Law360 (March 24, 2022, 7:22 PM EDT) — Criminal investigators at the Internal Revenue Service said they’ve found $1.8 billion worth of fraudulent loans, credits, payments and other schemes across 660 cases involving money meant for workers, families and small businesses to deal with the COVID-19 pandemic.
Tax and money laundering cases related to the Coronavirus Aid, Relief and Economic Security Act covered many types of criminal behavior, including wire fraud, the IRS Criminal Division said Wednesday in a news release. Then-President Donald Trump signed the CARES Act into law nearly two years ago, sending $1,200 checks to individuals and $349 billion in forgivable loans to small businesses through the Paycheck Protection Program, which Congress supplemented twice for $933 billion in total authorized funding.
“These investigations cover a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families and small businesses that were created under the CARES Act,” Carissa Cutrell, a spokesperson for IRS Criminal Investigation division, told Law360 on Thursday.
A data analytics team reviewed case information and provided statistics on a variety of investigative areas, Cutrell said, adding that the division is “only able to speak to cases we have investigated.”
The federal government’s wider efforts to combat so-called COVID fraud — overseen by the U.S. Department of Justice’s COVID-19 Fraud Enforcement unit — has led to criminal and civil actions over the allegedly fraudulent capture of $8 billion in federal pandemic aid and state unemployment insurance money.
Cutrell said CI’s investigations, which contributed to that total, are all criminal cases involving CARES Act programs. Investigators’ efforts led to a 100% conviction rate for prosecuted cases with prison sentences averaging 42 months, the agency said.
On Nov. 16, IRS investigators’ efforts culminated in the sentencing of three family members in a wider Los Angeles-based ring that fraudulently obtained more than $20 million in Paycheck Protection Program and Economic Injury Disaster Loan COVID-19 relief funds, according to a news release.
“This case, involving an egregious example of pandemic relief fraud, was the first in the country to go to trial,” Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said in the release.
The PPP loans were meant “for job retention and certain other expenses,” the IRS said in the release. In April 2020, Congress authorized more than $300 billion in additional funding for PPP loans, tacking on another $284 billion in December 2020. The loans were meant “as a safety net for Americans in light of an unprecedented health crisis,” CI Chief Jim Lee said in the news release.
“Unfortunately, even during times of crisis, criminals pop their heads out to look for ways to take advantage of those in their most vulnerable state,” Lee said.
On Nov. 28, a federal jury convicted a Florida woman for her role in an alleged scheme to defraud the government out of more than $3.3 million in aid money with fake employee and business information, another case brought to trial based on CI’s efforts, the agency said.
The U.S. Attorney’s Office in Southern Florida announced the Nov. 24 verdict describing 32-year-old Keyaira Bostic as part of a cohort of at least 10 people who submitted 90 fraudulent loan applications from May 2020 to July 2020.
CI special agents’ investigations and partnerships with law enforcement have “ensured criminals who try to defraud CARES Act programs face consequences for their actions,” Lee said.
–By Kevin Pinner. Additional reporting by Ivan Moreno and Lauren Berg. Editing by Neil Cohen.
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