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Fraud, White-Collar Crime Investigations Stemming from the CARES Act
The federal government is cracking down on fraud, false statements and other white-collar crimes associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion economic stimulus bill signed into law in March 2020 to provide immediate financial relief to American families, workers and small businesses affected by the coronavirus crisis.
As with any emergency federal aid package, there is a risk of fraud in connection with the CARES Act and COVID-19 federally funded loans, and the Department of Justice has vowed to aggressively investigate allegations of fraud and false statements related to the CARES Act and swiftly prosecute alleged offenders. If you have been arrested for CARES Act fraud or another fraud offense, it is in your best interest to consult an experienced criminal defense attorney with experience handling federal fraud cases. Contact Federal Criminal Defense Lawyers today to schedule a free consultation with our legal team.
DOJ Launches Federal Fraud Investigations
As part of an ongoing effort to help the millions of American families and small businesses struggling to overcome the staggering economic impact of the COVID-19 pandemic, the government injected more than $2 trillion into the U.S. economy with the CARES Act. At the same time that the government was doling out funds to borrowers, it was also putting in place the systems of oversight and enforcement it needed to vigorously investigate and prosecute fraud related to these federal aid programs, including the Paycheck Protection Program.
In a memo to the DOJ in March, the Attorney General called for federal prosecutors to “prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.” Then, in May, just two short months after the CARES Act was signed into law, the DOJ filed the first fraud charges in connection with the CARES Act. A wave of fraud investigations and criminal charges followed and this aggressive enforcement activity by the federal government is expected to continue with vigor.
Government Thoroughly Reviewing CARES Act Applications
This isn’t the first time accepting government funds caused borrowers to be subjected to heightened scrutiny, federal investigations and criminal charges. In 2008, in response to the financial crisis in the United States, Congress passed the Emergency Economic Stabilization Act (EESA), which established the Troubled Asset Relief Program (TARP), a $700 billion bailout program. This was followed in 2009 by the American Recovery and Reinvestment Act (ARRA), an $800 billion stimulus package. Together, these two relief programs distributed roughly $1.4 trillion in government funds, and an unintended consequence of these measures was a high potential for fraud.
To combat fraudulent activity related to the aid programs, the government created a separate law enforcement agency to investigate allegations of fraud by recipients of TARP funds (Special Inspector General for TARP, or SIGTARP) and a Recovery Accountability and Transparency Board tasked with investigating fraud and abuse. By the end of 2019, 430 individuals had been charged with crimes ranging from bank fraud and mortgage fraud to false statements, money laundering and bankruptcy fraud, 373 were convicted and 291 were sentenced to prison.
Potential CARES Act Fraud Charges
Now, with billions of dollars in government funds at stake, federal investigators and lenders are carefully reviewing CARES Act loan applications and supporting documentation for any potential fraudulent activity, which could trigger a federal investigation and potential criminal charges. In fact, the government has created a similar Special Inspector General for Pandemic Recovery (SIGPR) and Pandemic Response Accountability Committee, whose job it is to “conduct, supervise, and coordinate audits and investigations” in connection with the CARES Act. The charges being pursued by the federal government against those accused of committing or conspiring to commit CARES Act fraud include the following white-collar crimes:
One of the most common crimes being charged in connection with CARES Act fraud is bank fraud. According to 18 U.S.C § 1344, bank fraud occurs any time a person knowingly uses false or fraudulent pretenses, promises or representations in order to execute, or attempt to execute, a scheme with the intent to defraud a financial institution or obtain any money, funds, assets, securities or other property owned by or under the control of a financial institution. Federal bank fraud carries a potential penalty of up to 30 years in federal prison, up to $1 million in fines, or both.
Another common CARES Act fraud charge is wire fraud. Any person who, “having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice,” can face potential charges for federal wire fraud under 18 U.S.C. § 1343. This type of fraud crime is punishable by a substantial fine and up to 20 years in federal prison.
False Statements – 18 U.S.C. § 1014
Making a false statement or report on a loan or credit application is a violation of 18 U.S.C. § 1014. As a federal fraud offense, 18 U.S.C. § 1014 is punishable by a potential penalty of up to 30 years’ imprisonment in federal prison, up to $1 million in fines, or both.
Mail Fraud – 18 U.S.C. § 1341
Mail fraud is a crime that occurs any time a person, having devised or intending to devise a fraud scheme (a scheme to obtain money or property under false pretenses), uses the U.S. Postal Service or a private interstate carrier for the purpose of executing or attempting to execute that scheme. The potential punishment for mail fraud includes a fine and a term of imprisonment not to exceed 20 years. Under certain circumstances, the maximum prison sentence for mail fraud may be increased to 30 years.
Conspiracy to Defraud the Government – 18 USC § 371
The general conspiracy statute in the United States is 18 USC § 371, and this statute allows the government to file conspiracy charges any time “two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy.” If you are found guilty of conspiring to defraud the government under 18 USC § 371, you could face a fine and up to five years in federal prison.
Tax Evasion – 26 U.S.C. § 7201
In some cases, fraud and other white-collar crime cases involve violations of tax law, such as tax evasion, which is a felony offense. According to 26 U.S.C. § 7201, tax evasion occurs any time a person “willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof.” The potential penalty for tax evasion includes a fine of up to $100,000 for an individual or up to $500,000 for a corporation, a federal prison term of up to five years, or both.
How a Knowledgeable Criminal Defense Attorney Can Help
Federal crimes like bank fraud, mail fraud and false statements are serious offenses punishable by years or possibly even decades in prison and thousands, if not millions, of dollars in fines. Even if you didn’t actually obtain funds under the CARES Act, you could be at risk for criminal prosecution under the federal conspiracy statute if you are accused of conspiring to commit CARES Act fraud. If you or someone you know has been charged with bank fraud, wire fraud or another federal crime in connection with the CARES Act, or if you believe you may be the target of a federal fraud investigation, consult a skilled federal criminal defense attorney right away. A good defense attorney can ensure that your rights are protected and make the best possible legal decisions on your behalf, whether that involves responding to a target letter, negotiating with federal prosecutors or fighting the charges in court. The sooner you hire a knowledgeable criminal defense lawyer to defend you, the stronger your case will be.
Contact the Fraud Defense Attorneys at Federal Criminal Defense Lawyers
The federal government has made it a priority to investigate and prosecute any and all fraud related to the coronavirus pandemic and that includes bank fraud, wire fraud, false statements and other white-collar crimes associated with the CARES Act. There is a common misconception among borrowers that allegations of CARES Act fraud involving less than $2 million will not be pursued by federal investigators. However, you can believe that the government will go after all individuals and businesses suspected of committing or conspiring to commit fraud. If you applied for or obtained government funds under the CARES Act, you could be at risk for a potential audit, criminal investigation and legal action by the Department of Justice and its partner agencies. Contact our reputable fraud defense lawyers at Federal Criminal Defense Lawyers as soon as possible to discuss your case and determine the best legal strategy based on your specific situation.
Federal Criminal Defense Lawyers
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