DoJ Clamps Down on COVID-19 Fraud, Charging Nearly 500 Individuals

The US Department of Justice (DoJ) has charged nearly 500 individuals for allegedly participating in coronavirus-related scams and fraudulent activities.

As of March 26, 474 individuals have been publicly charged with COVID-19 fraud schemes focused on siphoning over $569 million from government financial relief projects, including the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs.

According to a press release, the DoJ has indicted 120 individuals with PPP fraud. The defendants include business owners accused of inflating payroll expenses to secure large loans and members of organized crime rings who allegedly submitted exact copies of loan applications and documents under different company names.

A Texas-resident was charged with illegally obtaining over $17 million in PPP loans in one particular case. He allegedly used the proceeds to acquire real estate, luxury goods and vehicles.

Fraudsters also targeted the EIDL program, designed to provide loans to small businesses, agricultural and non-profit entities. The scammers successfully applied for SMB loans and diverted the funds for illegal purposes using shell or non-existent companies.

“The department has responded, primarily through the efforts of the U.S. Attorney’s Office for the District of Colorado and their partners at the U.S. Secret Service, acting swiftly to seize loan proceeds from fraudulent applications, with $580 million seized to date and seizures ongoing,” the DoJ said.

In response to increased Unemployment Insurance fraud, the department created a multi-agency task force that charged over 140 alleged criminals ranging from international organized crime groups to domestic wrongdoers, including identity thieves.

While the pandemic brought financial hardship across the world, many threat actors have learned to adapt and seek new profitable opportunities. In the past year, consumers have been tricked into purchasing fake COVID-19 treatments, protective gear and vaccines.

“The department has prosecuted or secured civil injunctions against dozens of defendants who sold products — including industrial bleach, ozone gas, vitamin supplements, and colloidal silver ointments — using false or unapproved claims about the products’ abilities to prevent or treat COVID-19 infections,” the report said.

“The department has also worked to shutter hundreds of fraudulent websites that were facilitating consumer scams, and it has taken scores of actions to disrupt financial networks supporting such scams,” it added.

The Department’s Criminal Division Acting Assistant Attorney General sent out a public warning directed to any pandemic opportunists scamming citizens: “To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t,” he said. “No matter where you are or who you are, we will find you and prosecute you to the fullest extent of the law.”