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Back to
school season may have just started, but for the PRAC Fraud Task
Force, class is always in session.
We continue to learn how criminals commit fraud and
spend their
ill-gotten
gains, and our latest cases tell us a lot about what we're dealing
with. We'll school anyone on the consequences of trying to steal
from the public. Read on for details!
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Cousins flunk the exam
Pandemic
relief loans for your business were supposed to be used for
permissible expenses, such as payroll or fixed business debts. They
were not to be used for personal enrichment. In one recent example,
three West Viriginia cousins were charged for defrauding pandemic
relief programs.
The first cousin pleaded guilty and
will be sentenced later this month for using over $450,000 in
Paycheck Protection Program (PPP) and Economic Injury Disaster Loan
(EIDL) funds to pay his personal mortgage, and buy a garage and a
vehicle. The other two cousins, who are brothers, allegedly
followed the same cheat sheet and were charged in June. The first
brother allegedly transferred over $1.9 million in EIDL loans to
his personal accounts to invest in crypto currency, while the
second allegedly spent at least $1.4 million for his own personal
gain.
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Back to detention
Applicants
for pandemic relief funds were required to tell the truth before
hitting submit, disclosing facts such as prior convictions on their
record. At the end of July, a Florida man was sentenced to three years in prison
and ordered to pay $75,000 in restitution for committing EIDL
fraud. The individual filed for a pandemic relief loan of $200,000,
ultimately receiving $75,000, for a non-existent small business he
claimed to own in 2019. However, he spent the majority of 2019 in
federal prison and applied for the relief money while in a Bureau
of Prisons residential reentry center in Florida. The judge also
noted during his sentencing hearing that he had conspired to file
additional fraudulent COVID relief loan applications in excess of
$400,000.
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A not-so-amusing lesson
Back to the
first rule when accepting a pandemic relief loan: Do not use it for
unauthorized expenditures. A Louisiana woman pleaded guilty to
spending over $12,000 in pandemic relief aid at high-end retail stores and an amusement park.
In June 2020, she applied for several PPP and EIDL loans for her
small business and received over $350,000 in relief money. Instead
of using that money for business purposes, she used it for personal
pleasure. She is scheduled to be sentenced in October 2024.
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Don't be a copycat
A trio of
rules was broken in these two separate, but nearly identical, cases
in West Virginia that led to guilty pleas in August. Two
independent contractors both applied for unemployment insurance
benefits and PPP loans during the pandemic. They fraudulently
obtained $8,760 and $14,336 in unemployment benefits,
respectively. Additionally, both individuals falsified their PPP
applications by representing that they had earned enough money as
independent contractors in the prior year to receive the maximum
allowed loan amount of $20,832. They both admitted to using the
fraudulently obtained funds for personal purchases and to pay off
their bills. They will be sentenced in November 2024.
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Taking fraudsters to school
Remember these lessons to ace any pop quiz:
Do not apply for unemployment insurance when employed;
do not falsify earned income to qualify for a PPP loan; and again,
do not use relief dollars for personal expenses.
To date, PRAC Fraud Task Force investigations have led
to criminal charges against nearly 100 individuals, with 17
convictions thus far, and over $16 million in restitution,
seizures, forfeitures, and voluntary repayments.
But we can't ace the assignment on our own, it takes a
team. Agents from our partner Offices of Inspectors General and law
enforcement agencies work with us on this group project to fight
fraud.
Homework assignment: Read up on
our latest investigative stats and notable case findings, and how
we use data analytics to track down fraudsters.
Disclaimer: An indictment is a formal accusation
of a serious crime. However, all defendants are presumed innocent
until proven guilty beyond a reasonable doubt in a court of
law.
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