Category: USDJ National Center for Disaster Fraud

Source: United States Department of Justice (National Center for Disaster Fraud)

PORTLAND, Maine: A Westbrook woman was sentenced in U.S. District Court in Portland for serving as a “money mule” for someone she met online. A money mule is someone who transfers or moves illegally acquired money on behalf of someone else.

Chief U.S. District Judge Jon D. Levy sentenced Cheryl White, 58, to three years of probation. She was also ordered to pay $7,340 in restitution to the Federal Emergency Management Agency (FEMA). White pleaded guilty on May 19, 2022.

According to court records, White met an unknown person on the internet. At their request, White purchased prepaid debit cards and provided the card numbers to the person. She was later contacted by the person and informed that the cards had been loaded with money. In October 2017, White withdrew the money from the cards and used the funds to purchase money orders which she deposited into her bank account. She withdrew the money days later and mailed most of the money to an address provided by the person she met online.

The money loaded onto the prepaid cards came from FEMA, which had issued the money based on false and fraudulent claims for disaster relief filed with the agency. Although White did not file the false claims, she admitted that she knew the money came from some type of crime. Two banks had previously closed her accounts due to similar conduct, with one bank informing her that her deposits and withdrawals were part of a fraud scheme. White nonetheless continued the same conduct.

The Department of Homeland Security, Office of Inspector General (DHS OIG) investigated the case with assistance from FEMA’s Fraud Prevention and Investigations Branch and the Westbrook Police Department.

Money Mule Scams: Acting as a money mule is illegal and punishable even if you aren’t aware that you are committing a crime. If you are a money mule, you could be prosecuted and incarcerated as part of a criminal money laundering conspiracy. Some money mules know they are supporting criminal enterprises; others are unaware that they are helping criminals profit. Criminals often target students, those looking for work, or those on dating websites, but anyone can be approached to be a money mule. Learn more about money mule scams at https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/money-mules.

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Source: United States Department of Justice (National Center for Disaster Fraud)

BRUNSWICK, GA:  A federal jury deliberated less than an hour before finding a Georgia man guilty on multiple charges for leading a conspiracy to fraudulently obtain more than $1 million in federal COVID-19 pandemic relief funding.

Bernard Okojie, 41, of McDonough, Ga., was found guilty after a three-day trial of Conspiracy to Commit Wire Fraud, Wire Fraud, and Money Laundering Conspiracy, said Jill E. Steinberg, U.S. Attorney for the Southern District of Georgia. The guilty verdict subjects Okojie to statutory penalties of up to 30 years in prison, along with up to $1 million in financial penalties and up to five years of supervised release after completion of any prison term. There is no parole in the federal system.

“Before the ink was dry on legislation creating the Coronavirus Aid, Relief and Economic Security (CARES) Act, Bernard Okojie was scheming to steal these vital small business safety net funds,” said U.S. Attorney Steinberg. “The guilty verdict slams the door on this fraud, and signals to others stealing from pandemic relief funds that they, too, will be held accountable.”

As described in trial and in court documents, Okojie used information for non-existent companies to file at least 24 fraudulent applications for Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program loans for himself and others from April 2020 through May of 2021, seeking millions of dollars in COVID-19 relief funds for himself and others. Okojie received the funding directly, or was paid by other recipients of the fraudulently obtained funding for his work in submitting the EIDL applications. Okojie then conspired to launder the fraudulent proceeds to hide the source of the funds.

Funds from the more than $1.4 million Okojie and others received through the schemes were used to purchase a home, vehicles, shopping trips to Versace, for personal investments, and a toy poodle. Okojie also was intercepted as he attempted to carry nearly $40,000 in undeclared cash on a plane from Atlanta to Nigeria.

Sentencing before U.S. District Court Judge Lisa Godbey Wood will be scheduled upon completion of a pre-sentence investigation by U.S. Probation Services.

“This verdict should serve notice that the FBI and our federal partners will investigate anyone who misdirects federal emergency assistance earmarked for businesses who need it to stay afloat,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “We won’t tolerate anyone driven by personal greed to pocket American tax payer money that should be going to those in need.”

“Manufacturing false information to wrongfully obtain funds from SBA programs intended for the nation’s small businesses is a theft from taxpayers,” said SBA OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Brathwaite. “OIG and its law enforcement partners will relentlessly pursue fraudsters and bring them to justice. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and commitment to seeing justice served.”

