The DOJ is Continuing to Target Multiple Forms of Fraud Related to COVID-19 in 2023
As the federal government races to get as many people vaccinated against COVID-19 as possible, the U.S. Department of Justice (DOJ) is waging a war on a different front. The DOJ has identified several forms of fraud arising out of the pandemic, and it is continuing to aggressively target individuals and businesses suspected of coronavirus-related fraud in 2023.
While this effort has led to the prosecution of many defendants that have indeed utilized the COVID-19 pandemic to perpetrate fraud and other crimes, it has also led to many innocent individuals and businesses being targeted. Then, there are those that fall in the middle—that may have inadvertently or unknowingly engaged in practices that technically qualify as “fraud” under federal law. Currently, the DOJ is casting an extremely wide net, and it is investigating all forms of suspected fraud related to COVID-19.
The DOJ Has Launched a “Combatting COVID-19 Fraud” Website
In fact, the DOJ is so focused on coronavirus-related fraud that it has launched a “Combatting COVID-19 Fraud” section of its website. Here the DOJ lists several forms of fraud that it is actively targeting. This includes fraudulent practices and schemes such as:
- COVID-19 vaccine fraud schemes
- COVID-19 cure and treatment schemes
- Cryptocurrency fraud schemes targeting individuals who are working from home
- Stimulus check, tax refund, and other IRS fraud schemes
- Fraudulent solicitations and sales of masks and other personal protective equipment (PPE)
- Fraudulent offers of “free” COVID-19 tests
- Social media scams seeking donations for non-existing charities
- Government spoofing schemes involving fake CARES Act program websites
- Contact tracing scams related to COVID-19
In addition to targeting these types of consumer fraud, the DOJ is also actively targeting individuals and businesses that are suspected of defrauding the federal government and banks. In particular, we have recently seen a significant number of DOJ cases targeting:
- Paycheck Protection Program (PPP) Fraud – The DOJ has prioritized its efforts to combat fraud under the PPP. This includes cases involving fraudulently-obtained PPP loans, unsuccessful attempts to fraudulently obtain PPP loans, and PPP forgiveness certification fraud.
- Government Contract Fraud Involving PPE – The DOJ has also prioritized cases involving fraudulent attempts (both successful and unsuccessful) to secure government contracts for the supply of PPE. This includes disposable PPE such as masks and gloves as well as face shields, dividers, and other protective devices.
- Fraud Targeting Other Federal Programs – In addition to the PPP, the DOJ has recently prosecuted cases involving allegations of fraudulently obtaining federal unemployment benefits and benefits under the Economic Injury Disaster Loans (EIDL) program.
- Medicare and Medicaid Fraud Involving COVID-19 Testing and Care – As always, the DOJ is devoting substantial resources to combatting fraud in the healthcare sector. This includes fraudulent billings related to COVID-19 testing and care under Medicare, Medicaid, and other federal healthcare benefit programs.
While the DOJ is actively targeting recent and ongoing pandemic-related fraud, it is also continuing to investigate and prosecute cases arising out of events that took place last year. This includes cases involving PPP loans, government contracts, and Medicare and Medicaid reimbursements obtained in 2020.
Examples of DOJ COVID-19 Fraud Cases in 2023
On March 26, 2021, the DOJ released a general update on its efforts to target fraudulent activities related to the COVID-19 pandemic. In its press release, the DOJ notes that it has, “publicly charged 474 defendants with criminal offenses based on fraud schemes connected to the COVID-19 pandemic. These cases involve attempts to obtain over $569 million from the U.S. government and unsuspecting individuals through fraud and have been brought in 56 federal districts around the country.”
Here are some examples of the DOJ’s recent cases targeting individuals, businesses, and healthcare providers suspected of coronavirus-related fraud:
Virginia Resident Charged with Filing Fraudulent Claims for Pandemic Unemployment Benefits
In March 2021, a 28-year-old Virginia woman pleaded guilty to filing multiple fraudulent claims for pandemic unemployment benefits, resulting in a total loss for the government of $499,000. According to the DOJ, the woman, “conspired to collect personal identification information of more than 35 co-conspirators, including 15 inmates in the custody of the Virginia Department of Corrections, and to file fraudulent claims of pandemic-related unemployment.” The charges to which the woman pleaded guilty include conspiracy, mail fraud, and aggravated identity theft.
