DOJ COVID-19 Fraud Enforcement Task Force Releases Report on Combating Fraud

The US Department of Justice’s (DOJ’s) COVID-19 Fraud Enforcement Task Force (CFETF) released a report on April 9 summarizing its efforts to identify, investigate, and prosecute fraud related to COVID-19 relief programs. DOJ’s press release announcing the report also called upon Congress to extend the statute of limitations for COVID-related fraud and promote continued coordination across federal agencies, suggesting that pandemic enforcement efforts, including with respect to the Paycheck Protection Program (PPP), will continue to remain a top priority for DOJ.

The CFETF has charged more than 3,500 defendants with federal crimes, recovered more than $1.4 billion in fraudulently obtained government funds, and produced more than 400 civil settlements and judgments. [1]

The CFETF, originally created in May 2021, is a partnership between DOJ and over a dozen other federal agencies and Offices of Inspectors General (OIGs). Over the past three years, it has investigated and prosecuted all types of pandemic fraud, including unemployment insurance, PPP, Economic Injury Disaster Loans (EIDL), romance fraud schemes, and business email compromise schemes. [2] Despite its successes at uncovering and punishing fraud, the CFETF warns that shrinking budgets and resource allocation, in conjunction with rapidly approaching outer limits of statutes of limitations for certain federal crimes, may thwart future prosecutions and recovery efforts. [3]

DOJ’S PANDEMIC FRAUD ENFORCEMENT EFFORTS

To assist DOJ’s investigation and prosecution efforts, DOJ created a director of COVID-19 fraud enforcement role and appointed two deputy directors of COVID-19 fraud enforcement, a lead prosecutor for the National Unemployment Insurance Task Force, a national COVID-19 Fraud forfeiture coordinator, and COVID-19 fraud coordinators in each US Attorney’s Office. In 2023, DOJ created 50 term assistant US attorney positions dedicated to COVID-19 fraud enforcement. DOJ also created five COVID-19 Fraud Enforcement Strike Forces to pursue fraud cases involving “large amounts of loss, overseas actors, violent offenders, and perpetrators who defrauded multiple pandemic-era aid programs.” [4]

These resource commitments and efforts have led to nearly 2,400 pandemic-related cases against roughly 3,500 defendants in connection with more than $2.1 billion in fraud. [5] Over 2,000 defendants pleaded guilty or were convicted at trial as of December 31, 2023, and US Attorney Offices continue to investigate additional charges of pandemic fraud. This has led to over $1 billion in forfeiture and $882 million in restitution orders to government and private victims. [6]

As of April 1, 2024, US Attorney Offices also opened over 1,200 civil fraud investigations, including more than 600 qui tam cases, in connection with alleged pandemic fraud. [7] This has led to over 400 civil False Claims Act judgments and settlements totaling more than $100 million. [8] US Attorney Offices have also partnered with the DOJ Civil Division to use data analytics to help detect alleged fraud and produce investigative leads in connection with claims paid by the Health Resources and Services Administration’s COVID-19 Uninsured Program as well as PPP and EIDL loans. [9]

The Civil Division’s Consumer Protection Branch has also prosecuted individuals distributing fake COVID-19 treatments and cures and faulty personal protective equipment, individuals who tampered with COVID vaccines, and others who sold fraudulent products. [10] Some of these individuals were charged under the COVID-19 Consumer Protection Act, which was enacted in December 2020. [11]

DOJ’s Tax Division has prosecuted individuals who abused the Employee Retention Credit (ERC). Tax Division attorneys are assigned to each COVID-19 strike force and Tax Division attorneys have helped train Internal Revenue Service (IRS) staff regarding ERC–related crimes. [12] Finally, the Antitrust Division has led the DOJ’s Procurement Collusion Strike Force to combat anti-competitive activity related to pandemic fraud. [13]

Through the Procurement Collusion Strike Force, the Antitrust Division also developed analytical tools to identify federal government contractors who pose an increased risk of misusing pandemic relief funding. [14]It plans to share this information with other law enforcement agencies in 2024 to coordinate investigative efforts on high-risk contractors. [15]

