In March 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Since the CARES Act’s enactment, CG attorneys have cautioned recipients about increased oversight and enforcement. In April 2020, CG attorneys discussed the creation of the Special Inspector General for Pandemic Relief, which is tasked with auditing and investigating funds distributed under the Act. The CARES Act also established the Paycheck Protection Program (PPP), under which the federal government has made billions of dollars in forgivable loans to businesses that met certain criteria. Chilivis Grubman has published several blog posts regarding the PPP and related fraud enforcement actions, including increased government scrutiny for PPP recipients, the first federal PPP loan fraud prosecution, and the prosecution of a reality television star.
The DOJ’s scrutiny of relief funds related to COVID-19 continues. In October 2020 alone, the DOJ announced at least five enforcement actions allegedly involving schemes to defraud the government of $51 million related to COVID-19 relief funds.
In a press release dated October 6, 2020, the DOJ announced charges against a Florida recording artist and a Pennsylvania man for their role in a $24 million COVID-19 relief fund scheme. According to the government, the men allegedly used falsified documents to obtain PPP funds, sought PPP funds for others in exchange for kickbacks, purchased luxury items, and paid kickbacks to co-conspirators. The government also noted that eleven other defendants were involved in the scheme.
On October 9, 2020, the DOJ announced charges against a Texas man, who allegedly submitted 15 fraudulent applications for approximately $24.8 Million in PPP loans, of which he received $17.3 million. The Texas man was charged with multiple counts of bank fraud, money laundering, and wire fraud.
On October 22, 2020, the DOJ announced charges against five individuals who allegedly sought over $1.1 million in PPP loan funds. The government alleges that the defendants misrepresented the number of employees and the amount of payroll expenses and submitted false tax documents. On the same day, the DOJ also announced charges against a thirty-five-year-old software developer who admitted submitting fraudulent applications for PPP loans. Similar to other fraudulent schemes, the software developer created and used fake entities, fake payroll records, and fake tax records on PPP loan applications.
On October 27, 2020, the DOJ announced charges against a Washington man who allegedly submitted false information and documents to receive COVID-19 relief funds. Additionally, the government alleged that the defendant made false and misleading statements about the companies’ respective businesses and operations when the entity had none.
In the press releases, the government alleges very serious felonies that could lead to a multi-year prison sentence. The government’s scrutiny of COVID-19 relief funds will continue for the foreseeable future.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with government investigations, including fraud investigations and prosecutions. If you need assistance with such a matter, please contact us today.