The case was investigated by the FBI and the Small Business Administration Office of Inspector General, and prosecuted for the United States by Assistant U.S. Attorneys Matthew A. Josephson and Jennifer A. Stanley.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Source: United States Department of Justice (National Center for Disaster Fraud)

St. Thomas, VI – Dozens of federal Inspector General officials gathered in St. Thomas on March 22-23, 2023, for the first Virgin Islands Office of Inspector General Spring Symposium. The federal oversight and law enforcement officials spent two days collaborating and sharing information as part of their ongoing commitment to protect federal funds awarded to the Virgin Islands.

“As a result of Hurricanes Irma and Maria and the COVID-19 pandemic, the Territory received tens of billions of federal funds,” United States Attorney Delia L. Smith said. “We are committed to ensuring that these funds are properly utilized to improve the lives of the people of the Virgin Islands.” Sponsored by the United States Attorney Office and the Virgin Islands OIG Council, the symposium focused on identifying strategies to combat waste, fraud and abuse, and to improve efficiency in the federally funded programs in the Virgin Islands.

“The symposium was an excellent opportunity to do what the Inspector General community does best: work together to combat fraud, waste and abuse across federal government programs,” said Mark Lee Greenblatt, Inspector General of the U.S. Department of the Interior and Chairperson of the Council of the Inspectors General on Integrity and Efficiency. Greenblatt thanked United States Attorney Smith for bringing together such a diverse array of federal law enforcement organizations. “Collaboration with our on-island partners – including the U.S. Attorney’s Office, the Virgin Islands OIG and local law enforcement – is critical to the DOI OIG’s success here. I look forward to bolstering those partnerships as we work together to identify and address misconduct in DOI programs in the U.S. Virgin Islands”, Greenblatt said.

Inspector General of the U.S. Small Business Administration (SBA), Hannibal “Mike” Ware, added that “the inaugural symposium showcased the unwavering commitment of the Inspector General community to combatting waste, fraud and abuse. With potential fraud on the rise, the IG community has implemented a whole-of-government approach by investing in partnerships to bring wrongdoers to justice and reclaim stolen taxpayer dollars.”

“This symposium represents the unprecedented commitment of the IG community and federal and local law enforcement partners to interagency collaboration in the U.S. Virgin Islands. Thank you to U.S. Attorney Delia Smith for hosting this historical symposium. We look forward to continued partnership with our local partners in the Virgin Islands to combat fraud, waste and abuse and to protect the integrity of HUD programs”, said Rae Oliver Davis, Inspector General of the U.S. Department of Housing and Urban Development (HUD).

Representatives from 16 Inspector General Offices and federal oversight agencies, including Small Business Administration, Interior, Health and Human Services, Housing and
Urban Development, Education, Treasury, Transportation Security Administration, General Services Administration, Environmental Protection Agency, Internal Revenue Service, Transportation, U.S. Postal Service, Energy, Labor, Department of Justice and Commerce, attended the symposium. Federal law enforcement agents and analysts stationed in the Virgin Islands also attended the symposium, as well as representatives from the Virgin Islands Office of the Inspector General. The symposium was held at the U.S. Citizenship and Immigration Services office in Smith Bay, St. Thomas.

Source: United States Department of Justice (National Center for Disaster Fraud)

Remarks as Delivered

Thank you so much, Mr. Attorney General. It is great to be here and to have all of you here in person. It’s great to see so many friendly and familiar faces, to actually see faces, and I’m really hopeful that we’ll continue to do this in person and see more of us gathered together in person for these types of meetings.

I want to say a few words, as we kick off this discussion. Since the beginning of the pandemic, the Department of Justice and those of you and the teams that you all represent — we of course know there’s many men and women behind you, quite literally, doing all of this incredible work — you all have been, and we have been, hard at work to protect the American people from fraud perpetrated by those seeking to exploit the pandemic and to frankly line their own pockets.

Although we didn’t know how long we would have to endure the challenges, the public health challenges of the pandemic, this group knew that because of our experience as prosecutors, as investigators, we knew that there would be other challenges related to the pandemic: those who saw the government’s response as an opportunity to enrich themselves. Anticipating what was to come, each of your agencies assembled teams to prevent, detect, and, where appropriate, prosecute those who defraud government programs.

