WASHINGTON–The Department of Justice announced it has now publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the COVID-19 pandemic, including schemes targeting the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs.
The cases involve attempts to obtain more than $569 million from the U.S. government and unsuspecting individuals through fraud and have been brought in 56 federal districts around the country, the DoJ said, adding the cases “reflect a degree of reach, coordination, and expertise that is critical for enforcement efforts against COVID-19 related fraud to have a meaningful impact and is also emblematic of the Justice Department’s response to criminal wrongdoing.”
“The Department of Justice has led an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes,” said Attorney General Merrick B. Garland. “The impact of the department’s work to date sends a clear and unmistakable message to those who would exploit a national emergency to steal taxpayer-funded resources from vulnerable individuals and small businesses. We are committed to protecting the American people and the integrity of the critical lifelines provided for them by Congress, and we will continue to respond to this challenge.”
The Specifics
Specifically, the DoJ said:
- Paycheck Protection Program (PPP) Fraud: “Prominent among the department’s efforts have been cases brought by the Criminal Division’s Fraud Section involving at least 120 defendants charged with PPP fraud,” the DoJ said. “The cases involve a 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. Most charged defendants have misappropriated loan proceeds for prohibited purposes, such as the purchase of houses, cars, jewelry, and other luxury items.”
- Economic Injury Disaster Loans (EIDL) Fraud: Fraudsters have targeted the program by applying for EIDL advances and loans on behalf of ineligible newly-created, shell, or non-existent businesses, and diverting the funds for illegal purposes. “The department has responded, primarily through the efforts of the U.S. Attorney’s Office for the District of Colorado and their partners at the U.S. Secret Service, acting swiftly to seize loan proceeds from fraudulent applications, with $580 million seized to date and seizures ongoing,” the DoJ said.
- Unemployment Insurance (UI) fraud: Due to the COVID-19 pandemic, more than $860 billion in federal funds has been appropriated for UI benefits through September 2021. “Early investigation and analysis indicate that international organized criminal groups have targeted these funds by using stolen identities to file for UI benefits,” the DoJ said. “Domestic fraudsters, ranging from identity thieves to prison inmates, have also committed UI fraud. In response, the department established the National Unemployment Insurance Fraud Task Force, a prosecutor-led multi-agency task force with representatives from more than eight different federal law enforcement agencies. Additionally, the department is hiring Assistant U.S. Attorneys in multiple U.S. Attorney’s Offices whose focus will be UI fraud prosecutions. Since the start of the pandemic, over 140 defendants have been charged and arrested for federal offenses related to UI fraud.”
ICHIP Program
The DoJ further said:
- Through the department’s International Computer Hacking and Intellectual Property (ICHIP) program, ICHIP advisors have provided assistance and case-based mentoring to foreign counterparts around the globe to help detect, investigate and prosecute fraud related to the pandemic.
- ICHIPs conducted webinars for foreign prosecutors and law enforcement in Asia, Africa, Europe, and South America on how to take down fraudulent COVID-19 websites. These webinars addressed methods for finding the registrar for a particular domain and requesting a voluntary takedown as well as the U.S. legal processes necessary for obtaining a court order that would bind a U.S. registrar.
- The department has also brought actions to combat coronavirus-related fraud schemes targeting American consumers. “With scammers around the world attempting to sell fake and unlawful cures, treatments, and personal protective equipment, the department has brought dozens of civil and criminal enforcement actions to safeguard Americans’ health and economic security.”
Scam Attempted to Use Names of the Deceased
Separately, in Newark, N.J., a Sussex County, N.J., man has been charged for his role in fraudulently obtaining federal Paycheck Protection Program (PPP) loans totaling $1.9 million, Acting U.S. Attorney Rachael A. Honig announced.
John Jhong, 51, of Sparta, N.J., has been charged with one count of bank fraud, one count of false representation of a Social Security number and one count of money laundering, TAPinto reported.
According to documents filed in this case and statements made in court Jhong submitted 10 fraudulent PPP loan applications to several lenders on behalf of 10 purported businesses.
Jhong’s PPP applications allegedly contained false and fraudulent representations to the participating lenders, including documentation purporting to be from the IRS. In fact, according to IRS records, none of the tax documents Jhong submitted with the PPP loan applications were ever filed with the IRS. Jhong also fabricated the existence of numerous business partners.
Dead For More Than a Decade
In some instances, the personal identifying information for Jhong’s purported business partners belonged to individuals who had been deceased for over a decade, the charges state.
Based on Jhong’s alleged misrepresentations, the lenders approved Jhong’s PPP loan applications and provided Jhong’s purported business with $1.9 million in federal COVID-19 emergency relief funds meant for distressed small businesses. Jhong then converted a portion of the proceeds into a cashier’s check that was used to fund a business account.