Since the pandemic, COVID-19-related fraud has been a consistent target of the Department of Justice.
The creation of the DOJ’s COVID-19 Enforcement Task Force in May 2021 marked the start of DOJ’s commitment to combatting COVID-19-related fraud. Since then, according to the Task Force’s 2024 Report, published in April of this year, the Task Force has charged over 3,500 defendants with federal crimes related to Covid-19 fraud, recovered more than $1.4 billion in stolen funds and reached over 400 civil settlements and judgments.
Most of these matters involved unemployment insurance (“UI”) benefits fraud, Paycheck Protection Program fraud (“PPP”), and Economic Injury Disaster Loan (“EIDL”) fraud , but other types of CARES Act fraud and health care fraud related to the COVID-19 pandemic were also charged. The quantum of fraud losses associated with these cases was reported to be over $2.1 billion.
Most recently, on August 8, 2024, the DOJ issued a press release announcing that West Coast Dental Administrative Services LLC, operating a network of dental offices in Southern California, along with its founders and former owners, agreed to pay $6.3 million to resolve allegations that they knowingly violated the False Claims Act (“FCA”) in connection with seven improper loans that the company and its affiliated dental offices received under the PPP. Additionally, an unrelated real estate holdings company owned by one of the founders agreed to pay an additional $35,149.82 to resolve its potential liability under the FCA in connection with a separate PPP loan.
Other examples of COVID-19 criminal fraud prosecutions by the Task Force include the following:
- In the Southern District of Georgia, a Florida-based attorney was convicted at trial of conspiracy to fraudulently obtain almost $800,000 in Economic Injury Disaster Loans for herself and others.
- In the Western District of Washington, the ringleader of a $6.8 million pandemic fraud ring was sentenced to five years in prison for fraudulently seeking funds from various relief programs.
- In the Eastern District of Washington, an Arkansas-based business owner pleaded guilty to fraudulently receiving more than $16.5 million in SBA pandemic relief funds for himself and others.
- In the Eastern District of Virginia, a former VA nurse was sentenced to 18 years in prison for conspiring to fraudulently obtain more than $3.5 million in UI benefits from at least five states. She and her co-conspirators had filed more than 220 false applications for unemployment insurance benefits using stolen identities and the identities of state and federal prison inmates.
- In the Middle District of Florida, a defendant was sentenced to eight and a half years in prison for obtaining more than $7.2 million in PPP loan funds, which he used to purchase luxury automobiles and buy a 12-acre estate.
- The District of Minnesota has brought charges against more than 50 individuals for their respective roles in a $250 million fraud scheme that allegedly exploited a federally funded child nutrition program during the COVID-19 pandemic.
- In the Eastern District of Michigan, a man was sentenced to 15 years in prison for his role as the ringleader of conspiracies to use stolen identities to fraudulently obtain $2.1 million in unemployment insurance benefits from multiple states and to traffic in methamphetamine.
Additional examples of historical enforcement actions by this Task Force can be found in our 2022 blog post on the DOJ’s commitment to combatting COVID-19-related fraud.
It is clear that COVID-19 fraud remains a top government enforcement priority, carrying with it the risk of severe civil and criminal consequences for violators. Recipients of COVID-19 relief funds and/or those involved in the COVID-19 testing space should take great care to ensure their processes are compliant with the Stark Law and the False Claims Act, as well as the Anti-Kickback Statute (“AKS”), Eliminating Kickbacks in Recovery Act (“EKRA”), and any other applicable state laws. Our team of white collar defense counsel can ably assist fund recipients with such an analysis.