From the very beginning, the federal government — including each of you — has been aggressive about getting out in front of potential fraud. And I want to particularly acknowledge the leadership of Michael Horowitz and the Pandemic Response Accountability Committee, the PRAC, and thank him for his efforts and the efforts of the PRAC, and those of you, of course, who have joined forces. We all and you all have joined forces through the PRAC, through the National Unemployment Insurance Fraud Task Force, and, now nearly one year ago through the COVID-Fraud Enforcement Task Force thanks to leadership of the Attorney General when he launched it nearly a year ago. That task force — this task force, of course — consolidated our efforts to improve information sharing, promote best practices, and develop innovative new approaches to prosecuting pandemic-related fraud.

Now, your work has paid off. The COVID Fraud Enforcement Task Force has pursued justice on behalf of victims of fraud and worked to prevent it in the first place. Thanks to your work, we’ve charged over 1,000 subjects with criminal charges connected to alleged fraud losses of more than $1 billion. And we have underway, of course, investigations of more than 1,800 individuals and entities for alleged fraud in connection with more than $6 billion in relief package loans.

Now, I want to highlight some of the work, your work, that demonstrates just how wide ranging this fraud and our efforts are. In California, thanks to the hard work of inspectors general and investigators from the Small Business Administration, the Federal Housing Finance Agency, and the IRS, the task force was able to secure significant sentences for eight fraudsters who applied for $21 million in PPP and EIDL loans using stolen and fictitious identities. I will say, as you all know, the problem of identity theft, interacting with a pandemic-related fraud is a really significant one, and one we are putting all of our muscle into.

After these defendants that I’m talking about in this case, after trying to launder the proceeds, they used the stolen funds to purchase real estate, securities, luxury watches, designer handbags, and, yes, even a Harley Davidson.

In April of last year, the Consumer Protection Branch of our own Civil Division here in the Department of Justice, working with the Federal Trade Commission, brought charges against a defendant who marketed fake Coronavirus cures. That case represented the first enforcement action under the COVID-19 Consumer Protection Act.

And also last year, thanks again to a great partnership among the Criminal Division here at the Department of Justice and the FBI, the Secret Service, inspectors general and investigators from the Department of Labor, the Social Security Administration, the IRS, and the Postal Service, thanks to all of that work, the task force brought charges against an overseas actor who used the identities of more than 100 Washington state residents to steal funds from a state unemployment insurance agency. That defendant filed similar fraudulent unemployment claims in six other states. So that gives you a sense of just the breadth of these cases.

Now these cases exemplify the collaboration, the teamwork, that defines this whole effort. Each case involves multiple agencies working together to protect the American people. And many more investigate like them, of course, are underway even as we meet here today.

These cases demonstrate also, and I think really, really importantly to underscore, these cases demonstrate that these crimes are not victimless. Every stolen dollar is taken from somebody who needed it. It’s taken from a parent who needed it to put food on the table. It’s taken from a small business owner who needed it to meet payroll. So these are not victimless crimes.

Make no mistake: these criminals chose to line their own pockets, at a time when Americans were hurting, when many Americans were dying.

I also want to recognize the work that task force partners are doing far from a court room. And yes, we in the Department of Justice recognize there’s work that goes on outside the courtroom. [Laughter]

Because these efforts, our efforts, extend well beyond what winds up in a court room, in a brief, in complaint. Some of our most critical work never appears in a complaint or a press release.

For example, Interpol is leading a global operation to target the illicit production and marketing of fake vaccines.

The U.S. Postal Service has invested over 45,000 inspector hours to investigate claims and develop leads that have resulted in scores of arrests and prosecutions.

And the IRS has directed efforts to tackle tax-related pandemic schemes, and importantly, to inform the public as to how to protect themselves from those types of scams.

And the Social Security Administration’s IG has been critical to addressing identity theft-related fraud, and most recently stepped up its efforts to process an enormous backlog of data from state workforce agencies. That data, as we’ll talk about, I think, today, is really key to detecting and prosecuting COVID-19 fraud.

These efforts have been incredibly effective, and they are key contributions to our whole-of-government efforts. So, I say thank you, to you and to your teams.

Now, we’ve made tremendous progress nearly one year since the Attorney General launched this taskforce and I convened our first meeting. But today, we’re marking a next phase, a new phase in our efforts, building on what’s worked, and bringing all of our expertise and experience and resources to bear on the problem of pandemic-related fraud with new leadership, and new focus on leveraging new tools in our fight.

