Maserati and Mercedes-Benz cars and buy a 12-acre estate.
The District of Minnesota has brought charges against more than 50 individuals for their respective roles in a $250 million fraud scheme that exploited a federally funded child nutrition program during the COVID-19 pandemic.
In the Eastern District of Michigan, a man was sentenced to 15 years in prison for his role as the ringleader of conspiracies to use stolen identities to fraudulently obtain $2.1 million in unemployment insurance benefits from multiple states and to traffic in methamphetamine.
Read more here.
The COVID-19 Fraud Enforcement Task Force of the DOJ has achieved notable progress in fighting against fraudulent activities, having criminally charged over 3,500 defendants and seized or forfeited more than $1.4 billion in CARES Act funds.
Additionally, it has resolved over 400 civil settlements and judgments. Yet, the extensive scale of the fraud underscores that there is still a significant amount of work ahead.
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