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COVID-19 Fraud Schemes Popping Up Weekly for IRS CI

Posted on Nov. 19, 2021

The IRS Criminal Investigation division investigated 384 cases of fraud related to COVID-19 and had 206 indictments in fiscal 2021, according to an IRS official.

“There isn’t a week that goes by these days where I’m not seeing someone being charged or indicted related to a COVID fraud crime,” CI Chief Jim Lee said on a November 18 press call for the release of the division’s annual report. “[We have been] working with the U.S. attorney's office on making timely prosecutions.”

The report says pandemic-related frauds were one of the division’s major areas of focus for fiscal 2021.

“Unfortunately, criminals haven’t stopped committing crimes just because there is a national health emergency,” the report says. “Some criminals pounce on the opportunity to take advantage of others as well as government programs designed to help the American people in times of crisis.”

Pandemic-related fraud is a large umbrella, according to Lee. It includes economic impact payments, Paycheck Protection Program loans, economic injury disaster loans, refundable payroll tax credits from the Coronavirus Aid, Relief, and Economic Security Act, and advance child tax credit payments that were made to taxpayers starting in August.

“The dominant space for COVID fraud is PPP loans,” Lee said. “We have hundreds of investigations open. . . . We recently indicted an individual in Orange County on four counts of bank fraud, four counts of wire fraud, six counts of money laundering — all to defraud the Paycheck Protection Program.”

The report highlighted several examples of PPP loan fraud investigations, including a scheme in which a Florida man fraudulently obtained nearly $4 million in PPP loans through applications to an insured financial institution on behalf of various companies. The man used the funds to purchase a Lamborghini Huracan sports car. He pleaded guilty to fraud charges in February. 

Another case involved a Texas man who received over $17 million in PPP loan funds and used the money to purchase multiple homes, pay off the mortgages on properties in California, and buy a fleet of luxury cars. He was sentenced to 135 months in prison in July.

With investigations ongoing, Lee told listeners to be on the lookout for more announcements regarding pandemic fraud cases.

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