During the pandemic, many states and localities forced businesses to create remote work plans so people could shelter at home, and in the case of restaurants and other public businesses, forced them to shut down almost completely. As a result, the federal government established the Paycheck Protection Program (PPP) as part of its relief package known as the CARES (Coronavirus Aid, Relief, and Economic Security Act) Act.
PPP provided often-forgivable loans to small businesses to keep their employees on payroll. Unfortunately, the program, with its rush to help the economy, opened the gates for fraud and misuse. As a result, the Department of Justice (DOJ) is now tracking down those who used PPP to get funds they didn’t deserve or which they used for personal gain.
In October 2021 – a Georgia man who obtained a $285,741 PPP loan for his business using fake documents was sentenced to 18 months in federal prison after pleading guilty. A California woman was sentenced to 6 months in prison and 12 months of home confinement for fraudulently obtaining a $491,310 PPP loan for her company.
The Justice Department is not only tracking down abuses of PPP and other COVID relief programs, but it is also aiming at individuals who gamed the Unemployment Insurance (UI) fund.
If you are under investigation or facing charges of COVID relief fraud, and you’re in Santa Cruz, Palo Alto, San Jose, San Francisco, or Berkeley, California, contact the Law Offices of Andrew C. Janecki. I have been a criminal defense attorney for more than two decades, and I will aggressively defend your rights and strive for the best possible outcome in your case.
The Department of Justice has set up several task forces to combat those who took illicit advantage of relief available under the $2.2 trillion CARES Act. It has identified three primary areas of abuse:
THE PAYCHECK PROTECTION PROGRAM (PPP) FRAUD: The DOJ says the cases it is investigating and prosecuting include a wide range of conduct -- “from individual business owners who have inflated their payroll expenses to obtain larger loans than they otherwise would have qualified for, to serial fraudsters who revived dormant corporations and purchased shell companies with no actual operations to apply for multiple loans falsely stating they had significant payroll, to organized criminal networks submitting identical loan applications and supporting documents under the names of different companies.”
ECONOMIC INJURY DISASTER LOAN (EIDL) FRAUD: EIDL was designed to provide loans to small businesses, and agricultural and non-profit entities. Fraudsters took advantage of EIDL by applying for loans for newly created shell businesses and even non-existent businesses.
UNEMPLOYMENT INSURANCE (UI) FRAUD: More than $860 billion was set aside to augment unemployment benefits across the nation. Remember when out-of-work employees were earning an extra $600 a week in UI benefits? People using stolen identities and even prisoners behind bars sought these extra benefits. In response, the DOJ created an Unemployment Insurance Fraud Task Force.
The Justice Department, through its International Computer Hacking and Intellectual Property (ICHIP) program, is also ferreting out online fraud related to the pandemic, including the sale of fraudulent and mislabeled COVID-19 treatments and the sale of counterfeit pharmaceuticals.
COVID relief fraud is netting abusers serious prison time. The DOJ has now charged more than 500 individuals with COVID fraud. The cases represent nearly a billion dollars in fraudulently obtained loans or benefits.
In the case of EIDL fraud, the EIDL Task Force in Colorado has already seized $580 million in fraudulently obtained loan proceeds. The UI Task Force recently charged a Virginia woman with the theft of $499,000 in UI benefits using the names of individuals ineligible for UI, including several prisoners. Another 140-plus UI fraudsters are awaiting trial or sentencing.
A Tarzana, California, couple is now on the run to avoid being sentenced for defrauding the government of $18 million in PPP and EIDL funds with the filing of some 151 loan applications for fictional companies. The FBI is searching for the fugitives.
More recently, with the burgeoning requirement to prove you’ve been vaccinated against COVID to attend public events or even go to work, fraudsters are now printing and selling bogus vaccine cards, the next level in COVID fraud.
The charges faced by those who are caught are all serious ones based on the federal criminal code, all carrying serious consequences. Charges related to these fraudulent activities include:
Conspiracy to commit wire fraud or mail fraud, or just wire fraud or mail fraud, or both
Conspiracy to commit bank fraud, or just bank fraud
Aggravated identity theft
Making a false statement
Engaging in monetary transactions with criminally derived proceeds
Embezzlement of government property
Fraud in connection with major disaster or emergency benefits
When the DOJ and its network of U.S. Attorneys – backed by the FBI and other agencies of the federal government – get involved in cracking down on crime, you can be sure of one thing: You’re going to face serious criminal charges, often with charges piled one atop another.
If you’re under suspicion of COVID relief-related fraud or have been recently charged, contact me immediately. Let me work with you to assess your situation and develop a strong defense aimed at the best possible outcome. Contact me at the Law Offices of Andrew C. Janecki. I proudly serve clients in the Santa Cruz area and the surrounding counties.