Department of Justice Crackdown Unearths $231 Million in Stolen Covid Relief Funds
The pandemic brought a lot of organizations together in relief efforts that involved raising funds for vulnerable populations during the crisis, but such a large amount of money changing hands also attracted the attention of scammers that plagued the world apart from the virus. In order to unearth the true extent of financial damage caused by scams orchestrated during and after the pandemic, federal law enforcement authorities have launched a nationwide crackdown on COVID-19-related fraud, resulting in charges against hundreds of individuals and the recovery of over $231 million in stolen funds. The Justice Department's initiative targeted schemes totaling more than $830 million. Over 60 defendants were linked to violent crime and transnational criminal networks, highlighting the severity and complexity of the cases.
Deputy Attorney General Lisa Monaco revealed alarming instances of abuse, including a Wisconsin street gang's exploitation of unemployment fraud proceeds for illicit activities such as soliciting murder for hire and purchasing firearms and drugs. Another case involved an international fraud and money laundering scheme with ties to Nigeria, demonstrating the global reach of Covid-related fraud operations.
Many of the accused individuals allegedly defrauded relief programs like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) intended to support struggling small businesses during the pandemic. The rampant misuse of these programs prompted widespread concern, with estimates suggesting that fraudsters may have siphoned off more than $200 billion, representing 17% of the total $1.2 trillion disbursed.
The nationwide sweep involved three strike teams in California, Maryland, and South Florida, collaborating with 50 U.S. attorneys and numerous law enforcement partners. Additional strike teams in Colorado and New Jersey were established to recover stolen pandemic relief funds.
Deputy Attorney General Monaco underscored the DOJ's commitment to pursuing convictions and reclaiming misappropriated funds. "We will seek judicial orders requiring convicted defendants to pay back every stolen dollar and we have 20 years to realize those recoveries," she said.
Before the current crackdown, attorney General Merrick Garland established a task force in May 2021 specifically targeting Covid relief fraudsters. The task force's diligent efforts have resulted in criminal charges against over 3,000 individuals and the seizure of more than $1.4 billion in stolen relief funds to date.
From fake cures on offer to phishing schemes, scammers have capitalized on the global health crisis to prey on vulnerable individuals. In the United States, these COVID-19 related scams have cost Americans over $879 million, causing financial losses and emotional distress.
According to the latest federal data, Americans lodged over 269,000 fraud complaints between the commencement of 2020 and October 14, 2021. Among these complaints, consumers frequently mentioned terms related to Covid, stimulus, or associated topics. Moreover, the median loss for the typical victim amounted to $392 across various schemes aimed at online shoppers, travelers, and other groups.
While the Department of Labor (DOL) and federal law enforcement agencies, such as the Department of Justice, are actively pursuing efforts to recoup these funds, recovery rates for both fraudulent and nonfraudulent overpayments occurring during the pandemic remain low.