Update on COVID-19 Fraud Enforcement Task Force 2024 Report

On April 9, 2024, the Justice Department’s COVID-19 Fraud Enforcement Task Force (“CFETF”) released its 2024 report, “COVID-19 Fraud Enforcement Task Force 2024 Report – April 2024.” This report details the efforts taken by the task force and its member agencies in response to widespread fraud involving many COVID-19 relief programs, including the Paycheck Protection Program (”PPP”) and Economic Injury Disaster Loan (“EIDL”) loans, the Employee Retention Tax Credit (“ERC”), and unemployment insurance (“UI”) benefits, among others, which were targeted by fraudsters who exploited the U.S. government’s relief efforts. [1]^,[2]

The actions taken by the task force have led to criminal charges against more than 3,500 defendants for losses of over $2 billion, civil enforcement actions resulting in more than 400 civil settlements and judgments of over $100 million, and over $1.4 billion seized or forfeited.

As of December 31, 2023, approximately 2,000 defendants charged with pandemic-related fraud have pleaded guilty or have been convicted at trial. The U.S. Attorney’s Office has a similar number of open investigations that have yet to be charged.

With representation from a wide array of government agencies, it is apparent just how significant and multifaceted the issue of fraud is.

In addition, the CFETF has established five strike forces to focus on the most complex and harmful pandemic fraud—that which is often committed by overseas, organized, or violent actors. Those strike forces, which are located in the U.S. Attorneys’ Offices in Maryland, New Jersey, Colorado, the Southern District of Florida, and a joint task force made up of the Eastern and Central Districts of California, are responsible for indicting 250 defendants to date, including gang members, inveterate fraudsters, and overseas rings committing a myriad of cyber-enabled fraud.

Selected Examples of Various Agencies’ Findings

• The Southern District of Florida Strike Force led to a defendant being sentenced to 71 months in prison for fraudulently obtaining PPP and EIDL loans and Shuttered Venue Operator Grants using stolen funds to buy two Teslas, a Lamborghini, a Porsche, and jewelry, including a gold chain with 70 carats of diamonds.
• Under the Civil Division of the DOJ, the Commercial Litigation Branch, Fraud Section, has primary responsibility for enforcing the False Claims Act (“FCA”), the government’s primary civil tool to redress fraud impacting federal funds, and the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), which provides for civil penalties for certain financial crimes. Civil Fraud (CIV-Fraud) and U.S. Attorney Offices (USAOs) have obtained more than 400 FCA settlements and judgments totaling over $100 million.
• The Tax Division of the DOJ has focused its efforts regarding COVID-19 fraud on combating abuse of the ERC. Because the ERC was available for relatively recent years (2020 and 2021) and given the complexity of identifying and prosecuting these offenses, the Tax Division expects that prosecuting ERC-related crimes will continue to be a priority for the foreseeable future.
• Since 2020, the Small Business Administration – Office of Inspector General’s (“SBA-OIG”) oversight of the PPP and EIDL programs has resulted in approximately 1,255 criminal indictments, 985 arrests, and 683 convictions as of December 31, 2023. SBA-OIG has identified over $1 billion in forfeitable COVID fraud proceeds and more than $10 billion in disallowed costs through audits and reviews.

While the DOJ’s CFETF is hard at work tracking down fraud in connection with PPP loans and ERCs, among other programs, many innocent beneficiaries of these programs may find themselves receiving an inquiry from one of the many agencies involved in this effort. Anchin has developed expertise in understanding the rules and regulations that guided the applications for PPP loans and ERC tax credits. If an agency reaches out to you or your business regarding either of these programs, be sure to discuss this with counsel and reach out to Anthony Bracco, Leader of the Litigation, Forensic and Valuation Services Group, David Beckman, Partner in the Litigation, Forensic and Valuation Services Group, Margaret Kolb, Director in the Litigation, Forensic and Valuation Services Group, or your Anchin Relationship Partner.

[1] Office of Public Affairs | COVID-19 Fraud Enforcement Task Force Releases 2024 Report | United States Department of Justice

[2] COVID-19 Fraud Enforcement Task Force 2024 Report April 2024 – Council of the Inspectors General on Integrity and Efficiency (justice.gov)