COVID-19 Fraud Task Force Targets Billions in Stolen Relief Funds

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Photo by 401(K)12 via Flickr

U.S. Attorney General Merrick Garland has announced the creation of a COVID-19 Fraud Enforcement Task Force to crack down in those who take  advantage of federal benefits given to those financially suffering during the pandemic.

With an estimated over $63 billion lost to pandemic-related fraud, the establishment of the COVID-19 Fraud Enforcement Task Force would enforce a “whole-of-government” approach to identifying and recovering funds lost due to fraud.

“The Department of Justice will use every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud. We look forward to working with our federal government colleagues to bring to justice those who seek to profit unlawfully from the pandemic,” said a Department of Justice announcement released Monday.

In a related development, a new report singled out 10 states as America’s “most cybercrime-ridden”  after they experienced a 629 percent increase in monetary losses due to cybercrime since 2013 and a $2.39 billion loss in the last year alone. The new report by Atlas VPN listed the states as  California, New York, Texas, Florida, Ohio, Illinois, Missouri, Pennsylvania, Virginia, and Colorado.

The state with the most loss was California, which lost approximately $621 million due to cybercrime in 2020, followed by New York ($416 million), Texas ($314 million), Florida ($295 million), Ohio ($170 million), Illinois ($150 million), Missouri ($115 million), Pennsylvania ($108 million), Virginia ($101 million) and Colorado ($100 million).

The spike in monetary damages related to cybercrime in the last year can be largely attributed to the pandemic, where fraud and identity theft were at a high.

“Cybercrime will not stop anytime soon, which means that you should stay more vigilant than ever before,” said the report.

The federal task force on COVID will partner with over a dozen other agencies such as the Department of Labor and Department of Homeland Security, as well as eight other interdepartmental agencies within the DOJ such as the Federal Bureau of Investigation and The National Unemployment Insurance Fraud Task Force.

According to the press release, the DOJ has already charged 600 defendants in fraud-related crimes totaling over $600 million in the past year alone.

The U.S. Secret Service also announced the recovery and return of $2 billion to state unemployment benefit programs last week.

The task force would ramp up prosecution to a “whole-of-government approach enforcement effort” to detect fraud, deter future agents of fraud and help recover funds acquired fraudulently.

Pandemic-related unemployment fraud was estimated to be at $63 billion at the beginning of March. California alone was the victim of $11 billion in siphoned-off benefits.

Taking advantage of unemployment benefits posed by the federal government, perpetrators of fraud have been found to steal citizen’s identities to apply for aid, often creating fake tax documents to lessen suspicion.

In fact, at least 350,000 people in Illinois alone were victims of unemployment fraud through identity theft by January.

Individuals who were still employed reported receiving letters in the mail about their unemployment benefits, leading to overwhelmed local police departments attempting to counter the increase in fraud.

“The sheer generosity of the federal programs made them targets for criminal enterprises at a time that states lacked the resources, the computers,” former Labor Secretary Eugene Scalia said last December.

In addition to fraudulent scams using identity theft, some fraudulent activity has been detected by the misuse of Payment Protection Program (PPP) loans, a forgivable loan made to incentivize small businesses from firing employees due to the pandemic.

David T. Hines, a 29-year-old businessman in Miami, was given a six-year sentence last week for using money from seven PPP loans to pay for a Lamborghini sports car, reported the Miami Herald.

Hines’ use of PPP loans in order to fund luxurious purchases isn’t a unique case.

In November, seven individuals were charged in relation to filing at least 80 PPP applications, totaling $16 million. The money was then used to purchase luxury items like sports cars, reported ABC13 News.

“Greed has no place in SBA’s programs that are intended to provide assistance to the nation’s small businesses struggling with the pandemic challenges,” said Special Agent in Charge Sharon Johnson of the SBA Office of Inspector General Central Region in a DOJ press release.

“OIG and its law enforcement partners will relentlessly pursue fraudsters and bring them to justice,” said Johnson.

The money recovered from the new task force’s investigations would likely return to states, who can allocate to businesses and individuals still suffering from the financial effects of the pandemic.

Read More: Pandemic Unemployment Fraud, Errors Estimated at $63B

Emily Riley is a TCR justice reporting intern.

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