Over $1.4b pandemic funds stolen, charges filed

The United States Department of Justice, or DOJ, announced last week federal criminal charges have been filed against 371 defendants for offenses related to more than $836 million in COVID-19 fraud, bringing the total to more than $1.4 billion in COVID-19 relief funds stolen by more than 3,000 defendants.

The 371 defendants came from a three-month "sweep" to combat the fraud, which ended in July and involved more than 50 US attorney offices and dozens of federal, state and local law enforcement agencies.

The DOJ said 119 defendants pleaded guilty or were convicted at trial during the sweep. More than $57 million in court-ordered restitution was imposed, and prosecutors worked with law enforcement to secure forfeiture of more than $231.4 million.

"This latest action … should send a clear message: the COVID-19 public health emergency may have ended, but the Justice Department's work to identify and prosecute those who stole pandemic relief funds is far from over," Attorney General Merrick Garland said in a statement.

At the end of June, the Labor Department said its inspector general had about 163,000 open investigations focused on unemployment insurance fraud from the pandemic.

Fraud cases

The DOJ listed a range of fraud cases, including defendants who were accused of using the money to hire a contract killer, and individuals who laundered funds by shipping cars to other countries. Some individuals used the stolen money to fund vacations, while others purchased assets overseas.

One case detailed by the department involved 30 individuals — all alleged to be members or affiliates of a street gang known as the Wild 100s in Milwaukee, Wisconsin. They were charged with a plot involving millions in fraudulently obtained pandemic unemployment insurance benefits. The funds were allegedly used to hire a contract killer and to purchase firearms, controlled substances, jewelry and clothing. Some defendants were also accused of transferring firearms.

In another case, New Jersey tax preparer Leon Haynes told some of his clients for more than two years that the federal government was giving out "free money" and he filed more than 1,000 false tax forms, fraudulently claiming more than $124 million in COVID-19 employment tax credits for businesses that he and others owned. He was arrested at the end of July.

The exact amount of stolen funds is unknown, but the Small Business Administration's inspector general estimated that more than $200 billion — or at least 17 percent of the roughly $1.2 trillion in pandemic loans the agency gave out — had been disbursed to "potentially fraudulent actors".

Prosecutors and investigators are working to "claw back as much of that money as possible", Michael Galdo, the DOJ's acting director of COVID-19 fraud enforcement, said.