Because pandemic fraud is a top priority of this administration and this Department of Justice, I’m very pleased and proud to announce that Associate Deputy Attorney General Kevin Chambers, will serve as the Director of COVID-19 Fraud Enforcement. Now, Kevin is known to many of you, and he is an experienced litigator who served as a federal prosecutor here in D.C. And since returning to government has been a trusted adviser to me on corporate investigations and prosecutions.

Many of you of course, know Kevin from his work already on the task force. I look forward to Kevin’s continued commitment and work on this important effort, and I thank him very much for agreeing to step up and take on this new role. [Applause]

Now, as outstanding as all of your work has been today, as the Attorney General said, there is still much, much more to do. As we emerge from the pandemic an incredible amount of data continues to arrive from a variety of sources. Criminals, of course, continue to devise and fine tune new ways to commit and to conceal fraud, and I know this task force is currently implementing a number of recommendations that will enhance our efforts to recover stolen funds, taking them out of the hands of criminals and returning them to the American people.

So thank you again for taking the time to join this discussion. I know we’re going to begin by hearing from Michael Horowitz, the Justice Department Inspector General and, of course, the chair of the PRAC, and we’re going to discuss the important work that the IG community has been doing but before we do that, I want to give our new Director an opportunity to say a few words. Kevin?

Source: United States Department of Justice (National Center for Disaster Fraud)

Hello everyone, I see a bunch of familiar faces, that’s very nice.  

I will be brief so we can get to work. I want to thank you all for your partnership and recognize the extraordinary work you’ve been doing – apparently, no one can hear me. [Laughter]

I will repeat that: I’m grateful for your work, for your partnership, everything you’ve been doing to combat pandemic-related fraud.

When I established this inter-agency task force last May, I said it would help us to deter, detect, and disrupt pandemic fraud wherever it occurs.

Over the past 10 months, that is exactly what this team, made up of close to 30 agencies has been doing. Led by the Deputy Attorney General, you have, among your many other accomplishments, lowered the barriers to information sharing related to COVID fraud and increased the flow of data between our agencies. This has resulted in investigative leads that have led to increased prosecutions.

You have developed a system that makes it easier for financial institutions to report pandemic relief funds they have frozen so that they can be seized.

And you have developed new analytical tools that will reduce the time it takes to convert data to investigations, and investigations to prosecutions.

Since the start of this pandemic, the Justice Department has seized over $1.2 billion in relief funds that criminals were attempting to steal, and charged over 1,000 defendants with crimes in federal districts across the country.

But, we know our work is not done.  As President Biden noted in his State of the Union Address, the Department is naming a Director of COVID-19 Fraud Enforcement. Our new Director is already a valued leader in the Department and an experienced former AUSA, and we are very grateful for his continued service.

I’m going to keep his name secret, so that the Deputy Attorney General can announce it. [Laughter]

The Department remains committed to using every available federal tool — including criminal, civil, and administrative actions — to combat and prevent COVID-19 related fraud. We will continue to hold accountable those who seek to exploit the pandemic for personal gain, to protect vulnerable populations, and to safeguard the integrity of taxpayer-funded programs.

And with that, I am happy to turn the keys over to the Deputy Attorney General, who will introduce our new Director.

Source: United States Department of Justice (National Center for Disaster Fraud)

Thank you, Mr. Attorney General, Madam Deputy Attorney General, I’m honored to take on this new role and I’m excited to continue to work with the women and men in the Department of Justice and also with all of you at the law enforcement agencies and Office of Inspector General that have been such good partners to us.

I’ve had the privilege over the past year to work with all of you and your teams on the COVID-19 Fraud Enforcement Task Force and I’ve seen firsthand the dedication and the hard work that they all bring to the effort and I’ve also seen the results. As we’ve heard, you brought criminal and civil cases against thousands of individuals and entities, alleging billions of dollars in fraud. And that’s impressive and it’s made all the more impressive by the fact that all of that was accomplished in the course of an unprecedented global crisis.

Now, the work is by no means done, as the Deputy Attorney General said. But the work to this point has been extraordinary and I’m looking forward to building on that work, and redoubling our efforts to identify pandemic fraud, to charge and prosecute those individuals responsible for it and whenever possible, to recover funds stolen from the American people. And we’re going to do it using tools that we’ve long used to fight crime, but we’re going to use some new tools that we’ve developed since the beginning of this pandemic when our law enforcement efforts began.

