The Internal Revenue Service’s Criminal Investigation unit investigated nearly 1,000 tax and money laundering cases related to COVID-19 relief, with the alleged fraud totaling $3.2 billion.
The 975 cases include a broad range of criminal activity, including fraudulently obtained loans, credits, and payments meant for American workers, families, and small businesses. Of those cases, 458 individuals have been indicted for their alleged COVID-related crimes, and 236 individuals have been sentenced to an average of 37 months in federal prison.
The IRS-CI division announced the statistics Thursday to mark the three-year anniversary of passage of the CARES Act of 2000, which included a number of popular COVID relief programs, including the Paycheck Protection Program and the Employee Retention Credit, which have been exploited by fraudsters.
Over the three years, CI said it has achieved a nearly 100% conviction rate in prosecuted cases.
“IRS-CI is proud to lead the fight against COVID-related fraud,” said IRS-CI Chief Jim Lee in a statement. “While COVID illnesses no longer lead the nightly news, the effects from the disease and the fraud perpetrated on the various COVID-related relief programs have not left our sights. Any criminal looking to exploit the CARES Act should know that there are serious consequences for stealing from hard-working Americans, and it’s only a matter of time before they are held to account.”
IRS-CI cited some examples of recent cases including a man in Irvine, California, who was sentenced last month to four and a half years in prison for fraudulently obtaining $5 million in PPP loans he spent on luxury sports cars, including Ferrari, Lamborghini, and Bentley vehicles. He claimed to be operating four companies in Newport Beach, California, but none were actually operating. He falsified the number of employees, changed bank account records to show inflated balances, and filed bogus quarterly federal tax return forms. He also used someone else’s name, Social Security number, and signature to fraudulently apply for one of the loans.
A woman in New York was sentenced to 45 months in prison in January for her role in submitting $9.2 million in fraudulent, forgivable PPP loan applications under the CARES Act. She recruited people to apply for the loans in exchange for kickbacks from their PPP loan proceeds, using aliases to send the personal information of her recruits to other co-conspirators, who used the information to prepare fraudulent PPP loan applications that included falsified bank statements and payroll tax forms and misrepresented the borrowing entities’ payroll amounts and number of employees. She even participated in the scheme while on pretrial release for separate federal fraud-related offenses in New Jersey.
The announcement comes as Congress has been holding hearings on pandemic-related fraud schemes, with estimates of the extent of the fraud ranging up to hundreds of billions of dollars.