Pandemic Fraud

Pandemic fraud refers to the misuse of government funds intended for COVID-19 pandemic relief efforts. This kind of fraud occurred across federal and state programs that were established to support businesses, employees and healthcare providers during the COVID-19 crisis.

Common examples of pandemic fraud included:

• Creating nonprofit organizations or shell companies that don’t exist
• Filing fraudulent unemployment claims
• Submitting program and loan applications that include false information
• Taking advantage of benefits from multiple programs
• Using the funds for personal or other unauthorized expenses

Government agencies that were directly impacted by pandemic fraud included:

• Department of Education (ED)
• Department of Labor (DOL)
• Department of Health and Human Services (HHS)
• Federal Emergency Management Agency (FEMA)
• Internal Revenue Service (IRS)
• Small Business Administration (SBA)

Why does pandemic fraud matter?

Fraud against the government can seem like a large concept that doesn’t impact the daily lives of individual people. You may even wonder, “Why should I care if the government was defrauded?”

Public funds are your money. They come from your taxes and are intended to go toward programs that help your community and your country. A person or business that takes advantage of holes in the system for their own gain is taking advantage of you. By reporting pandemic fraud (or any fraud) you help prevent future drains on the system.

Government agencies rushed to establish programs to help those in need during the pandemic. But people took advantage of vulnerabilities in the system, which led to fraud. COVID-19 relief aid programs also opened the door for people to take advantage of those who were genuinely looking for financial help.

Financial fraud increased during the pandemic due to:

• Minimal vetting: In an effort to get funds out fast, agencies loosened oversight, making it easier for fraudsters to submit false claims.
• Overloaded systems: State unemployment systems and other government portals were overwhelmed, leading to delays and errors.
• Third-party fraud schemes: Fraud rings used identity theft to bypass safeguards.

High-profile programs targeted by fraud

Several programs were affected by pandemic fraud. These included:

• Paycheck Protection Program (PPP): This program allowed small businesses to pay for payroll, rent, utilities, etc. Some small businesses inflated payroll figures or listed fake employees to receive larger loans.
• COVID-19 Economic Injury Disaster Loan (EIDL): These loans allowed small businesses to combat the economic impacts of the pandemic. Some applicants used shell companies or exaggerated economic harm to try to qualify for these loans.
• Pandemic Unemployment Assistance (PUA): This program was created to provide temporary benefits to people who lost their jobs due to COVID-19. Some people submitted claims using false identities, sometimes even across multiple states.
• Education and housing relief: Grants were available to people who needed financial assistance after COVID-19. Some fraudsters misrepresented their income or employment status to receive this relief.

Pandemic fraud is serious and you should take the proper actions if you suspect COVID-19 fraud is happening or has already occurred. Misusing funds meant to help others recover from a worldwide health crisis takes those funds away from those who actually need them.

Whistleblowers who suspect pandemic fraud should:

1. Gather all evidence: Compile everything you have that could be used as evidence to prove suspected pandemic fraud. This may include emails, documents, loan applications, etc.
2. Identify who’s involved: Figure out who specifically is involved in the suspected fraud.
3. Consult with a lawyer: A whistleblower attorney can help determine if pandemic fraud is occurring and if it violates the False Claims Act.
4. Consider qui tam protections: Understand how you may be eligible for a financial award and protected against retaliation if your report leads to a legitimate fraud case and recovered funds.

Motley Rice whistleblower lawyers have represented individuals in whistleblower lawsuits, including SEC claims and qui tam lawsuits. Our attorneys have worked with potential whistleblowers to protect their rights and help them file accurate and thorough claims through the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Department of Justice (DOJ).

How much pandemic aid was lost to fraud?

Recent reports suggest that hundreds of billions of dollars in COVID-19 aid were lost due to pandemic fraud. The exact amount may never be discovered as law enforcement is still investigating these claims.

Can individuals report COVID relief fraud?

Anyone who believes they know of potential COVID relief fraud and misconduct should report it through the proper federal government and law enforcement channels. Individuals can also consult a whistleblower attorney and file a qui tam lawsuit.

What happens after I report fraud?

Depending on the agency you reported the fraud to and the type of fraud, agencies may open a proper investigation into the claim. If the government intervenes and eventually recovers funds, whistleblowers may be eligible to receive a percentage of that settlement.

Motley Rice attorneys have represented whistleblowers, leading to millions of dollars in rewards to the individuals involved in exposing the proven illegal activity. Our attorneys have experience filing claims through various whistleblower reward programs of government agencies.

Read more on our whistleblower litigation experience.