April 24, 2020
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday — Department of Justice Prepares for Coronavirus Stimulus Fraud
On April 21, 2020 the U.S. Department of Justice issued a statement warning about the potential for economic stimulus fraud schemes. According to the statement, U.S. law enforcement personnel have already received numerous reports of individuals and businesses engaging in a wide range of fraudulent and criminal behavior.
“It’s too early in the process for us to be able to say that we’ve seen actual evidence of stimulus fraud, because the programs are so new,” says Brian Benczkowski, the assistant attorney general in charge of the criminal division of the U.S. Department of Justice. “But we know from past history, whenever the government makes a large amount of money available to help individuals and businesses, the fraudsters will come out of the woodwork and seek to get access to that money. So we are preparing vigorously for what we absolutely know is coming.”
Although Paycheck Protection Program loan fraud has not yet been confirmed, it is only a matter of time. The Department of Justice is already pursuing reports of small businesses and non-profits attempting to sell fake COVID-19 vaccines and non-existent personal protection equipment.
The National Center for Disaster Fraud (NCDF), which was established in 2005 in the wake of Hurricane Katrina, is preparing for the inevitable influx of PPP fraud. In connection with Hurricane Katrina, NCDF prosecutors charged over 1,300 disaster fraud cases in 49 different districts. Already, NCDF has received more than 9,000 tips related to coronavirus fraud schemes.
In response, federal investigators have begun warning SBA lenders that small businesses could make false statements on their loan applications, inflate payroll numbers to get bigger PPP loans, or lie about how PPP money is being used.
“The unfortunate fact is the only limitation here is the limitation on the creativity of these fraudsters to come up with ways to use the situation that we all find ourselves in to separate individuals, businesses and the government from lots of money,” says Benczkowski.
Participating SBA lenders are encouraged to report fraud, waste, abuse, mismanagement, or misconduct involving SBA programs to the SBA OIG hotline or online at: https://sbax.sba.gov/oigcss/.