COVID-19 federal financial assistance was a boon to many businesses that struggled during the pandemic’s height. Now it’s Uncle Sam who’s getting relief.
The U.S. Secret Service today announced the return of around $286 million in Economic Injury Disaster Loans (EIDL) to the Small Business Administration (SBA). The loans were granted based on fraudulently submitted applications that contained fabricated or stolen employment and personal information.
Debit cards to hide, move funds: The investigation was initiated by the Secret Service’s Orlando, Florida, field office. Those agents found alleged conspirators used more than 15,000 Green Dot debit cards to illegally conceal and move the government money. Green Dot online bank, the issuer of the cards, worked with federal agents to uncover the cards.
“Working closely with our Central and North Florida Cyber Fraud Task Forces, this investigation enabled the recovery of a significant amount of critical federal relief,” said Assistant Special Agent in Charge Roy Dotson, the Secret Service’s lead investigator in the case.
Part of a billion-dollar recovery effort: Today’s announcement is the latest instance of criminal investigations into suspicious COVID relief efforts.
In addition to the EIDL program, criminals also took advantage of Paycheck Protection Program (PPP) loans, as well as the unprecedented issuance of unemployment benefits that were part of relief efforts rolled out in the midst of the worldwide coronavirus pandemic.
The Secret Service said that since 2020, the law enforcement agency has initiated more than 3,850 pandemic related fraud investigations, seized more than $1.4 billion in fraudulently obtained funds, and helped return $2.3 billion to state unemployment insurance programs.
Investigations continue: And the feds aren’t stopping.
“This forfeiture effort and those to come are a direct and necessary response to the unprecedented size and scope of pandemic relief fraud,” said Kevin Chambers, director for COVID-19 fraud enforcement at the Justice Department.
And they’re working closely with other involved agencies.
“Through intentional collaborations like this, OIG will continue to ensure that taxpayer dollars obtained through fraudulent means will be returned to taxpayers and fraudsters involved face justice,” said SBA Office of Inspector General (OIG) Inspector General Hannibal “Mike” Ware. “I want to thank the U.S. Secret Service and our many partners in law enforcement for their tireless dedication and focused commitment to seeing justice served.”
Criminal charges possible: The return of the fraudulently obtained COVID relief funds is just one part of the investigation.
During the press conference announcing the funds’ recovery, Ware said the joint federal investigations will continue. In addition to getting back the dollars, the agencies also want to ensure that the “fraudsters involved face justice.”
Recently enacted legislation should help federal law enforcement do that.
On Aug. 5, President Joe Biden signed two bipartisanly supported bills, the PPP and Bank Fraud Enforcement Harmonization Act and the COVID-19 EIDL Fraud Statute of Limitations Act of 2022, that give prosecutors more time to go after those suspected of COVID-19 relief fraud.
SIGNED INTO LAW: @NydiaVelazquez‘s bills to extend the statute of limitations of certain smallbiz relief fraud cases.
Fraudsters took $ away from small firms when they needed it the most.
These bills will ensure law enforcement has ample time to hold bad actors accountable. pic.twitter.com/K9sJJNTk9J
— House Committee on Small Business (@HouseSmallBiz) August 5, 2022
The statute of limitations for PPP and EIDL criminal acts is doubled, going from five years to 10 years.
In response to a Government Executive question about the new laws’ effects, Dotson said they “will help immensely” since “we’re 30 months into pandemic fraud, so now we’re getting into the heart of investigations and this is not going to be a quick fix.”
Dotson noted that today’s EIDL announcement was just “one case, so you can just think of the potential number of suspects, [the] investigations that could come out of those.”
You also might find these items of interest:
- Gift cards are great holiday gifts, but not a way to pay taxes
- $163 billion in unemployment fraud run up during pandemic
- Dallas man already jailed for tax fraud, pleads guilty to new PPP criminal charges
- [Another] Texas man pleads guilty to $24.8 million PPP fraud; IRS touts more success in COVID-19 investigations
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