Now, we’re going to target large scale criminal organizations who are committing some of the largest and far-ranging fraud. Many of them using identity theft to victimize Americans who so needed this relief. We’re also going to prioritize overseas actors who saw our government’s relief packages as an opportunity for personal gain. There’s a lot of work for us to do, but there’s no doubt in my mind that this group is up to the task. Sir [Garland], Ma’am [Monaco], thank you for your leadership and for this opportunity and I look forward to the work ahead. Thank you.

Source: United States Department of Justice (National Center for Disaster Fraud)

Remarks as Prepared for Delivery

Good morning and thank you for joining us today.

Over the course of the past six months, the COVID-19 pandemic has wreaked havoc across our country and presented unprecedented challenges for ordinary Americans from all walks of life. 

In addition to inflicting a devastating toll in terms of human lives lost, the pandemic has caused widespread economic disruption that has harmed countless American businesses and American workers. 

Despite these challenges, the Administration has taken a number of important steps to combat the pandemic and the economic crisis it caused. 

On March 27^th of this year, Congress passed and President Trump signed into law a sweeping set of relief measures in the CARES Act. 

As part of the CARES Act, the federal government made hundreds of billions of dollars in forgivable loans available to American businesses through the Paycheck Protection Program, or PPP. 

These PPP loans were made available to businesses so they would have funds available to keep paying their workers, in order to avoid catastrophic job losses during a time of national emergency.

As President Trump made clear when he signed the CARES Act into law, the PPP was intended to provide a much-needed lifeline to American businesses and American workers who – through no fault of their own – were suffering terribly during this national emergency.

By the time the PPP closed to new applications on August 8^th, over 5.2 million loans had been approved, for a total in excess of $525 billion. 

These loans were made to businesses in virtually all sectors of the economy, from manufacturing and construction to health care, education, and the arts. 

These loans allowed American businesses to keep paying their employees and, in turn, allowed those employees to continue paying their rent, mortgages, and other bills, and to continue putting food on the table.

The PPP represented critical help at a critical time.  

Unfortunately, almost every crisis brings out not only those who seek to help others, but also those who try to exploit the situation for their own unlawful purposes and financial gain. 

Early on, Attorney General Barr recognized that the pandemic would present fraudsters and other bad actors with a unique opportunity to take advantage of the crisis, and he directed the Department of Justice to take swift action to protect law-abiding Americans. 

At Attorney General Barr’s direction, the Department of Justice has taken a number of important steps to combat pandemic-related fraud.

One area of particular focus has been the PPP program.  Experience has taught us that any time the federal government makes a large amount of money available to the public on an expedited basis, the opportunities for fraud are clear. 

The Criminal Division – and the Criminal Division’s Fraud Section in particular – moved quickly to combat fraud in connection with the PPP program. 

We set up a team dedicated to PPP fraud, began investigating almost immediately, and brought our first cases within months of the PPP being announced, and while loans were still being made. 

We did this not only to protect the integrity of the PPP and the taxpayer funds it was disbursing, but also to send a message of deterrence to would-be fraudsters – while loans were still being made – that the Department was standing watch and would move aggressively to prosecute those who defrauded this critical program.

We are here today to announce a key milestone in the Criminal Division’s efforts to combat pandemic-related fraud by holding accountable those who sought to abuse the PPP. 

Today the Criminal Division’s Fraud Section, along with our law enforcement partners on this stage, are announcing that as a result of law enforcement operations in the past few days – and indeed just within the past few hours – the Criminal Division has now criminally charged more than 50 people who allegedly committed fraud to obtain money from the PPP. 

This impressive number is in addition to a number of other cases that have been brought by U.S. Attorneys’ Offices around the country, with the Criminal Division’s help and support. Those offices have been an important part of the Department’s efforts as well.

Joining me on stage today to make this important announcement are a number of key partners who have been integral to this effort, including representatives from the FBI, the SBA’s Office of Inspector General, the IRS, the U.S. Postal Inspection Service, and the Offices of Inspectors General from the FDIC and the FHFA.  You will hear from them shortly.

Before that, let me take a moment to briefly mention some of the individuals charged in recent days that have taken us past this important milestone of 50 charged defendants.

Yesterday, our law enforcement partners arrested defendant Tiara Walker in Miami, who is alleged to have been part of a criminal ring that attempted to steal $24 million of PPP funds.  Another member of that ring, defendant Joshua Bellamy, was arrested this morning in Miami.

Just a few hours ago, charges were unsealed against seven other individuals alleged to have been part of a criminal ring attempting to steal and launder hundreds of thousands of dollars in PPP funds. 

