U.S. DOJ informs about actions against COVID-19 fraud

The U.S. Department of Justice (hereinafter “DOJ”) has announced in a press release an update on its criminal and civil enforcement efforts to combat COVID-19 related fraud, including schemes targeting the Paycheck Protection Program (hereinafter “PPP”), the Economic Injury Disaster Loan (hereinafter “EIDL”) program, and Unemployment Insurance (hereinafter “UI”) programs.

Since the U.S. Congress first responded to the coronavirus pandemic by passing USD 2.2 trillion in relief through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, DOJ has publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the COVID-19 pandemic according to the DOJ. These cases would involve attempts to obtain over USD 569 million from the U.S. government and unsuspecting individuals through fraud and would have been brought in 56 federal districts around the country.

The DOJ’s summarised its efforts across three main fronts:

  • PPP fraud:  The DOJ informed that it charged 120 defendants with PPP fraud. Some individual business owners would have inflated their payroll expenses to obtain larger PPP loans while serial fraudsters would have revived dormant corporations and purchased shell companies with no actual operations to apply for multiple PPP loans. At the same time, organised criminal networks would have submitted identical loan applications and supporting documents under the names of different companies, and then spent those proceeds on houses, cars, jewellery, and other luxury goods.
  • EIDL program fraud: The DOJ has also focused on fraud against the EIDL program, which was designed to provide loans to small businesses, agricultural and non-profit entities. According to the DOJ, fraudsters would have targeted the program by applying for EIDL advances and loans on behalf of ineligible newly created, shell, or non-existent businesses, and diverting the funds for illegal purposes.
  • UI programs fraud: Pursuant to the DOJ, more than USD 860 billion would have been appropriated for UI benefits through September 2021. Early investigation and analysis would indicate that international organised criminal groups would have targeted these funds by using stolen identities to file for UI benefits. The DOJ informed that has already charged and arrested more than 140 individuals for fraud on this programs since the start of the pandemic.

Find the press release here.

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