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Understanding COVID Relief Fraud

As the effects of the COVID-19 pandemic recede, its impact on the U.S. economy is still being felt. According to the New York Times, the federal government has sent over $5 trillion to citizens, small businesses, schools, and other organizations.

While the economic relief helped thousands of American workers, teachers, and business owners weather the storm of the pandemic, the government has already brought dozens of high-profile fraud cases. This has resulted in more investigations and more people facing charges.

If you have been formally charged or are under investigation for COVID-related fraud in New York, you need a highly-skilled NYC criminal defense attorney, who can evaluate your situation and work to address the issue. Talk to Protass Law PLLC. Call 212.455.0335 or submit a request to schedule a free and confidential consultation.

Types of COVID Relief Fraud

Federal prosecutors are focused principally on two types of pandemic-related fraud: a href="https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program"rel="noopener" target="_blank">The Paycheck Protection Program (PPP) and pandemic-related unemployment benefits. These programs were particularly susceptible to fraud due to their fast rollout and the high volume of applications at the onset of the pandemic.

PPP Loan Fraud

The Paycheck Protection Program was put in place by the U.S. Small Business Administration to provide loans to help businesses pay utilities, and rent, and keep paying their workers while their businesses were shut down. Unfortunately, PPP loans became a prime target for fraud as some business owners took advantage of the program.

Some applicants have been accused of a href="https://www.justice.gov/opa/pr/three-men-sentenced-27-million-covid-19-relief-fraud-scheme"rel="noopener" target="_blank">falsifying information such as the number and identities of employees on their payroll or the cost of business expenses. Business owners have also been charged with fraud for having used loan funds for personal expenses. And some have even been charged for fabricating companies and then applying for fraudulent PPP loans.

Unemployment Fraud

The millions of new unemployment applications precipitated by the pandemic exacerbated existing issues with longstanding problems with unemployment insurance benefits. The widespread availability of unemployment benefits allowed more bad faith claims to slip through the cracks. Many people received (and may continue to receive) unemployment funds by filing claims using the names and Social Security numbers of deceased, out-of-state or incarcerated individuals.

Like PPP loan fraud, some individuals even created shell businesses and/or fictitious employees to acquire unemployment benefits.

Penalties for Unemployment & PPP Fraud Charges

Because COVID financial relief was offered by the federal government, COVID relief fraud is typically charged under federal law in federal court. Some specific criminal offenses applied to COVID fraud include:

Mail or Wire Fraud

If convicted of using the mail or a communication device to perpetrate a PPP fraud, you face federal mail or wire fraud penalties, which include 20-30 years in prison, fines up to $1,000,000, and restitution.

False Statement

The federal penalty for making a false statement to a financial institution or agency is a maximum of 30 years, a 1,000,000 fine, or both.

Bank Fraud

If the DOJ purses a case against you for federal bank fraud in relation to a PPP scheme, the possible penalties are up to 30 years and or a $1,000,000 fine.

Other Federal Fraud Charges

In addition, other PPP-related charges include Identity theft, tax evasion, and conspiracy to defraud the government. And while bank and wire fraud have longer terms of imprisonment, all of these also carry potential prison terms and penalties are aggressivity sought by prosecutors.

COVID Fraud Investigation & Enforcement

The Secret Service estimates nearly $100 billion of pandemic relief funds have been stolen.

To recover as much of it as possible, the Attorney General of the United States created a COVID-19 Fraud Enforcement Task Force in mid-2021. The task force works closely with other government agencies such as the U.S. Postal Inspection Service, the Federal Deposit Insurance Corporation, and the Internal Revenue Service to conduct investigations of pandemic-related financial frauds.

If any of these agencies detect fraudulent activity related to COVID relief money, they will coordinate the investigation. Indeed, the U.S. Department of Justice recently named a chief prosecutor to pursue COVID relief fraud. That prosecutor’s office and staff will focus on large-scale criminal enterprises and high-profile cases, but the move underscores the government’s resolve for punishing those who misused COVID relief funds.

Can I Be Charged for A Mistake or Good-Faith Error?

Suppose you applied for a PPP loan or unemployment benefits and received more money than you were eligible for or entitled to. In that is the case, it is your responsibility to bring tell the borrower or recipient of the error. If, however, you made a knowing misstatement, you could be subject to criminal charges. The lender will rectify a mistake on the lender’s part.

Protass Can Help with COVID Relief Fraud Charges

Attorney Harlan Protass has extensive experience defending against fraud, larceny, and forgery charges. If you face allegations of misuse of unemployment or PPP loan money, Protass knows how to keep the charges from affecting the rest of your life and can articulate the complexities that may aid in building your defense strategy.

Having an effective criminal defense lawyer early on can help clear your name and mitigate any potential harm. Contact Protass Law PLLC today at 212.455.0335.