Criminal Investigations Into COVID-19 Fraud

Criminal investigations into COVID-19 related benefit fraud are on the rise and are likely to be a regular part of the Department of Justice’s case list for years to come. At the end of March, the Department of Justice announced that it had already publicly charged 474 defendants across the country with COVID-related benefit fraud. It’s likely that number will greatly increase.

There are three major COVID-related government benefit programs that are leading to criminal and civil investigations. The first relates to Economic Injury Disaster Loans (EIDL), the second to Paycheck Protection Program (PPP) loans, and the third to Unemployment Insurance (UI) benefits.

Last spring and summer, the U.S. Government rushed to get trillions of dollars into the hands of individuals and businesses suffering from government-mandated shutdowns necessitated by the pandemic. Now, the government is investigating benefit fraud and prosecuting individuals and businesses it believes received those benefits illegally by giving the government false or misleading information.

Federal investigators are looking into benefit fraud cases where individuals and businesses made false or misleading representations in their pandemic-related benefit applications, whether it was by over-inflating payroll or overhead costs, under-accounting for revenue or workforce numbers to qualify for a benefit, or a host of other related issues. All loans and loan applications can be audited. In addition, investigators will be looking to see if the monies obtained were used for personal expenses or put to other impermissible uses.

It is important to remember that whoever applied for governmental assistance attested to the accuracy of the information contained in the application. The misrepresentation of information to obtain benefits or the misuse of federal funds can result in serious criminal charges and/or civil penalties for benefit fraud.

If you or your company have been approached by federal investigators related to COVID benefit fraud, call us immediately before answering any questions. If you discover that you made mistakes or misstatements in your COVID-benefit application, call us for advice on how to proceed.