Separately, law enforcement partners this morning arrested defendants Larry Jordan and Sutukh El in Buffalo, New York, who are alleged to have tried to steal $7.6 million of PPP funds.  

Now it is of course important to remember in announcing these charges that they are merely allegations; each charged defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. 

As I mentioned, these charges, in conjunction with charges previously brought by the Criminal Division’s Fraud Section since early May of this year, bring the total number of defendants charged with PPP-related fraud by the Criminal Division to 57.

The numbers are revealing. 

The cases we have charged involve attempts to steal over $175 million from the PPP.

And actual losses to the federal government of over $70 million. 

Through our efforts to date, we have been able to recover or freeze over $30 million, and we expect to add to that total in the future as we seize additional funds and liquidate assets purchased with PPP funds.

Our cases are diverse in size and scope, involving fraud ranging from loan requests for just $30,000 to approximately $24 million. 

And they span the country: we have brought charges in no fewer than 19 federal judicial districts.  These are not simple or easy cases to investigate and charge. 

They are white-collar matters.  They often involve obtaining and then piecing together often-complex financial, payroll, and tax records for individuals and companies, and sifting through other evidence. 

This makes it all the more remarkable that the Department has been able to bring so many cases so quickly and is a testament to the hard work and dedication of our attorneys, agents, and partners across the U.S. government. 

I would like to take a moment to explain the two general categories into which you’ll see our PPP cases fall.

This first category involves individuals – or small groups – who lied about having legitimate businesses, or who claimed they needed PPP money for things like paying their workers, but instead used it to buy splashy luxury items for themselves. 

As we allege in our charging documents, these defendants used lies to obtain millions of dollars in PPP funds and then spent those funds on things like luxury cars, homes, renovations, jewelry — and even adult entertainment and gambling in Las Vegas. 

The second category of cases that I’d like to focus on are the coordinated criminal rings that have engaged in systematic, organized conduct to loot the PPP. 

The involvement of these rings is unsurprising, but it is particularly troubling, and we will be focusing on these types of cases going forward.

As an example, we recently filed charges in Cleveland and Miami against 11 individuals, including a professional athlete and his business manager. 

This group of defendants allegedly worked in concert to try to obtain a total of $24 million in PPP funds using falsified records and fraudulent application materials. 

As an example of the teamwork involved here, to unravel this case, the Fraud Section partnered with (1) the FBI; (2) the Internal Revenue Service, Office of Criminal Investigations; (3) the Small Business Administration’s Office of the Inspector General; and (4) the FDIC’s Office of the Inspector General, as well as the U.S. Attorneys’ Offices in the Northern District of Ohio and the Southern District of Florida. 

As I mentioned, these law enforcement organizations and our U.S. Attorneys have been critical partners to the Criminal Division as it leads this effort, and we expect our joint work to continue going forward.

As you can see from our charging documents, these cases are of all different types and sizes.  

While we’ve taken aim at a wide variety of schemes in these cases, there are a few common threads that I’d like to highlight today.

First are the brazen, bold, and simply false representations we allege the defendants made in their applications for PPP funds. 

These alleged misrepresentations typically centered on the nature and existence of the businesses the defendants were claiming to need funds for and included misrepresentations about things like the number of employees they had, their average monthly revenue and payroll figures, and the applicants’ criminal backgrounds. 

And in many cases these defendants didn’t stop at simply making false statements, but rather tried to back up their alleged lies with fake documents, like falsified tax records, dummy payroll and revenue records, and in some cases even stolen personal information from unsuspecting third parties. 

Another common thread among these cases is the defendants’ use of their stolen PPP funds for entirely illegitimate purposes. 

We allege that many of these defendants took the relief money offered by the PPP and spent it on things having absolutely nothing to do with relief — often on luxury items for themselves, their families, and their friends such as cars, jewelry, travel, and other personal expenses. 

For example, in late July, we charged David Hines of Miami with fraudulently obtaining almost $4 million in PPP funds and using them, in part, to buy an exotic, $320,000 Lamborghini sports car.

And in August, we charged five defendants with fraudulently obtaining millions in PPP funds and using them, in part, to buy a luxury Mercedes, a Range Rover, and $125,000 in jewelry.

PPP funds were intended to help keep American businesses afloat.

They were intended to help ordinary, everyday Americans pay their bills and put food on the table. 

I can assure you they were not intended to help support fraudsters’ dreams of owning Lamborghinis, Rolls Royces, Range Rovers, or diamond jewelry.

