The Fraud Section of the Department of Justice (“DOJ”) has prosecuted over 100 defendants in over 70 criminal cases and has seized more than $65 million in illegal proceeds from the Paycheck Protection Program (“PPP”). The DOJ continues to pursue individuals who defraud COVID-19 relief fund programs and has devoted significant resources and established several task forces in pursuit of criminals. Since Congress enacted the COVID-19 relief programs, there have been several indictments related to COVID-19 relief fund fraud. Throughout 2021, the number of individuals sentenced for their roles in defrauding COVID-19 relief funds has steadily increased, as seen in a recent press release by the DOJ. There are no indications that such prosecutions will lessen soon.
On October 13, 2021, the DOJ announced that two individuals were sentenced to jail in the Southern District of Florida for their roles in COVID-19 relief fund fraud. Dennes Garcia, a 28-year-old man, pled guilty to conspiracy to commit wire fraud in July 2021. He admitted to defrauding the PPP by providing false information about his company, such as the number of employees, average payroll, and tax information. Mr. Garcia obtained $285,742, of which he paid more than $71,000 as a kickback to a co-conspirator for assistance in preparing and submitting the application. Mr. Garcia also wrote himself a check for $100,000 from the PPP funds. For his actions, Mr. Garcia must pay $285,742 in restitution and $285,742 in forfeiture. He was also sentenced to 18 months in federal prison.
The DOJ announced the sentencing of Cindi Denton, a 63-year-old woman, to six months in prison and 12 months of home confinement for her role in COVID-19 relief fund fraud. Ms. Denton pled guilty to conspiracy to commit wire fraud in July 2021. Similar to Mr. Garcia, Ms. Denton provided false information about her company, including the number of employees, average payroll, and false supporting tax documents. Overall, Ms. Denton obtained over $491,000 in PPP proceeds. From the proceeds, she sent herself $150,000 and paid more than $98,000 as a kickback to a co-conspirator for assistance in preparing and submitting the application. Both Ms. Denton and Mr. Garcia co-conspired with and paid kickbacks to James Stote for his assistance in preparing and submitting the fraudulent PPP loan applications.
Recipients of COVID-19 relief funds should be diligent in complying with the respective program rules and requirements. As the press release makes clear, the government will prosecute individuals who attempt to defraud COVID-19 relief programs. Chilivis Grubman attorneys have discussed government enforcement efforts related to COVID-19 relief programs that can be read here.
The attorneys at Chilivis Grubman – which includes a former federal prosecutor – represent businesses and individuals in connection with government investigations and audits, including those conducted by HHS-OIG and the DOJ. If you need assistance with such matters, please contact us today.