Prosecution Rising in Coronavirus Relief Fraud Cases

ppp fraud

It has been over a year since Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which authorized forgivable small business loans through the Payroll Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. These programs provided much-needed economic assistance to countless small businesses by providing funds to cover payroll expenses, overhead, and to hire back employees who lost their jobs during the shutdown. However, some people took advantage of this program, and PPP fraud became a widespread issue.

After the SBA Office of the Inspector General (OIG) announced that there were “strong indicators of widespread potential fraud” in applications for COVID-19 relief, the Department of Justice and other federal agencies have brought criminal charges against hundreds of individuals accused of committing PPP fraud.

A Vast Number of Potential Cases of CARES Act Fraud

According to the Project On Government Oversight (POGO), there are a vast number of potentially fraudulent loans that were approved through these programs. The DOJ has accused numerous defendants of using PPP and EIDL funds for unlawful purposes such as purchasing private planes, sports cars, and taking expensive trips to Las Vegas casinos as well as spending for personal expenses.

According to a review of court filings through April 21, 2021 individuals have been accused and charged with:

  • Falsifying payroll documentation to justify a loan or a larger loan than they were eligible for;
  • Creating fake tax documents used to verify details in loan applications;
  • Creating phony or defunct companies to apply for a loan;
  • Using stolen identities on loan applications;
  • Falsifying business ownership documents;

Examples of CARES Act Fraud Cases

Examples of prosecution for PPP fraud include:

  • Dinesh Sah, a Dallas-area man who obtained $17.3 million by submitting at least 15 fraudulent applications on behalf of 10 companies, two of which were not in good standing before the PPP began. Sah used the funds to purchase a Bentley convertible and multiple homes, among other things.
  • Amir Aqeel and others in the Houston area who were involved in a scheme that used fake tax and payroll documentation to net applicants over $16 million.
  • Didier Kindambu, who obtained over $2.5 million in loans using fraudulent payroll documentation and used the funds to purchase a luxury car and a private plane.
  • Joshua Edwards, the vice president of ASLAN International Ministry, who has been accused of submitting fake payroll, tax, and financial documentation to support applications for an $8.4 million loan that he used to purchase a mansion in Disney World’s Golden Oak gated community.
  • Joel Greenberg, a former tax collector, who allegedly bribed an SBA insider to obtain over $430,000 in EIDL funds.

Many CARES Act fraud cases involve people who submitted false information in applications, falsified a business’ number of employees and payroll costs, submitted multiple applications to different lenders, or used business funds for personal use and on lavish expenditures.

Most people charged with CARES Act fraud are facing multiple allegations that include bank fraud, wire fraud, fraud involving major disaster funds, identity theft, Social Security fraud, making false claims, money laundering, and conspiracy.

Coordinated Efforts Among Law Enforcement

Because of the increase in the number of cases of ppp fraud, the FBI, Secret Service, Homeland Security, and offices of inspectors general are coordinating enforcement efforts with the Department of Justice. If the DOJ is not interested in pursuing a particular case, the agencies do not pursue their investigation.

In addition, banks and other lenders have been filing more reports of suspicious activity related to PPP and EIDL with the Treasury Department’s Financial Crimes Enforcement Network.

Investigators and prosecutors are working quickly to investigate and prosecute these cases. While fraud cases often take several years to investigate, the DOJ is moving forward with CARES Act cases in a matter of months.

However, this also means that there are many cases the DOJ is deciding not to prosecute—especially cases involving smaller dollar-amount loans, and cases that come up in busier U.S. attorney’s offices throughout the country.

Law enforcement is also pursuing civil remedies under the False Claims Act, where the evidentiary burden is lower than in a criminal case.

Hope Lefeber: Federal Financial Crime Defense

If you believe you are under investigation or have been charged with fraud or another crime arising from an application for relief under the CARES Act, you need to act quickly to hire an experienced federal criminal defense attorney.

New York City federal criminal defense attorney Hope Lefeber has been defending people accused of federal financial crimes for more than 30 years. She began her career as an enforcement attorney with the United States Securities and Exchange Commission (SEC), where she learned first-hand how the government prepares and prosecutes federal fraud cases. Today, she uses that experience to defend people who have been accused of financial crimes in federal court.

Ms. Lefeber has extensive experience representing people who have been accused of financial crimes in federal court and has defended executives at Fortune 500 Companies, as well as lawyers, doctors, medical professionals, professors, students, and businessmen and women who have been under investigation or charged with financial crimes.

If you are under investigation or have been charged with a financial crime in federal court, Hope Lefeber should be your first call. Contact Hope Lefeber today to schedule a confidential consultation to discuss your case and learn how Ms. Lefeber can help.

Categories: Fraud