A third key point to remember is an obvious one:

The money these defendants stole was taxpayer money. 

Every dollar received was a dollar drawn from the American people’s account. 

Even worse, every dollar they took was a dollar set aside to help our fellow Americans weather one of the worst national crises in recent history. 

And as we allege, these defendants tried to steal it for themselves.

And a fourth key point is that in each and every one of these cases, the success of the defendant’s fraudulent loan application meant that there were fewer funds available at that time in the PPP for legitimate businesses that were in genuine need of support. 

You don’t need to look very far in the press to see reports of the unbelievable pace at which PPP loans were snapped up. 

The program was so popular, the initial tranche of funds was quickly exhausted and Congress had to re-authorize the program, making billions more dollars available in additional loan funds.

This program was popular because American businesses and American workers needed the money to pay their bills.   And they needed that help quickly.

But these defendants decided that they wanted the money to line their pockets instead. 

By doing so, they prevented or delayed other businesses with legitimate needs from accessing these critical funds.

These cases are tremendously important for many reasons, especially during this period of national emergency. 

And there are some critical aspects of our investigation and prosecution of these cases which bear highlighting.

First is the unparalleled speed with which these cases have been investigated and prosecuted. 

The PPP hasn’t even been in existence for six months, yet we are here today announcing that more than 50 defendants have been charged. 

Our efforts began the very same day the SBA launched the PPP, with the formal creation of a team in the Fraud Section under the leadership of Fraud Section Chief Rob Zink devoted to PPP-related investigations and prosecutions. 

Our prosecutors, and the group of agencies represented on this stage, moved quickly to establish law enforcement partnerships, obtain critical data and evidence, and take concrete and affirmative steps to identify fraud committed on the PPP. 

Just one month later the Division brought the very first series of PPP-related fraud cases. 

This pace is, to our knowledge, without precedent in the history of the Department’s white-collar criminal enforcement efforts. 

Second, I’d like to highlight the Division’s use of data analytics to develop these cases so quickly.

As I mentioned before, there were over 5.2 million PPP loans made.

To bring these cases as quickly as we have, and to sort through the volume of loans made by the SBA, the Fraud Section and its partners deployed the first-in-class data analytics capabilities they have developed and employed to great effect in other criminal investigative areas, such as health care fraud and market manipulation. 

The Fraud Section has truly become a market leader in its use and development of these techniques, and here again we see their potential. 

Another key component of our ability to bring these cases so quickly has been our use of public-private partnerships to maximize our awareness and visibility of suspicious conduct and our collection of critical evidence. 

Many financial institutions have been strong partners in assisting us in detecting and investigating potentially fraudulent activity in connection with the PPP and other government aid programs and safeguarding taxpayer dollars by freezing funds and accounts.  

I would like to thank them for their help and support.

Finally, I would like to highlight the whole-of-government approach that we have employed in bringing these cases.  This is not only reflected by the agencies represented here before you today, but by our U.S. Attorney partners and others, who have enabled the nationwide scope of these efforts. 

I’ll note, in particular, our partners here on stage, who you will hear from in a minute. 

It would not have been possible to stand up this program so quickly, or to investigate and charge so many cases so fast, without their assistance.

This has truly been a team effort, and so I want to thank all of you and your respective teams for everything you have done to achieve these results on this incredibly fast timetable for the American people.

Now, these 50-plus cases are significant in and of themselves, but you should also know that there is more to come. 

Our work is ongoing.  We are not done yet. 

The agencies represented behind me and prosecutors here in the Criminal Division are working tirelessly to help during this time of national emergency by bringing accountability to those who would victimize the American people. 

And I should point out that these cases are not brought at a time when the Criminal Division’s Fraud Section prosecutors are sitting idle. 

As you may know, the Fraud Section has charged a record number of individual and corporate criminal cases and resolved a record number of corporate cases over the past three years. 

We’ve been incredibly busy policing the markets and holding individual and corporate wrongdoers accountable for their misconduct. 

Just this year – despite the challenges COVID-19 has posed to our investigations – the Fraud Section alone has announced criminal charges against more than 125 individual defendants. 

With respect to corporate crime, the Fraud Section this year has resolved seven corporate criminal cases and imposed over $940 million in corporate criminal monetary payments here in the U.S., with worldwide monetary penalties, restitution, and disgorgement totaling over $4.5 billion. 

