Nearly 500 Charged By DOJ For COVID-19 Fraud Schemes

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Washington DC - Nearly 500 individuals across the country are facing federal charges related to COVID-19 fraud schemes, according to a recent release from the United States Department of Justice (DOJ).

As of Friday morning (March 26th), the DOJ has publicly charged 474 defendants with criminal offenses connected to the COVID-19 pandemic. These schemes—which targeted programs such as the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program and Unemployment Insurance (UI) programs—involved attempts to defraud over $569 million from the federal government and unsuspecting victims, throughout 56 federal districts around the US.

“The Department of Justice has led an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes,” said Attorney General Merrick B. Garland. “The impact of the department’s work to date sends a clear and unmistakable message to those who would exploit a national emergency to steal taxpayer-funded resources from vulnerable individuals and small businesses.

The DOJ say at least 120 defendants have been charged with PPP fraud, which can range from business owners inflating their payroll expenses to obtain larger loans than they otherwise would have qualified for, to serial fraudsters who revived dormant corporations and purchased shell companies with no actual operations to apply for multiple loans falsely stating they had significant payroll.

In one such case of PPP fraud, federal prosecutors charged 55-year-old Dinesh Sah of Coppell, Texas for obtaining over $24 million in PPP loans—which was used on luxury cars and multiple homes, according to a release from the DOJ.

In another case, prosecutors say eight defendants in the Los Angeles area applied for 142 PPP and EIDL loans, seeking over $21 million using stolen and fictitious identities and sham companies. The defendants then laundered the proceeds through a web of bank accounts to purchase real estate, securities, and jewelry.

To date, through the efforts of the US Attorney's Office for the District of Colorado and the Secret Service, $580 million worth of EIDL loans have been seized from fraudulent applications. 

Additional investigation by the DOJ found that international organized criminal groups have targeted unemployment funds by using stolen identities to file for UI benefits. Domestic fraudsters—including regular identity thieves and even prison inmates—have also engaged in Unemployment Insurance fraud, according to investigators.

“To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “No matter where you are or who you are, we will find you and prosecute you to the fullest extent of the law.”

To date, over 140 defendants have been charged and arrested for federal offenses related to UI fraud. This included the arrest of 28-year-old Leelynn Danielle Chytka, a Virginia woman who pleaded guilty to defrauding the government of almost $500,000. The DOJ says Chytka filed fraudulent claims for at least 37 individuals over the course of nine months. Court documents state that Chytka collected the personal identification information of more than 35 co-conspirators—which included 15 inmates currently in custody with the Virginia Department of Corrections.

“We will not allow American citizens or the critical benefits programs that have been created to assist them to be preyed upon by those seeking to take advantage of this national emergency,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “We are proud to work with our law enforcement partners to hold wrongdoers accountable and to safeguard taxpayer funds.” 

To report a COVID-19-related fraud scheme or suspicious activity, contact the National Center for Disaster Fraud (NCDF) by calling the NCDF Hotline at 1-866-720-5721 or via the NCDF Web Complaint Form.

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