Pandemic relief fraud investigation still in early stages

On Behalf of | Mar 7, 2023 | Fraud

During the pandemic, Congress approved nearly $5 trillion in emergency funding for U.S. citizens and businesses in three legislative packages. The funds were designed to keep shuttered companies and unemployed citizens afloat during the worldwide health crisis.

But starting nearly two years ago, the U.S. Department of Justice (DOJ) announced that those relief programs were subject to massive fraud due to loose rules and limited oversight by states and the feds. The result? The DOJ says thousands of individuals stole billions of dollars.

Guilty pleas and verdicts are becoming routine

As of last fall, prosecutors had charged over 1,500 people with defrauding pandemic relief programs, and more than 450 had been convicted. Still, the DOJ says those numbers are just the tip of the iceberg, as they had over 39,000 active investigations at that time.

The DOJ has 500 investigators working these cases through the FBI, IRS, Postal Inspection Service, the Secret Service, and the offices of 21 inspectors general. Charges and convictions are becoming almost a daily occurrence.

In a recent case, a Florida woman who calls herself a “social media influencer” pleaded guilty to stealing more than $1 million of pandemic-related loans that she used to pay for her expensive lifestyle, which she illustrated through numerous posts on Instagram.

On March 6, a California man was sentenced to 24 years in prison for stealing $5.5 million in pandemic-related unemployment benefits by using the identities of state prison inmates. Prosecutors say he also used the money to traffic methamphetamine and fentanyl.

Relief programs under scrutiny

While investigators examine all relief programs related to the pandemic, they say fraud schemes are especially prevalent in these three:

  • PPP or Paycheck Protection Program
  • EIDL or Economic Injury Disaster Loans
  • UI or Unemployment Insurance

The DOJ’s International Computer Hacking and Intellectual Property (ICHIP) program is crucial in detecting possible fraud cases.

My business received pandemic relief funds. Am I OK?

The short answer is that you should be safe if you correctly followed the procedures outlined for receiving pandemic-related relief and accurately accounted for the funds. The same goes for those receiving unemployment benefits. However, any irregularities detected during the process could lead to an investigation. In many cases, simple paperwork mistakes could spark interest from investigators. If authorities contact you, it’s advisable to speak to an attorney before answering their questions.