Two Georgia siblings, who allegedly field fraudulent COVID unemployment benefits and PPP loan applications, will spend the next twenty-one months in federal prison.
“Programs that provided unemployment benefits and disaster relief served as a lifeline to small businesses during the pandemic,” said U.S. Attorney Steinberg. “The defendants’ greed-fueled scheme targeted both programs, and they’re now being held accountable for their crimes.”
“These current sentencings of those who committed fraud on COVID-19 relief programs is sending the message that accountability is coming for those who did the same,” said Demetrius Hardeman, Acting Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS Criminal Investigation special agents and our law enforcement partners will continue finding and investigating individuals who chose greed over the well-being of their fellow Americans during the COVID-19 pandemic.”
“It is disheartening to see the willingness of some individuals to take advantage of programs intended to help people in need during a national and world crisis,” said Matthew Ploskunak, Senior Supervisory Special Agent of FBI Atlanta’s Augusta office. “The defendants’ personal greed affects every tax paying citizen, in particular those who needed help most. The FBI will make every effort to make sure federal funds are used as intended.”
U.S. District Court Judge J. Randal Hall also ordered the siblings to serve three years’ supervised release and pay $140,228 in restitution.
Nuts and Bolts of Fraud
Basically, fraud is an intentional misstatement of a material fact that’s calculated to produce a monetary gain. Let’s break down these four elements individually.
Intentional is not malicious. Instead, intentional essentially means the actor knew what s/he was doing and, in the case of a fraudulent statement, knew how the listener would probably interpret that statement.
On a similar note, a misstatement isn’t a lie. Assume I tell my wife I’m hanging out with the guys for a “couple of hours” and I’ll be back “later.” I don’t tell her we’re going to Las Vegas for the weekend. I come home on Sunday night and she’s furious. “But honey,” I implore, “I said I’d be gone for a ‘couple of hours’ and be back ‘later.’ I was gone for a couple of hours, and it’s later.”
I didn’t deliberately lie to my wife, but I did intentionally mislead her, especially since I knew she’d probably think I’d only be gone for the night.
A material fact is an item which affects the outcome of the application. Usually, giving a fake address isn’t a material fact. However, if a certain loan program is only available to Cobb County residents, a false address is a material misstatement.
Finally, the alleged fraudster must make a material misstatement to obtain a financial benefit, either directly (getting money) or indirectly (saving money). Frequently, this element of fraud is the easiest one for a Marietta criminal defense lawyer to disprove. Embarrassment, simple mistake, or a desire to embarrass an organization prompts many material misstatements.
Furthermore, the state must prove all elements of a fraud charge beyond any reasonable doubt. Circumstantial evidence usually isn’t enough. Typically, prosecutors need a valid confession. More on that below.
Coronavirus Financial Relief Fraud
In 2020 and again in 2021, lawmakers approved more than $5 trillion for coronavirus relief. Many times, government agencies wrote checks first and asked questions later. For example, government agencies gave more than $6 billion in coronavirus relief to people in foreign countries. A large chunk of this money went to three agencies in Switzerland, the Global Fund to Fight AIDS, Tuberculosis and Malaria, the United Nations, and the United Nations High Commissioner for Refugees.
Since government agencies were under so much pressure to write so many checks so quicky, fraud was rampant in programs like:
- Individual Relief: Most displaced COVID workers were eligible for unemployment benefits even if they weren’t looking for a job. Other individual benefits included stimulus payments, rent payment assistance, and an expanded child tax credit.
- Small Businesses: The Paycheck Protection Program provided small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead. Other relief, such as tax credits, was available as well.
- State, Local Government, and Tribal Assistance: Fraud wasn’t quite as common in these programs. However, government officials have taken shortcuts before to get money, and they’ll do so again.
In 2023, a special government task force began investigating and prosecuting coronavirus fraud allegations. The statute of limitations in felony fraud cases is usually between five and fifteen years, so this aggressive government probe will most likely continue for the foreseeable future.
Criminal Investigation Issues
This “special task force” is more like an umbrella organization that includes many different law enforcement agencies. As the old saying goes, too many chefs often spoil the broth.
At both the state and federal level, cost and communications issues often taint multi-agency investigations.
Long, multi-agency investigations cost lots of money. As these investigations approach their conclusions, the investigators want to produce a large return on this investment, in the form of major arrests. They often over-rely on questionable warrants to grab the brass ring.
These questionable warrants usually contain the uncorroborated testimony of a paid informant. Typically, in fraud investigations, investigators nab low-level, data-entry fraudsters, threaten them with harsh criminal penalties, and coerce them into naming names. The uncorroborated word of a paid informant is usually insufficient for probable cause.
Multi-agency investigations may also involve a “king of the hill” syndrome. Different agencies often don’t communicate with each other very well, mostly because they don’t like to share credit for major arrests. Communication problems during criminal investigations often create procedural defenses for a Marietta criminal defense lawyer.
Probation and Parole Issues
A few final words about probation and parole issues. At the federal level, the 1984 Sentencing Act largely eliminated parole in the federal system. However, many inmates are still eligible for parole or early discharge from probation after they serve one-third of their sentences. Usually, a Marietta criminal defense lawyer must convince a judge that early discharge (or early release) is in the best interests of society.
The one-third rule also applies, at least informally, to state court proceedings. Somewhat surprisingly, most judges want to see a history of solid compliance, but not perfect compliance.
People with a few minor blemishes on their records are usually better candidates for early discharge than people with perfect record. A spotty record means the defendant isn’t a danger to society and isn’t doing well in the system. A perfect record means the system is working and the defendant should remain in it.
Fraud charges are very serious, but these cases have lots of moving parts. For a free consultation with an experienced Marietta criminal defense lawyer, contact The Phillips Law Firm, LLC. Virtual, home, and jail visits are available.
