COVID-19 Pandemic Fraud

In light of the COVID-19 pandemic, Congress passed several measures providing financial assistance to struggling people and businesses. For example, under the CARES Act’s Payroll Protection Program (PPP), Congress set aside $350 billion for small businesses needing loans to cover payroll, mortgage, rent, and utility payments. Similarly, the Small Business Administration launched the Economic Injury Disaster Loan (EIDL) program, which offered small businesses fixed-interest rate loans to help offset COVID-19’s impact on operating expenses, like health care benefits, rent, and fixed debt payments. And lastly, the Department of Labor, through the Families First Coronavirus Response Act, expanded eligibility for unemployment benefits (known as the Pandemic Unemployment Assistant (PUA) program) for workers affected by the COVID-19 pandemic.

Since implementing these programs, the Department of Justice has made a concerted effort to ensure the proper disbursement of pandemic relief funds after uncovering significant fraud amounting to more than $8 billion in relief funds. In light of fraudulent benefit applications, the Justice Department established the COVID-19 Fraud Enforcement Task Force and, most recently, appointment of a Director for COVID-19 Fraud Enforcement. Both groups seek to uncover and prosecute alleged fraud in partnership with local law enforcement agencies. To date, the Government has criminally charged over 1,000 defendants.

An individual can face federal COVID-19-related fraud charges for several reasons, but here are a few common scenarios:

• Knowingly making false or inaccurate statements on COVID benefit applications, like overstating revenues and disbursements, under/overrepresenting the number of employees, or misstating eligibility for PUA assistance
• Seeking PPP loans from multiple lenders
• Pursuing PPP monies for a fictitious business
• Misusing funds for personal or unlawful purposes
• Identity theft

Committing any offense(s) below can lead to severe civil and criminal penalties. Here are some charges federal prosecutors bring against those alleged to have committed PPP fraud:

• Wire Fraud (18 USC 1343): Wire fraud occurs when someone uses a form of telecommunications––like a cellphone or computer––to commit fraud. Prosecutors must prove: (1) a scheme to defraud and (2) the use of an interstate wire communication to further the scheme. A conviction of wire fraud comes with a sentence of up to 20 years in prison, along with hefty fines.
• Conspiracy to Commit Wire Fraud (18 USC 1349): A conspiracy charge is unique because an individual doesn’t have to commit the crime to face charges. Here, a defendant only needs to “conspire” to violate federal law. He or she faces the same penalties as if they were to have committed the offense, so the same sentence and fines for wire fraud are here.
• Aggravated Identity Theft (18 USC 1028A): An individual is guilty of Aggravated Identity Theft if she knowingly transfer, possess, or use, without lawful authority, a means of identification of another person. A conviction of aggravated identity theft comes with a mandatory minimum sentence of two years.
• Bank Fraud (18 USC 1344): A bank fraud charge requires a person to knowingly or attempt to execute a scheme or artifice to defraud a financial institution or obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises. A defendant can face up to 30 years in prison and hundreds of thousands of dollars in fines.
• False Statements to a Financial Institution (18 USC 1014): This crime occurs when a person knowingly makes false statements or willfully overvalues any property or securities to influence a bank or government agency. Upon conviction, you can face nearly 30 years in prison and extensive fines.
• Fraud in Connection with Major Disaster or Emergency Benefits (18 USC 1040): After Hurricane Katrina in 2007, Congress sought to curb fraud and abuse when people were wrongly applying for disaster aid. They did this by passing the Emergency and Disaster Assistance Fraud Penalty Enhancement Act, which created a new criminal offense for those who knowingly engage in fraud or make a false statement involving a benefit paid out for disaster relief. Upon conviction, an individual can face upwards of 30 years in prison.

Given the prominence of COVID-19 fraud cases in the news and on the minds of federal prosecutors, undoubtedly, the government is eager and ready to bring these types of cases. Moreover, with the threat of possible imprisonment and financial penalties, hiring legal counsel is crucial.

As a former federal and state prosecutor, Peter Katz has spent much of his career prosecuting and defending these types of cases. Engaging with an attorney during the early stages of the investigation will give you more leverage in preparing your defense.

Peter is ready to bring his over two decades of experience to your case and work tirelessly on your behalf to protect you and your rights. Call the Law Offices of Peter Katz at 609-900-2648 or online to begin preparing your defense today.