And there will be much more to come between now and year’s end, both with respect to individual and corporate criminal accountability. 

So again, my thanks to everyone here today for their work.

I would also like to thank, in particular, Attorney General Barr for his leadership on this issue.  He quickly recognized the significant potential for COVID-related fraud, and he directed us to bring the Department’s resources to bear to help the American people.  We have done so. 

Today is a significant milestone.  But we have much more to do, and we are fortunate to have such a dedicated and talented team in place.

And let me just end by with what I hope will be an unmistakable message to those who might consider abusing programs like the PPP that provide critical lifelines for American business and American workers:

You will be identified.  You will be held accountable.  You will face the severest of consequences for trying to exploit your fellow Americans’ suffering for your own personal gain. 

The Department of Justice, with our partners across government, will continue to use every tool available to us to ensure the integrity of the relief provided by the government to this unprecedented national emergency.  The American people deserve nothing less. 

I’d now like to hand it over to Rob Zink, Acting Deputy Assistant Attorney General overseeing the Fraud Section, and the leader of our work in this area, to say a few words.

Source: United States Department of Justice (National Center for Disaster Fraud)

Tampa, FL – United States Attorney Roger B. Handberg announces that Miles Partnership, LLC (Miles), a travel and tourism consulting company headquartered in Sarasota, Florida, has agreed to a civil settlement of $2,281,950 to resolve allegations that Miles improperly obtained and received forgiveness of a loan under the Paycheck Protection Program (PPP).

Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized these businesses to seek forgiveness of the loans if they spent the loan funds on eligible expenses. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications. The PPP was administered by the U.S. Small Business Administration (SBA). Under the PPP rules and regulations then in effect, companies that were required to file a registration statement under the Foreign Agents Registration Act (FARA) were not eligible for a PPP loan. 

GNGH2, Inc. filed a qui tam complaint in the Middle District of Florida alleging that Miles improperly obtained a second draw PPP loan for $2 million. According to the allegations in the complaint, Miles was required to file a registration statement under FARA due to its work with various foreign tourism boards. The United States investigated GNGH2’s allegations with the cooperation of Miles. The civil settlement will conclude the lawsuit filed by GNGH2 and GNGH2 will receive $207,450 as a share in the recovery.

“The United States Attorney’s Office is committed to investigating and holding responsible those applicants who improperly obtained loans under the PPP program,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “We will continue to seek civil redress and, where appropriate, criminally prosecute those individuals and entities that obtained PPP loans to which they were not entitled.”

SBA’s General Counsel Therese Meers stated, “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, other federal law enforcement agencies, as well as private individuals who uncover borrower misconduct to recover the lending program’s damages as well as penalties.”

The investigation was handled by Assistant U.S. Attorney Christopher J. Emden, with assistance from the Small Business Administration – Office of General Counsel. 

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Source: United States Department of Justice (National Center for Disaster Fraud)

Tampa, Florida – United States Attorney Roger B. Handberg announces the return of an indictment charging Jeanty Cherilus (54, Lakeland) with five counts of wire fraud. Cherilus faces a maximum penalty of 20 years in federal prison on each count. The indictment also notifies Cherilus that the United States is seeking an order of forfeiture in the amount of $370,000, the proceeds of the charged criminal conduct.

According to the indictment, Cherilus was an owner of Natransusa Corporation (NATRANS), a business that advertised to provide automobile salvage and transportation services. Cherilus, through NATRANS, submitted applications to obtain federal Paycheck Protection Program (PPP) loans and an Economic Injury Disaster Loan (EIDL) to which Cherilus and NATRANS were not entitled. The loan applications had materially false and fraudulent representations, including an inflated number of employees and average payroll, and certifications that the loan proceeds would be used for business-related purposes. Cherilus also included fraudulent supporting documentation to induce the Small Business Administration and an approved lender to fund the loans. After receiving the PPP and EIDL funds, Cherilus used them for purposes other than what was approved by the terms of the loans and for his own person enrichment.

An indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

This case was investigated by the U.S. Agency for International Development – Office of Inspector General and the Pandemic Response Accountability Committee Task Force. It will be prosecuted by Assistant United States Attorney Greg Pizzo.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit Justice.gov/Coronavirus and Justice.gov/Coronavirus/CombatingFraud. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form.

Source: United States Department of Justice (National Center for Disaster Fraud)

Used stolen identity information of thousands of U.S. residents to steal unemployment benefits, tax refunds, and small business loans