According to the DOJ, the need to combat widespread fraud arising out of the COVID-19 pandemic drove the establishment of the Task Force. Individuals seeking to profit from the pandemic have sold counterfeit vaccines and personal protective equipment, inflated payrolls to obtain larger loans from the government, used shell companies to unlawfully divert government assistance, and improperly submitted loan applications in the names of multiple companies.3 The DOJ has been addressing such misconduct by charging approximately 600 defendants with crimes associated with COVID-19-related fraud.4
Many of these cases have involved the abuse of government-provided relief meant to assist individuals and businesses impacted by the pandemic. For example, the DOJ has recently prosecuted cases in which defendants exploited the Paycheck Protection Program (“PPP”), which allows qualifying small businesses to receive loans with a low interest rate and a maturity rate of two years.5 The PPP also allows interest and principal to be forgiven if businesses spend proceeds on qualifying expenses such as payroll costs, interest on mortgages, rent and utilities, and payroll expenses.6 The DOJ has uncovered multiple schemes in which individuals or groups of people instead used money obtained from PPP loans for extravagant purchases, such as expensive sports cars, luxury homes, and designer handbags and clothing.7
The DOJ has also charged multiple defendants in connection with schemes to defraud government agencies through the submission of fraudulent applications for the Pandemic Unemployment Assistance (“PUA”) program, which expanded access to unemployment benefits to self-employed workers and independent contractors. Defendants charged in connection with fraudulent schemes relating to the PUA program provided false or stolen social security numbers and employment records to obtain government benefits.8
The Task Force seeks to expand and build on the DOJ’s enforcement efforts. In addition to the investigation and prosecution of individuals and businesses engaged in fraud, the Task Force hopes to assist in the recovery of stolen funds; train agencies tasked with administering relief about fraud trends and common tactics; field a public awareness campaign to help protect people from fraud; and deter, detect, and disrupt future fraud.9 The Task Force plans to marshal its internal resources and partner with various cross-governmental agencies to enhance its prevention, enforcement, and public awareness efforts.10
The White House has expressed support for the Task Force. On the same day the Task Force was announced, President Biden released a statement that highlighted the importance of “fastidious oversight” over pandemic relief efforts and welcomed the Attorney General’s announcement of the Task Force’s creation.11
The Attorney General’s Press Release announcing the Task Force emphasized that the “Department of Justice will use every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud.”12 In the past, such enforcement tools have included civil injunctions over individuals and companies, seizure of loan proceeds from fraudulent loan applications, and convicting individuals involved in fraudulent schemes.13
Individuals, companies, and state and local government agencies working in industries involving healthcare or essential services, as well as those who provide or receive pandemic-related assistance, should take note of the government’s attention to COVID-19-related fraud and the tools at the government’s disposal.
1 Press Release, US Department of Justice, Attorney General Announces Task Force to Combat COVID-19 Fraud (May 17, 2021), available at https://www.justice.gov/opa/pr/attorney-general-announces-task-force-combat-covid-19-fraud (“DOJ Press Release”).
2 US Department of Justice, COVID-19 Fraud Enforcement Task Force Fact Sheet, available at https://www.justice.gov/opa/press-release/file/1394716/download (“Task Force Fact Sheet”).
3 Memorandum for the Deputy Attorney General Attorney General, Heads of Department Litigating Components, United States Attorneys, Executive Office for United States Attorneys, Federal Bureau of Investigation, Office of the Inspector General, Organized Crime Drug Enforcement Task Force, and Interpol Washington from the Attorney General (May 17, 2021), available at https://www.justice.gov/opa/press-release/file/1394721/download. (“AG Memorandum”).
4 Task Force Fact Sheet at 1.
5 Press Release, US Department of Justice, Man Purchase Lamborghini After Receiving $3.9 Million in PPP Loans (Feb. 10, 2021), available at https://www.justice.gov/opa/pr/man-purchased-lamborghini-after-receiving-39-million-ppp-loans?utm_medium=email&utm_source=govdelivery.
7 See, e.g., id.; Press Release, US Department of Justice, Irvine Man Arrested on Federal Grand Jury Indictment Alleging He Fraudulently Obtained $5 Million in COVID-Relief PPP Loans (May 7, 2021), available at https://www.justice.gov/usao-cdca/pr/irvine-man-arrested-federal-grand-jury-indictment-alleging-he-fraudulently-obtained-5; Press Release, US Department of Justice, Four Additional Members of Los Angeles-Based Fraud Ring Indicted for Exploiting COVID-Relief Programs (March 12, 2021), available at https://www.justice.gov/opa/pr/four-additional-members-los-angeles-based-fraud-ring-indicted-exploiting-covid-relief; Press Release, US Department of Justice, Man Purchased Lamborghini After Receiving $3.9 Million in PPP Loans (February 10, 2021), available at https://www.justice.gov/opa/pr/man-purchased-lamborghini-after-receiving-39-million-ppp-loans?utm_medium=email&utm_source=govdelivery.
8 See, e.g., Press Release, US Department of Justice, Twelve Individuals Indicted And Arrested For Unemployment Benefits And Pandemic Unemployment Assistance (PUA) Fraud (Apr. 13, 2021), available at https://www.justice.gov/usao-pr/pr/twelve-individuals-indicted-and-arrested-unemployment-benefits-and-pandemic-unemployment; Press Release, US Department of Justice, Russell Co. Woman Pleads Guilty to $499,000 Unemployment Fraud Scheme (March 18, 2021), available at https://www.justice.gov/usao-wdva/pr/russell-co-woman-pleads-guilty-499000-unemployment-fraud-scheme; Press Release, US Department of Justice, Rapper Who Bragged about Unemployment Benefits Scam in Music Video Arrested for Allegedly Bilking COVID-19 Jobless Relief Program (Oct. 16, 2020), available at https://www.justice.gov/usao-cdca/pr/rapper-who-bragged-about-unemployment-benefits-scam-music-video-arrested-allegedly.
9 Task Force Fact Sheet at 1.
10 AG Memorandum at 2.
11 Statement of President Joe Biden on American Rescue Plan Oversight (May 17, 2021), available at https://www.whitehouse.gov/briefing-room/statements-releases/2021/05/17/statement-of-president-joe-biden-on-american-rescue-plan-oversight/.
12 DOJ Press Release.
13 AG Memorandum at 1