Fraudsters got ahold of almost $100 billion in pandemic relief funds, according to the Secret Service. Federal dollars allocated in the Coronavirus Aid, Relief and Economic Security (CARES) Act have “attracted the attention of individuals and organized criminal networks worldwide,” the agency said in a Tuesday press release.
The stolen funds represent three percent of the $3.4 trillion dollars dispersed to the American public. “The Secret Service currently has more than 900 active criminal investigations into fraud specific to pandemic-related relief funds. That’s a combination of pandemic benefits and all the other benefits programs too,” said Assistant Special Agent in Charge Roy Dotson, who is coordinating multiple ongoing Secret Service investigations examining fraudulent use of pandemic relief funds. “Every state has been hit, some harder than others. The Secret Service is hitting the ground running, trying to recover everything we can, including funds stolen from both federal and state programs.”
To date, the Secret Service’s investigation has recovered more than $1.2 billion in fraudulent unemployment insurance and Small Business Association loan fraud. Another $2.3 billion in fraudulently obtained funds have been returned through reversals of payments by financial institutions. Dotson is also leading a cryptocurrency investigation into unsuspecting victims being used “as money mules to move stolen funds from one account to another within the cyber arena.”
The majority of the fraudulent payments came in the form of unemployment fraud, the Secret Service said. According to the Department of Labor, $87 billion in unemployment benefits may have been disbursed improperly. Some examples of people prosecuted for relief fund fraud include a Philadelphia attorney who applied for for two Paycheck Protection Program (PPP) loans and two Economic Injury Disaster Loans (EIDL) on behalf of his law firm, but prosecutors allege he made “materially false representations by inflating the [firm’s] payroll.” Another case involves a Louisiana woman sentenced to 18 months for wire fraud, who confessed she had “devised a scheme to defraud the U.S. Small Business Administration by filing numerous false and fraudulent applications for EIDL funds,” the Justice Department said.
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