Federal investigators in Md. unearth $40M in COVID fraud schemes

As part of a sweeping national crackdown on COVID-19 relief program fraud, the U.S. Attorney’s Office in Maryland has filed criminal charges against 20 defendants for more than $40 million in various illegal schemes, officials said Tuesday.

The state and national investigations are far from over, said U.S. Attorney for Maryland Erek Barron.

“We cannot, and will not, tolerate those who would take advantage of a global pandemic by stealing funds and defrauding programs intended to help Americans who were suffering during the pandemic,” Barron said.

Relief programs to help Americans and bolster a variety of business and economic sectors struggling during the pandemic  ad been passed by Congress and signed into law by Presidents Donald J. Trump and Joe Biden. The final piece of those aid packages was the Coronavirus Aid, Relief and Economic Security Act.

Thus far, most of the investigations have examined schemes that targeted the Paycheck Protection Program, which was set up to aid struggling small businesses, as well as  the Economic Injury Disaster Loan and unemployment insurance programs.

The Justice Department established the Maryland COVID-19 Fraud Strike Force in Aug. 2022 to enhance the department’s efforts to combat and prevent COVID-19 fraud.

Harry Gruber, chief of the fraud and public corruption section of the Maryland COVID-19 Fraud Strike Force team, said investigators have found some common threads to the scams. One is the use of fake identities when fraudsters submit applications for relief funds. Often they create fake businesses that lack a physical location or even any revenues. Sometimes, the COVID frauds are part of other criminal activities.

Some individuals allegedly used shell business entities to fraudulently apply on multiple occasions for benefit funds that they used for their personal benefit, or they inflated payroll expenses to obtain larger loans than they otherwise would have qualified for.

Maryland prosecutors found examples of CARES Act frauds ranging from $25,000 to $15 million. Investigators said some defendants participated in other fraud schemes as well, including elder fraud and business email compromise schemes, in addition to some illegally possessing firearms.

Paul Riley, deputy chief of the fraud and public corruption section of the COVID-19 Fraud Strike Force team, said the team is committed to accountability.

“Congress has shown a will to hold people accountable, and we have too,” Riley said.

To report a COVID-19-related fraud scheme or suspicious activity, contact the National Center for Disaster Fraud by calling the NCDF Hotline at 1-866-720-5721 or via the NCDF Web Complaint Form.