A former South Florida regional manager for a leading national bank was sentenced to 120 months in prison for participating in a $15 million COVID loan fraud conspiracy.
The defendant, who pled guilty to one count of conspiracy to commit wire fraud, admitted that he and others submitted over 90 fraudulent PPP loan applications. He also conspired to submit fraudulent EIDL applications through the SBA, but most of the applications were declined.
The defendant and his co-conspirators attempted to defraud the PPP and EIDL programs out of approximately $25 million. The conspiracy caused approximately $15 million in losses. The investigation has recovered over $800,000 so far.
His co-defendants also pled guilty for their roles in the conspiracy. One was sentenced to 60 months' imprisonment in February; the other is scheduled to be sentenced in April.
COVID fraud prosecutions will continue to be prevalent with additional federal funding proposed for “Pandemic Anti-Fraud” policy
It is expected that federal prosecutions for COVID fraud will continue to be prevalent across the country with additional funding for COVID task forces being proposed by the White House.
Under the CARES Act, the federal government authorized forgivable loans to small businesses for job retention and certain other expenses through the PPP. The EIDL program provides economic relief to small businesses that experienced a temporary loss of revenue. Unemployment insurance (UI) programs provided unemployment benefits to eligible workers who became unemployed through no fault of their own.
It is estimated that as much as $80 billion — or about 10 percent — of the $800 billion handed out in PPP money is due to fraud. That's on top of the $90 billion to $400 billion believed to have been stolen from the COVID UI relief program — at least half taken by international fraudsters — and another $80 billion potentially stolen from the SBA's EIDL program.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.
On September 15, 2022, the Attorney General selected the Southern District of Florida's U.S. Attorney's Office to head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud.
Earlier this month, the Biden Administration introduced a three-part Pandemic Anti-Fraud proposal which, in part, requests $300 million for the DOJ to add at least ten more “strike forces” to target criminal syndicates and major fraudulent actors.