FLSD Cracks Down on Covid Loan Fraud
The Southern District of Florida’s (FLSD) U.S. Attorney’s Office has been selected to head one of three COVID-19 Fraud Strike Force Teams nationally. In recent weeks alone, FLSD has charged 23 COVID-19 relief fraud cases, with scheme amounts totaling over $150 million. In total, the South Florida U.S. Attorney’s Office has charged over 80 cases since the CARES Act was passed. It has seized over $23.5 million in stolen relief funds. The Department of Justice established the Strike Force to build on this momentum and enhance the department’s existing efforts to combat and prevent COVID loan fraud.
FLSD’s Strike Force Team will be comprised of prosecutors working together with agents from Department of Labor Office of Inspector General, Small Business Administration Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, Department of Homeland Security Office of Inspector General, FBI, U.S. Secret Service, Homeland Security Investigations, Internal Revenue Service Criminal Investigations, U.S. Postal Inspection Service, Federal Reserve System Office of Inspector General, Treasury Inspector General for Tax Administration, and U.S. Coast Guard Investigative Service. The Pandemic Response Accountability Committee and Special Inspector General for Pandemic Recovery will assist the Strike Force.
Criminal enforcement in the Southern District of Florida to combat COVID-19/CARES Act-related financial fraud schemes have proceeded on numerous fronts, including:
- Paycheck Protection Program (PPP) fraud: Prominent among the District’s efforts have been cases involving attempts to obtain PPP loans through fraud. These loans were intended to help small businesses financially survive the COVID-19 pandemic. The cases charged in the district 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. They then falsely stated they had significant payroll to organized criminal networks submitting identical loan applications and supporting documents under the names of different companies.
- Economic Injury Disaster Loans (EIDL) fraud: Another type of fraud charged in the district has been fraud against the EIDL program, which was designed to provide loans to small businesses, agricultural, and non-profit entities. 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.
- 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. People looking to exploit UI benefits during the pandemic use stolen identities to fraudulently file for UI benefits.
Although these COVID-19 loan programs have ended, guilty parties should not get a false sense of security. In recent weeks, the district has charged 23 COVID-19 relief fraud cases, with scheme amounts totaling over 0 million. It is alleged that the defendants in these cases received over $35 million.