The Law Firm of Piacentile, Stefanowski & Malherbe LLP

The DOJ’s COVID Fraud Enforcement Task Force and Whistleblowers

Since the outbreak of Covid-19, the US government has created several programs in an attempt to mitigate the economic impact that the pandemic has had on the most vulnerable people. The CARES Act created programs like the Payment Protection Program (PPP), Economic Injury Disaster Loan (EIDL), Economic Impact Payments (EIP), Provider Relief Fund (PRF), Pandemic Unemployment Assistance (PUA), and Federal Pandemic Unemployment Compensation (FPUC). These programs worked by giving money directly to people, expanding unemployment benefits, or providing business loans to help keep small businesses afloat. Although these programs were created to inject trillions of dollars into the economy at a critical moment, it has also been the target of fraud. It is estimated that over $80 billion was given to people and businesses who should not have qualified for it. This past year, the Department of Justice and other agencies have been cracking down on these instances of fraud.

There are many ways that fraudsters operate but the most common involve submitting false statements when applying for financial assistance. One case that was settled in March of 2022 involved a business owner applying for a PPP loan using misleading information regarding the business’ payroll. The defendant went on to use the money he received to pay for his personal mortgage. There have also been cases where the defendants use other people’s information in order to apply for PUA benefits, including one case where they used incarcerated people’s personal information for the scheme.

In another case, again regarding PPP loans, a man submitted 27 loan applications on behalf of 8 companies. A total of $27 million in forgivable loans was given to him because he misled the Program by stating that his companies had 100 employees and an average of $400,000 in monthly expenses, none of which was true. This was done through falsified IRS documents. The defendant then transferred the money to his personal bank account and used it to pay off his credit cards and even rent an ocean-front apartment in Santa Monica. In the end, he was convicted of bank fraud, making false statements to financial institutions, and money laundering, and he could face up to 30 years in prison per count.

Additionally, people have been scamming the unemployment assistance program more than ever before. Recently, a woman in Texas applied for and received unemployment benefits in both Texas and Massachusetts using stolen identities. She was charged with wire fraud for conducting an unemployment scam and was sentenced to 18 months in prison.

After hundreds of cases like these, the government has started taking steps in bringing more fraudsters to justice. For example, this last case was investigated by the Homeland Security Investigation’s Document and Benefit Fraud Task Force, which specializes in detecting identity and benefits fraud. In addition, Attorney General Merrick B. Garland created the Covid-19 Fraud Enforcement Task Force, which partners with the Department of Justice to combat people abusing the programs set in place during the pandemic. Other agencies like the Department of Labor and the Smalls Business Administration have also taken steps to ramp up their fraud detecting and investigating powers.

Fraud of any type can be difficult to detect, and the schemes surrounding the CARES Act and other Covid-19 relief programs are no different. Thankfully, there are ways in which normal citizens can help the US government in its fight against fraud. Through the False Claims Act, people can sue fraudsters on behalf of the government and help it recover the money lost. The False Claims Act focuses mainly on money given by the government to people or companies under false or misleading pretenses. This can include money that was supposed to be given to the government, the most common example being taxed, but also seen with PPP loans. The people who come forward with information about fraud are not only protected against retaliation but can also receive a portion of the money recovered as a reward, usually between 15% to 30%. During the fiscal year of 2021 more than $5.6 billion were recovered thanks to brave whistleblowers who filed lawsuits against these people, but the money given to fraudsters is estimated to be much more. With the help of the False Claims Act and its whistleblowers, we can expect more instances of Covid-19 fraud to be brought to light in the near future.

If you know about Covid-19 Fraud you believe the public and government do not know about, please contact our firm, Piacentile, Stefanowski & Associates LLP, also known as Whistleblowers International. Our attorneys and investigators will evaluate your matter free of charge and may be able to help.