TASK FORCES

In late 2020, the Office of the Deputy Attorney General created the National Unemployment Insurance Fraud Task Force (NUIFTF). [16] The NUIFTF has since expanded to focus on all types of Coronavirus Aid, Relief, and Economic Security Act (CARES Act) fraud and includes members from a variety of federal agencies, including the US Department of Labor OIG, Federal Bureau of Investigation (FBI), Homeland Security Investigations, and Small Business Administration OIG, among others. [17] The NUIFTF identifies “the largest perpetrators of COVID-19 fraud” and provides investigative leads for agents and prosecutors. [18] It serves as a central repository “where searches of multiple pandemic relief data sets can be conducted, rather than having to pursue data that was previously siloed within various state and federal agencies.” [19] It has generated more than 100 leads for investigative partners in connection with over $3.3 billion in suspected fraud. [20]

The Pandemic Response Accountability Committee (PRAC) helps promote transparency and oversight of the federal government’s COVID-19 pandemic response by coordinating with 20 OIGs to oversee more than $5 million in COVID-19 spending, identify risks, and detect fraud, waste, abuse, and mismanagement of relief funds. [21] Its Fraud Task Force has overseen 127 investigations charging over 60 individuals and resulted in 44 years of collective prison time and $11 million in restitution. [22] Its Pandemic Analytics Center of Excellence has also supported other law enforcement agencies through data management, analytics, and lead generation on more than 700 investigations representing $1.87 billion in losses. [23] PRAC also recruited and hired 28 Data Science Fellows to help OIGs conduct data analytics in support of their investigative efforts. [24]

OTHER INVESTIGATIVE AGENCIES

In addition to DOJ, a host of other federal agencies have investigated and prosecuted pandemic-related fraud.

• Department of Labor OIG has investigated over 205,000 cases of unemployment insurance fraud, resulting in over 1,700 indictments, over 1,100 convictions, over 24,850 months of incarceration, and more than $1 billion in financial recoveries. [25]
• Small Business Administration OIG has investigated PPP and EIDL fraud, resulting in over 1,200 criminal indictments and nearly 700 convictions. [26] Given the 10-year statute of limitations for PPP and EIDL fraud, as well as a recent cost-benefit analysis supporting efforts to seek recovery for loans under $100,000, this area of investigation and prosecution is likely to remain a focus. [27]
• The FBI initiated 364 COVID-19 healthcare fraud investigations and has initiated campaigns to help educate the public regarding fraudulent schemes. [28] It has also investigated unemployment insurance, EIDL, and PPP fraud and helped recover over $600 million in funds. [29]
• The US Secret Service seized over $1.4 billion, forfeited over $900 million, and remitted over $400 million in pandemic relief funds in conjunction with the DOJ Money Laundering and Asset Recovery Section and Treasury Department Office of Asset Forfeiture .[30]
• IRS Criminal Investigation has investigated loan fraud, counterfeit economic injury checks, sales of fraudulent personal protective equipment, unemployment insurance fraud, and tax schemes. [31] More recently, it has also investigated more than $2.9 billion in potential fraud in connection with the ERC. [32]
• US Postal Inspection Service has generated investigative leads that have led to more than 160 arrests in connection with more than $283 million in losses. [33]

These are just a few of the federal agencies that have been instrumental in the government’s efforts to identify and prosecute pandemic-related fraud. A non-exhaustive list of other offices includes the Department of Health and Human Services OIG, Federal Deposit Insurance Corporation OIG, Department of Education OIG, Department of Veterans Affairs OIG, Department of Defense OIG, and INTERPOL Washington, the United States National Central Bureau.

The coordination among these agencies and offices, which span a variety of disciplines and investigative areas, reflects the importance the government has placed on recovering fraudulently obtained funds.

FUTURE OUTLOOK

The CFETF explicitly called upon Congress to extend “the statute of limitations for all COVID-19 fraud-related offenses” and the Pandemic Response Accountability Committee’s statutory authorization (currently set to expire in 2025), as well as provide adequate resources for “fraud data sharing, lead development, investigations, prosecutions, and asset recoveries.” [34] It also welcomes the creation of “a permanent, interagency body to respond to government benefits fraud” and ensure ongoing data-sharing. [35]

It remains to be seen whether Congress will respond to this call. Regardless, pandemic-related fraud will continue to be a key enforcement priority for the DOJ and other federal agencies now and in the years ahead.