On May 17, U.S. Attorney General Merrick Garland announced the establishment of the COVID-19 Fraud Enforcement Task Force. The Task Force aims to “marshal the resources of the Department of Justice in partnership with agencies across government to enhance enforcement efforts against COVID-19 related fraud.”
The press release explains how the U.S. government issued monetary aid in the wake of the COVID-19 pandemic and that the U.S. Department of Justice (DOJ) has been working to uncover COVID fraud schemes and hold “bad actors accountable.” The newly announced Task Force will continue the enforcement of COVID relief fraud and “work in close coordination with other efforts underway throughout the federal government.”
The Task Force “will work closely with the [DOJ’s] interagency partners to share information and insights gained from prior enforcement experience, in order to reduce the potential threat to the American people and COVID-19 relief, and will help agencies tasked with administering these significant relief programs increase their fraud prevention efforts by providing any appropriate information law enforcement learns about fraud trends and illicit tactics.” According to the press release, it will also bolster efforts to investigate and prosecute the most culpable domestic and international criminals, prevent the exploitation of government assistance for personal and financial gain, and recover stolen funds.”
The Task Force includes several DOJ entities, including the Criminal and Civil Divisions, the Executive Office for United States Attorneys, and the FBI. Other interagency partners have been invited to the Task Force: these include the Department of Labor, Department of the Treasury, Department of Homeland Security, Small Business Administration, Special Inspector General for Pandemic Relief, and the Pandemic Response Accountability Committee.
In a memo, Attorney General Garland said that the DOJ “will use every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud. We look forward to working with our federal government colleagues to bring to justice those who seek to profit unlawfully from the pandemic.”
The press release states that the DOJ “needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at: https://www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form.” According to the press release, “Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.”
The pandemic and subsequent pandemic relief allocated by the U.S. government has already prompted numerous actions against individuals attempting to take advantage of those programs. Just this month, the DOJ announced two enforcement actions involving individuals fraudulently obtaining money from Paycheck Protection Program (PPP) loans. PPP was enacted with the passage of the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program aims to help small businesses in need and issue forgivable loans. However, the DOJ is finding that individuals have tried to take advantage of PPP loans. On May 6, the DOJ announced actions against a New York City man who filed “eight falsified loan applications to numerous lenders” on behalf of five of his businesses. The individual, Gregory Blotnick, filed false documentation and information about employees on the loan applications. Blotnick was able to receive nearly $4 million from PPP and is now facing “eight counts of wire fraud and six counts of money laundering.”
Similarly, on May 12, the DOJ announced that an individual from Miami has been sentenced after pleading guilty to one count of wire fraud. The press release states that David Hines submitted multiple PP loan applications “claiming to have had dozens of employees and millions of dollars in monthly payroll.” Hines also helped others submit fraudulent PPP loan applications. The DOJ states that Hines bought a 2020 Lamborghini Huracan for $318,000 with the money from the loans. “As part of the sentence, the court ordered Hines to forfeit the $3.4 million in fraudulent loan proceeds that law enforcement seized,” as well as the Lamborghini. Read more COVID-19 fraud news from the DOJ here.
These recent cases demonstrate a blatant disregard for people and businesses that are actually struggling to stay afloat during the pandemic — hopefully, the new Task Force will continue to crack down on PPP loan fraud and preserve the integrity of the program.
In the past, the DOJ has acknowledged that whistleblowers play a major role in uncovering fraud and corruption. In the 2020 fiscal year, the DOJ reported that “$2.2 billion was recovered through False Claims Act (FCA) settlements and judgements.” Additionally, $1.6 billion of that total was recovered because of qui tam, or whistleblower cases. “Whistleblowers with insider information are critical to identifying and pursuing new and evolving fraud schemes that might otherwise remain undetected,” said Acting Assistant Attorney General Jeffrey Clark. “These individuals often make substantial sacrifices to bring these schemes to light, and our efforts to protect taxpayer funds continue to benefit from their actions.”
On February 4, 2021, Representatives Jackie Speier (D-CA) and Jamie Raskin (D-MD) and Senator Elizabeth Warren (D-MA) introduced the COVID-19 Whistleblower Protection Act to Congress. The Act aims to protect whistleblowers who report fraud and misuse of COVID-19 relief funds and “strengthens anti-retaliation protections for employees and former employees of recipients of COVID-19 relief funds,” according to previous WNN reporting. Under the Act, “[w]histleblowers will be able to file anti-retaliation claims confidentially, have access to jury trials in federal court, and obtain compensatory and exemplary damages.”
Whistleblowers are clearly an essential way for the U.S. government to be alerted of fraud and corruption; their disclosures are vital, especially in the age of COVID-19 relief. Hopefully, the new Task Force will further the DOJ’s efforts to root out fraud and protect the American public.
The message from AG Garland is clear: all hands are on deck to combat COVID-19 fraud, and the authorities need help. Whistleblowers have already had a tremendous impact during this pandemic, and they are invaluable in prosecuting financial fraud. It’s also worth noting that whistleblower advocates urge individuals to contact an experienced whistleblower attorney to ensure full protection and award eligibility.