Jailed Felons among Thousands who Scammed COVID Relief Program out of Billions of Dollars

Fraud and corruption are so rampant in the U.S. government’s mammoth pandemic relief program that the Justice Department created a special COVID-19 Fraud Enforcement Task Force (CFETF) to crack down on scams and recover some of the stolen funds. A few days ago, it published an update on its work and American taxpayers should be furious. In the program’s short existence, over $2 billion have been lost to fraud and more than $1.4 billion have been seized or forfeited. More than 3,500 defendants have been criminally charged and civil enforcement actions have resulted in north of 400 civil settlements and judgements of $100 million. Among those charged by the federal task force is a gang member who as a prison inmate operated a scheme that collected $25 million in pandemic unemployment benefits and another jailed convict who used stolen identities to claim more than $1 million in unemployment payments.

It is still a drop in the bucket considering that the American Rescue Plan of 2021, the nearly $2 trillion measure passed by Democrats to provide immediate and direct relief to families and workers impacted by the COVID-19 crisis through no fault of their own, has doled out so much more. When the law passed, the Biden administration promoted it as one of the most progressive pieces of legislation in history that would build a bridge to an equitable economic recovery. The administration justified the measure by asserting that the public health crisis and resulting economic effect devastated the health and financial wellbeing of millions of Americans, particularly people of color, immigrants, and low-wage workers. The reality is that a lot of the money—billions and counting—has gone to unrelated causes and the administration’s COVID relief program continues to fleece American taxpayers.

The situation is so critical that the government needs to spend more resources to clean it up, further sticking it to the public. In a statement announcing the CFETF’s latest report Deputy Attorney General Lisa Monaco indicates that the fraud is widespread and overwhelming federal prosecutors. “The statute of limitations must be extended and the necessary funding and data analytic tools secured for our prosecutors to recover hundreds of millions of dollars more in fraud proceeds, bring remaining offenders to justice, and disrupt criminal networks that continue to victimize our citizens,” Monaco said. Attorney General Merrick B. Garland assures us his agency’s work is far from over. “We will continue our efforts to investigate and prosecute pandemic relief fraud and to recover the assets that have been stolen from American taxpayers,” Garland said. CFETF Director Michael C. Galdo, a veteran federal prosecutor, confirmed that “much work remains in the fight against COVID-19 fraud.”

That is because the government has made it too easy to collect benefits, making the massive cash giveaway a great target for criminals. Of the 3,500 defendants charged, most of the cases involve unemployment benefits fraud, Paycheck Protection Program fraud (PPP), and Economic Injury Disaster Loan fraud (EIDL), programs launched and funded by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act. Congress passed the measure to provide “fast and direct economic aid” to those negatively impacted by the pandemic. Other types of CARES Act fraud and health care scams related to the pandemic were also charged, according to the latest CFETF report. “The fraud associated with these cases was more than $2.1 billion,” the document states. As of December 31, 2023, about 2,005 of the defendants charged with pandemic related fraud have pleaded guilty or been convicted at trial and the fraud loss associated with the completed cases has exceeded $1.2 billion.

The report includes examples from around the nation. In Minnesota dozens of individuals have been charged for operating a $250 million fraud scheme that exploited a federally funded child nutrition program during the COVID-19 pandemic. A Florida defendant was sentenced to eight years in prison for obtaining more than $7.2 million in PPP loan funds, which he used to purchase luxury cars and a 12-acre estate. In Washington, the ringleader of a $6.8 million pandemic fraud ring was sentenced to five years in prison for seeking funds from various relief programs. In Michigan, a man was sentenced to 15 years in prison for using stolen identities to illegally obtain $2.1 million in unemployment insurance benefits from multiple states and to traffic methamphetamine. The list goes on and on.

Even government employees have defrauded the system. Back in the fall of 2022 Internal Revenue Service (IRS) employees got charged with stealing over a million dollars from pandemic relief programs to buy luxury goods, fancy cars, and travel. Five employees from the feared tax agency in Tennessee and Mississippi easily withdrew the money by filing false loan applications with two of the federal stimulus programs, PPP and EIDL. Federal authorities say they used the illegally obtained pandemic relief funds to buy expensive designer clothes (Gucci), a fancy imported car (Mercedes-Benz), jewelry, trips to Las Vegas, manicures, and massages. The leftover cash got deposited into personal investment accounts.