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Back to school season may have just started, but for the PRAC Fraud Task Force, class is always in session.
We continue to learn how criminals commit fraud and spend their
ill-gotten gains, and our latest cases tell us a lot about what we're dealing with. We'll school anyone on the consequences of trying to steal from the public. Read on for details!
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Cousins flunk the exam
Pandemic relief loans for your business were supposed to be used for permissible expenses, such as payroll or fixed business debts. They were not to be used for personal enrichment. In one recent example, three West Viriginia cousins were charged for defrauding pandemic relief programs.
The first cousin pleaded guilty and will be sentenced later this month for using over $450,000 in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds to pay his personal mortgage, and buy a garage and a vehicle. The other two cousins, who are brothers, allegedly followed the same cheat sheet and were charged in June. The first brother allegedly transferred over $1.9 million in EIDL loans to his personal accounts to invest in crypto currency, while the second allegedly spent at least $1.4 million for his own personal gain.
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Back to detention
Applicants for pandemic relief funds were required to tell the truth before hitting submit, disclosing facts such as prior convictions on their record. At the end of July, a Florida man was sentenced to three years in prison and ordered to pay $75,000 in restitution for committing EIDL fraud. The individual filed for a pandemic relief loan of $200,000, ultimately receiving $75,000, for a non-existent small business he claimed to own in 2019. However, he spent the majority of 2019 in federal prison and applied for the relief money while in a Bureau of Prisons residential reentry center in Florida. The judge also noted during his sentencing hearing that he had conspired to file additional fraudulent COVID relief loan applications in excess of $400,000.
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A not-so-amusing lesson
Back to the first rule when accepting a pandemic relief loan: Do not use it for unauthorized expenditures. A Louisiana woman pleaded guilty to spending over $12,000 in pandemic relief aid at high-end retail stores and an amusement park. In June 2020, she applied for several PPP and EIDL loans for her small business and received over $350,000 in relief money. Instead of using that money for business purposes, she used it for personal pleasure. She is scheduled to be sentenced in October 2024.
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Don't be a copycat
A trio of rules was broken in these two separate, but nearly identical, cases in West Virginia that led to guilty pleas in August. Two independent contractors both applied for unemployment insurance benefits and PPP loans during the pandemic. They fraudulently obtained $8,760 and $14,336 in unemployment benefits, respectively. Additionally, both individuals falsified their PPP applications by representing that they had earned enough money as independent contractors in the prior year to receive the maximum allowed loan amount of $20,832. They both admitted to using the fraudulently obtained funds for personal purchases and to pay off their bills. They will be sentenced in November 2024.
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Taking fraudsters to school
Remember these lessons to ace any pop quiz:
Do not apply for unemployment insurance when employed; do not falsify earned income to qualify for a PPP loan; and again, do not use relief dollars for personal expenses.
To date, PRAC Fraud Task Force investigations have led to criminal charges against nearly 100 individuals, with 17 convictions thus far, and over $16 million in restitution, seizures, forfeitures, and voluntary repayments.
But we can't ace the assignment on our own, it takes a team. Agents from our partner Offices of Inspectors General and law enforcement agencies work with us on this group project to fight fraud.
Homework assignment: Read up on our latest investigative stats and notable case findings, and how we use data analytics to track down fraudsters.
Disclaimer: An indictment is a formal accusation of a serious crime. However, all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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