The CARES Act
The CARES Act (Coronavirus Aid, Relief and Economic Security Act) enacted in March 2020, was designed to provide emergency financial assistance to those suffering economic losses related to COVID-19. It included $2.2 trillion in economic aid for individuals and businesses and provided access through the Small Business Administration (SBA) to forgivable loans to cover payroll and other specified expenses through the Paycheck Protection Program (PPP). It also provided government assistance through the Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) program. However, the CARES Act has also provided an opportunity for fraudsters to take advantage of the government assistance.
COVID-19 Related Investigations, Prosecutions and Civil Penalties
Immediately after the CARES Act was passed in March 2020, the DOJ began efforts to investigate and prosecute pandemic-related fraud. By the end of March 2021, it had charged more than 470 defendants with criminal offenses based on fraudulent schemes connected to the COVID-19 pandemic.
The government also pursued and secured civil injunctions against defendants who sold products such as fake vitamin supplements and silver ointments, making false claims about the products’ abilities to prevent or treat COVID-19 infections. The government used other civil tools to address CARES Act-related fraud as well, like the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and the False Claims Act (FCA). FIRREA allows prosecutors to seek civil penalties for violations of certain federal criminal statutes. The FCA permits the government and private citizens to seek monetary recovery for penalties related to false claims for federal funds.
The government made clear that its focus on CARES Act fraud would only intensify in the coming months and years.
The Task Force
On May 17, 2021, the government again enhanced its efforts to investigate and prosecute fraud. U.S. Attorney General Merrick B. Garland announced the establishment of the Task Force to marshal the resources of the DOJ in partnership with other agencies to enhance enforcement efforts against COVID-19 related fraud. He warned that the “Department of Justice will use every available federal tool – including criminal, civil, and administrative actions – to combat and prevent COVID-19 related fraud. We look forward to working with our federal government colleagues to bring to justice those who seek to profit unlawfully from the pandemic.”
In announcing the creation of the Task Force, DOJ said it had already been working together with its partner agencies to hold hundreds of bad actors accountable. The Task Force was created to incorporate the existing coordination mechanisms within DOJ and is expected to work closely with other government agencies to combat fraud. The Task Force includes several entities within the DOJ, including the Criminal and Civil Divisions, the Executive Office for United States Attorneys, and the FBI. Other government agencies have also been invited to be part of the Task Force, including the Department of Labor, the Department of the Treasury, the Department of Homeland Security, the SBA, the Special Inspector General for Pandemic Relief and the Pandemic Response Accountability Committee. The Task Force is expected to bolster efforts to investigate and prosecute the most culpable criminals and other bad actors.
The creation of the Task Force is consistent with the government’s focus on rapidly investigating and prosecuting COVID-19 related fraud, as discussed in our prior alerts – Justice Department Continues Historic Level of Enforcement Against COVID-19 Fraud and DOJ Announces First Criminal Prosecution for Misuse of COVID-19 Relief Funds Dedicated to Health Care Providers.
The government has continued to receive an outpouring of complaints related to suspected fraudulent activity from whistleblowers. Investigators also make reporting alleged fraud easy for the public by having a hotline dedicated to pandemic related fraud as well as an accessible online complaint form.
For up-to-date information on prosecutors’ efforts in combating COVID-19 related fraud, consult Fox Rothschild’s proprietary PPP Fraud Prosecution Tracker, an interactive tool that monitors new case filings and the disposition of cases involving alleged fraud and abuse in connection with PPP nationwide. For access, contact Matthew D. Lee at email@example.com or Marissa Koblitz Kingman at firstname.lastname@example.org.