On March 10, 2022, the U.S. Department of Justice (DOJ) announced the appointment of Associate Deputy Attorney General Kevin Chambers to serve as the Director for DOJ’s COVID-19 Fraud Enforcement Task Force. In remarks delivered at the American Bar Association’s 37th National Institute on White Collar Crime earlier this month, U.S. Attorney General Merrick Garland announced that DOJ will be hiring 120 additional attorneys as “force multipliers” to combat pandemic-related fraud. These actions underscore President Biden’s recent statements in his State of the Union address earlier this month that he intends to bolster existing pandemic fraud efforts and target large-scale and transnational complex fraud schemes.
Created in May 2021, the COVID-19 Fraud Enforcement Task includes nearly 30 agencies, including the Labor Department, the Treasury Department, the Small Business Administration (SBA), the U.S. Postal Inspection Service, and the Pandemic Response Accountability Committee. DOJ has requested allocation of an additional $36.5 million from Congress for U.S. Attorney’s Offices and DOJ’s Criminal Division to increase efforts to combat pandemic-related fraud.
The Attorney General highlighted two focus areas for these additional pandemic fraud resources:
- Prosecutions of individuals who fraudulently obtained pandemic relief funds from programs like the Paycheck Protection Program (PPP) and Unemployment Insurance (UI); and
- The use of data-analytics to target large-scale and transnational fraud schemes.
As to the first objective, Attorney General Garland announced plans to redouble existing efforts to prosecute individuals who fraudulently obtained pandemic relief. On March 29, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act provided more than $2 trillion in relief for individuals and businesses economically suffering due to the pandemic. CARES Act funds were funneled into programs such as the PPP, Economic Injury Disaster Loans (EIDL), Pandemic Unemployment Assistance (PUA), and Federal Pandemic Unemployment Compensation (FPUC).
The COVID-19 Fraud Enforcement Task Force was created to target and prosecute the individuals who, as President Biden recounted in his State of the Union address, “fraudulently obtained loans meant for small businesses facing threats of layoffs and closure due to the pandemic” and “stole unemployment insurance benefits meant for those who lost their jobs through no fault of their own.”
DOJ hired 34 additional attorneys in 2021 to support the task force, and as President Biden stated, has already prosecuted “scores” of individuals. For example, in January 2022, a couple pled guilty in the U.S. District Court for the Eastern District of Virginia to submitting fraudulent disaster-related loan benefits in the form of SBA-sponsored EIDL and PPP loans. The government alleges the couple intended to defraud the government out of more than $5.1 million and caused an actual loss to the United States and participating financial institutions of more than $1.4 million.
Second, Attorney General Garland echoed President Biden’s new focus on “major targets of pandemic fraud, such as those committing large-scale identity theft, including foreign-based actors.” Attorney General Garland explained that the data analytics supporting this initiative are DOJ’s second “force-multiplier” in its renewed focus on pandemic fraud. Last month, for instance, the U.S. Attorney’s Office for the Eastern District of New York announced charges against eleven defendants alleged to have used personally identifiable information of more than 800 victims to submit false unemployment insurance benefit claims funded by COVID-19 assistance programs.
Attorney General Garland’s remarks emphasize this administration’s renewed commitment to combatting corporate crime. The additional resources sought by President Biden signal DOJ’s view that a significant amount of COVID relief funds were improperly obtained and may constitute fraud. Businesses who have or will apply for program relief should carefully consider eligibility and ensure the accuracy of all representations made to a government agent in the process.
We will continue to monitor developments in this area over the coming months. Please contact the authors if you have any questions about the risks associated with COVID-related relief funds.
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