Vanessa R. Waldref, the U.S. Attorney for the Eastern District of Washington, recently announced the creation of a new interagency COVID-19 Fraud Strike Force to combat alleged fraud arising from the pandemic. One of its recent efforts led to the arrest of a man who took a relatively small loan of approximately $32,000 through an assistance program created under the CARES Act. The government’s creation of new interagency teams to combat fraud for fairly trivial loans signals that what appear to be relatively insignificant transgressions may still lead to years behind bars.
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). PPP loans were given for the purpose of helping businesses keep their workforce employed during the COVID-19 crisis. The CARES Act also provided government assistance through the Economic Injury Disaster Loan (EIDL) program. Similarly, loans provided through the EIDL program were meant to help small businesses recover from the economic effects of the pandemic.
As the government issued loans to individuals and businesses at a rapid pace, borrowers made mistakes in their applications. In addition, some applicants intentionally made misrepresentations on their loan documents. Within weeks of creating the government assistance programs, the government began investigating those who received the loans. By May 2021, the Attorney General had established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice and agencies across the government to enhance efforts to combat and prevent pandemic-related fraud. In recent weeks, the government announced the creation of a new, interagency COVID-19 Fraud Strike Force to combat alleged fraud arising from the pandemic.
New COVID-19 Fraud Strike Force Prosecutions
Waldref stated that the new COVID-19 Fraud Strike Force was created because the government deemed it was “critical” that governmental agencies “all work together to combat pandemic-related fraud.” This new strike force consists of agency representatives from the U.S. Attorney’s Office, SBA, Office of Inspector General (OIG), Federal Bureau of Investigation (FBI), Department of the Treasury Inspector General for Tax Administration (TIGTA), Secret Service, Homeland Security Investigations, Department of Veterans Affairs OIG, General Services Administration OIG, Internal Revenue Service, Department of Energy OIG, and others.
The new COVID-19 Fraud Strike Force has already been involved in a number of criminal prosecutions. On March 16, 2022, a federal grand jury returned an indictment charging Roshon Edward Thomas, age 52, of Spokane, Washington, with two counts of fraud. The indictment alleged that Thomas fraudulently applied for and received a rather small loan, $32,400, through the SBA’s EIDL program in the name of a fictitious business. Each count carries a maximum sentence of 20 years in federal prison.
What to Expect Next
The creation of the new interagency COVID-19 Fraud Strike Force, as well as prosecutors’ focus on bringing fraud charges involving relatively small loans, signals that the government is willing to spend its resources to combat all levels of alleged fraud. People who received government aid through COVID-19 assistance programs should be mindful that even if the loan amount was small, the government may prosecute you for fraud and other related federal crimes. Any borrower who is concerned about compliance with the CARES Act or is concerned about potential fraud exposure should consult counsel and not wait to be contacted by law enforcement. Those who have already received a subpoena or inquiry from any law enforcement agency should immediately consult with counsel who can assess the full potential for civil and criminal exposure prior to responding.