With rampant fraud in federal covid-relief programs, prosecutors are just getting started.
Amid the Covid-19 pandemic, the United States government gave unemployment benefits to thousands upon thousands of people. And as the virus shuttered businesses and forced people to stay home from work, the federal government sent relief money into programs to help the newly unemployed and boost the economy by infusing money into businesses across the country.
But this money came with few strings attached and little oversight. The result—one of the largest frauds in United States history. Now, prosecutors are trying to catch up.
Pandemic Relief Program Fraud
During the Covid-19 pandemic, former President Donald J. Trump approved a $3.1 trillion relief package in 2020, followed by $1.9 trillion signed into law in 2021 by President Biden.
Currently, 500 prosecutors are working on pandemic-related fraud cases, plus investigators from the FBI, the Secret Service, the Postal Inspection Service, and the IRS.
1,500 people have already been charged with defrauding
the pandemic-aid programs, and more than 450
have been convicted thus far.
These numbers are just the beginning, there is a mountain of tips and leads that investigators are still planning to chase. Agents in the Labor Department’s inspector general’s office have over 39,000 ongoing investigations. And 50 agents in the Small Business Administration office are sorting through two million possible fraudulent loan applications.
In all, the relief program from the SBA, awarded 3.9 million loans totaling around $389 billion, on top of the $27 billion in grants that do not need to be repaid. Many of the fraud allegations date back to the first weeks of the pandemic when the government gave out 5.8 million advance grants worth $19.7 billion.
Covid-19 Relief Program Flaws
Investigators believe that Congress, in its haste to get money out to those who needed it quickly, designed the relief packages with the same flaw—they relied on the honor system.
The expanded unemployment benefit during the pandemic gave workers an extra $600 a week on top of what they were already receiving from their state. Though the program was funded by the federal government, it was ultimately administered by the states, which often had loose rules to qualify.
A similar approach was used in the two loan programs run by the Small Business Administration, the Paycheck Protection Program, and the Economic Injury Disaster Loan program. In both, the government trusted businesses to self-certify that they met the requirements.
Statute of Limitations Updates
President Biden signed a bill this month that extends the statute of limitations for some pandemic-related fraud from five to ten years, giving the government more time to prosecute cases.
So far, the United States Justice Department has charged people and businesses with around $1 billion in fraud and is investigating more cases that could total around $6 billion o more. But some reports have suggested that the real number is much higher, possibly reaching $100 billion or more.
Pandemic-Related Charges
The first person was charged with benefit fraud in May of 2020, so the effort to catch fraudsters began almost as soon as the money started flowing.
Prosecutors face a critical disadvantage—fraud takes minutes;
investigations and prosecutions take months or longer.
Many people and businesses are currently being charged with:
- Wire fraud
- Mail fraud
- Bank fraud
- Benefit fraud
- Scheme to defraud
- Aggravated identity theft
- Tax evasion
- Conspiracy
- Making false statements
- And more
How a Fraud Defense Attorney Can Help
If you are being investigated for pandemic relief program fraud or you believe your business is, you can take specific steps to mitigate the impacts. It is possible that in many cases, the investigators have incorrect information, so you may need to show proof to investigators to prove your innocence.
It could be helpful to show:
- Any fraud was unintentional. There was an inconsistency or mistake in your application that was a genuine mistake and not an intent to defraud.
- How you spent the loan funds was genuinely intended to fit within the parameters of the loan application.
- You applied for the loan truthfully and your spending is in line with the application.
In any case, do not hesitate to reach out to a lawyer. This can save you a lot of stress and help ensure that the investigation goes smoothly. If you are found to have applied for or used the loan or unemployment funds fraudulently, our lawyers can help defend your case and mitigate the charges.
Call Stechschulte Nell
The charges and arrests are ongoing. If you have been contacted by federal authorities or believe you are being investigated for pandemic-related fraud, don’t wait. Contact our criminal defense attorneys at Stechschulte Nell immediately for a case review. We’re available 24/7 to take your call.
Related articles:
Florida PPP Loan Fraud Defense
How Businesses Can Respond to PPP Loan Investigations
