President Joe Biden said in his State of the Union address on Tuesday he's tapping a new boss to fight pandemic-related financial crimes. The move comes as the U.S. Justice Department prosecutes cases around the country alleging people falsified paperwork to obtain forgivable loans meant for small businesses.
As of March 2021, the Justice Department had publicly charged 474 defendants with pandemic-related criminal fraud, alleging more than $569 million in illegally obtained funds.
A yet-to-be named chief prosecutor, Biden said, will chase after fraudulently obtained relief funds made available to workers, families, and businesses. Congress authorized those funds under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which then-President Donald Trump signed in March 2020, just two weeks after COVID was declared a pandemic.
“In my administration, the watchdogs are back,” Biden said. “And we’re going to go after the criminals who stole the billions of relief money meant for small business and millions of Americans. And tonight I'm announcing that the Justice Department will soon name a chief prosecutor for pandemic fraud.”
In announcing his plan, Biden criticized the Trump administration, saying it undermined the government’s ability to keep pandemic relief funds from being wasted.
“Remember, we had those debates about whether or not those watchdogs should be able to see every day how much money was being spent, or whether it was going in the right place?” Biden said, referring to negotiations that assured Democratic lawmakers that multiple safeguards would be put in place.
“Those kinds of administration watchdogs are back,” Biden said.
In some cases, individual fraudsters obtained millions of dollars. Just last week, a federal jury convicted a 40-year-old Massachusetts man of submitting $13 million in fraudulent loan applications under the CARES Act’s forgivable Paycheck Protection Program (PPP) and submitting false documents to the IRS. He received $2 million in PPP funds despite having no U.S.-based employees and no U.S.-based payroll expenses.
In another case last year, a 41-year-old California man pleaded guilty to fraudulently obtaining $9 million in forgivable loans after submitting fake tax filings and bogus employee payroll records. Prosecutors said he used the money to gamble and buy risky stocks.
The Justice Department's new chief prosecutor will be just one high-level official focusing on pandemic fraud. In December, the Secret Service announced that it was tapping an assistant special agent in charge of pandemic fraud. The agency cited more than 900 ongoing criminal investigations.
In May, the Justice Department's Office of the Attorney General said it had established a task force with other agencies to prevent pandemic-related fraud.
The Justice Department did not respond to Yahoo Finance's request for the total dollar amount of pandemic-related fraud allegations or recoveries, to date.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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