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Department Of Justice Increases Focus On Covid-19 Fraud – Criminal Law

New IdentityTheft Scam

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In March 2020, Congress passed the Coronavirus Aid, Relief and
Economic Security (“CARES”) Act, which provided $2.2
trillion in economic relief.  The Act was designed to quickly
get money to millions of Americans suffering from the pandemic.
 Unfortunately, this relief provided ample opportunity for
fraud.  As the COVID pandemic begins to ease, the Department
of Justice’s efforts to prosecute this COVID-19 fraud is
intensifying.  To date, the Department has charged nearly 500
defendants with criminal offenses for attempted fraud in excess of
$550 million.  The focus of the prosecutions have been schemes
targeting the Paycheck Protection Program, Economic Injury Disaster
Loan program, Unemployment Insurance programs, and relief funds for
health care providers.

Anticipating that fraudsters would attempt to profit from the
pandemic, the Department created multiple initiatives to combat
theft.  According to Attorney General Merrick Garland,
“[t]he Department of Justice has lead an historic enforcement
initiative to detect and disrupt COVID-19 related
fraud.”  This initiative includes, among other law
enforcement techniques, using data analysis capabilities to
identify potential areas of fraud.  To date, the Department
has focused on a handful of key programs:

  • Paycheck Protection Program.  Over 120
    people have been charged nationwide for PPP fraud, including
    business owners who have inflated payroll expense to obtain larger
    loans than they qualified for; individuals who have misappropriated
    PPP funds for prohibited uses, such as cars and personal luxury
    items; and individuals who have established shell corporations and
    have simply stolen the paycheck funds.

  • Economic Injury Disaster Loans. This
    fraud has centered on shell companies claiming to have suffered
    business losses.  In these schemes, no actual business ever
    existed.  To date, over $580 million of fraudulent disaster
    loan funds have been seized by the government.

  • Unemployment Insurance fraud. This fraud
    centers on people who have claimed unemployment benefits they are
    not entitled to.  This has included international organized
    crime syndicates who have stolen identities, as well as domestic
    fraudsters, including inmates, that have improperly applied for and
    received unemployment funds.  The Department of Labor has
    estimated that more than $26 billion in fraudulent unemployment
    benefits will be lost to criminals during the pandemic, and many
    experts say the total loss of taxpayer funds will exceed $100

  • Identity theft. According to the Department of
    Health and Human Services, scammers are using telemarketing calls,
    text messages, social media platforms, and in some instances
    door-to-door visits to defraud people.  Under these scenarios,
    the criminals offer COVID tests, prescription cards or grants in
    exchange for personal information.  This information is then
    used for a variety of illicit purposes, including fraudulently
    billing health care programs.

While these are the most common frauds, other schemes also
exist.  For example, scam artists have also set up sham
charities, have marketed fake virus cures, and have defrauded
people out of their stimulus checks.  According to the Federal
Trade Commission, this fraud has cost American citizens over $382
million, in addition to the direct fraud of the government relief

Federal and state authorities in Michigan have combined to
investigate and prosecute COVID related crimes.  As a result
of these efforts, Michigan has seen several criminal indictments
for COVID fraud.  In February, a woman was charged with health
care fraud for submitting claims for treating COVID patients, while
in reality her home health agency was not operational during the
pandemic.  In April, five men were charged with creating shell
companies and receiving over $1 million under the Paycheck
Protection Program.  Last fall, a man was charged with
attempting to fraudulently obtain over $3 million for overstating
business operations and payroll expenses for nineteen different

The Department’s efforts to combat COVID fraud is not
limited to the criminal arena.  One such avenue for civil
recovery in the Financial Institutions Reform, Recovery and
Enforcement Act (“FIRREA”)  which allows the
government to impose civil penalties for violations of certain
federal criminal statutes.  The most pertinent qualifying
statute involves fraud on financial institutions.  In
California, the government successfully brought a FIRREA action
against an internet retail company for making a false PPP loan

The government’s primary tool for combating fraud civilly,
the False Claims Act, has also been successfully used against
individuals submitting false applications for PPP and economic
disaster loans.  The False Claims Act permits private citizens
with knowledge of fraud against the government to bring a lawsuit
on behalf of the United States and to share in any recovery. 
These whistleblower cases have been on the rise during the
pandemic, and will continue to be an important source of new leads
to help discover COVID related fraud.

There are several potential areas where the government will
likely utilize the False Claims Act.  For example, any
contractor that knowingly sells defective Personal Protective
Equipment to the government would be liable under the False Claims
Act.  Likewise, defective or inaccurate COVID tests may very
well give rise to a False Claims Act case if the provider acted
intentionally or recklessly in administering the tests.
 Laboratories that process the COVID tests that lack qualified
personnel or proper certification also face liability. Finally, any
healthcare provider that intentionally falsifies billing records
for treating COVID patients in order to receive higher
reimbursement would be subject to three times the amount billed,
plus penalties.

Individuals with information regarding COVID 19 fraud may report
it to the government at or
by calling 800-HHS-TIPS.

Originally Published by Healthcare Michigan May

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Source: on 2021-05-19 01:26:15

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