The Paycheck Protection Program (PPP) was part of the CARES Act in response to the COVID-19 pandemic. Under the PPP, the federal government made billions of dollars in forgivable loans to businesses that met certain criteria. COVID relief fund fraud has been a focus of the Department of Justice since the various programs’ inception.
In May 2021, the Department established the COVID-19 Fraud Enforcement Task Force to investigate claims of fraud against these programs. While the government has eased health-related precautionary policies related to COVID-19, such as the wearing of masks, the government’s focus on enforcement of COVID-19 fraud continues. Such continued enforcement should not be surprising. In 2022, Kevin Chambers, Chief Prosecutor for the COVID-19 Fraud Enforcement Task Force, vowed to aggressively pursue and prosecute those who illegally obtained funds from PPP loans and other pandemic relief benefits. The U.S. Department of Justice’s recent press release further evidences its continued enforcement efforts.
On August 9, 2022, the DOJ announced that three individuals were charged for their roles in an alleged scheme to fraudulently obtain and misuse PPP loans. The individuals are accused of falsifying information and submitting fraudulent documents to obtain PPP loans for several fictitious companies in 2021. Over $2.4 million in COVID-19 relief funds was obtained in the scheme.
Two of the defendants (Khadijah Chapman and Eric O’Neil) are charged with one count of bank fraud. And defendant Daniel Labrum was charged with five counts of bank fraud and one count of engaging in a monetary transaction with the proceeds from a criminal act. Each bank fraud count carries up to 30 years in prison. The charge of engaging in monetary transactions with criminally deprived proceeds carries up to 10 years in prison. The DOJ also reiterated that the indictments are only allegations, and the defendants are presumed innocent. If convicted, the defendant(s) will be sentenced after the Judge considers, amongst other factors, the U.S. Sentencing Guidelines.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with federal criminal and civil investigations. If you need assistance with such a matter, please contact us today.