DOJ Seizes $580 Million in Fraudulently Obtained EIDL Loan Proceeds
The DOJ’s March 26, 2021 press release touts the efforts of the U.S. Attorney’s Office for the District of Colorado in spearheading the Department’s efforts to combat fraud under the EIDL. According to the DOJ, the U.S. Attorney’s Office is actively, “investigating a broad swath of allegedly fraudulently loans and their applicants . . . and working to identify individual wrongdoers and networks of fraudsters appropriate for prosecution.”
Florida Tax Preparer Charged with Submitting Approximately 118 Fraudulent PPP Loan Applications
Also in March, the DOJ announced that it has filed a criminal information against a Florida tax preparer who is accused of submitting approximately 118 fraudulent PPP loan applications, “on behalf of himself and his accomplices.” According to the DOJ, “On each PPP loan application, [the defendant] allegedly falsified the applicant’s prior-year income and expenses and submitted fraudulent IRS tax forms. [The defendant] and his accomplices allegedly received approximately $975,582 in PPP loans as a result of the fraud.”
Six Individuals Charged with Fraudulently Obtaining PPP Loans for Companies in Georgia and South Carolina
In January 2021, the DOJ announced charges against six individuals who are accused of obtaining approximately $1.5 million in PPP loans on behalf of five businesses in Georgia and South Carolina. According to the DOJ, one of the defendants agreed to help the others submit fraudulent PPP loan applications in exchange for receiving a portion of the loan proceeds. The DOJ’s press release states that, “each of the loan applications claimed to have 16 employees and monthly wages of $120,000 . . . [and] identical fraudulent quarterly tax returns were submitted in connection with each loan application.”
DOJ Enters Into First Civil Settlement Arising Out of PPP Loan Fraud Allegations
Notably, in January 2021 the DOJ also announced its first civil settlement of a PPP loan fraud investigation. While the DOJ can prosecute PPP loan fraud as a criminal offense under the False Claims Act and various other statutes, it also has the discretion to pursue civil charges in appropriate cases. In this case, the defendants, a California retailer and its CEO, admitted to submitting fraudulent PPP loan applications and voluntarily returned the company’s $350,000 PPP loan. The company and its CEO also agreed to pay $100,000 in damages and penalties.
What To Do if Contacted By the DOJ Concerning Possible COVID-19 Fraud
If you find yourself the target of a DOJ investigation looking into possible coronavirus-related fraud, what should you do? The most-important thing you can do is to engage experienced federal defense counsel promptly. As the DOJ’s recent civil settlement shows, it is possible to avoid prosecution even when criminal penalties may be on the table.
Beyond engaging federal defense counsel, the specific steps that are necessary during a COVID-19 fraud investigation depend on the allegations at issue. Defending against allegations of submitting a fraudulent PPP loan application, for example, is a very different matter from defending against allegations of submitting fraudulent reimbursement requests to Medicare or defrauding consumers. Your defense attorneys can examine the circumstances of your case and determine what defense(s) you can assert to avoid or mitigate any potential civil or criminal penalties.
Broadly speaking, however, there are some steps you should take (and mistakes you should avoid) any time you are the target of a federal investigation. For example, if you are being targeted by the DOJ, you should:
- Carefully review any correspondence, subpoenas, or other documentation you receive from the DOJ. Try to discern why you are being targeted (but do not make assumptions), and identify any deadlines you may have to respond to the DOJ’s inquiry.
- Assert your right to remain silent and your right to counsel. When facing a DOJ investigation, it is extremely important that you engage federal defense counsel to communicate with the DOJ on your behalf.
- Avoid discussing the investigation with anyone but your legal counsel. This includes your friends, family members, colleagues, and any alleged co-conspirators. At this point, you should only discuss the DOJ’s investigation with your attorneys.
- Collect all relevant records. You may be required to submit records to the DOJ as a result of the investigation, but you should not do so until you have those records reviewed by your legal counsel. Start collecting them now, and keep them guarded in a safe place.
- Learn as much as you can about your situation. When facing a DOJ investigation involving allegations of coronavirus-related fraud, you need to make informed decisions every step of the way. With this in mind, the best thing you can do is consult with an attorney as soon as possible.
Are You the Target of a DOJ COVID-19 Fraud Investigation? Contact Us 24/7
If the DOJ is targeting you or your company in a COVID-19 fraud investigation, our former DOJ prosecutors and agents can help. Our healthcare fraud defense attorneys assist service providers and businesses under investigation for alleged Qui Tam Lawsuit, Stark Law, False Claims Act, or Anti-Kickback violations. To get started with a complimentary case assessment, call 888-680-1745 or contact us online now.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.