IRS-CI releases COVID fraud statistics ahead of the 3rd anniversary of the CARES Act
Saturday, March 25, 2023
Agency has investigated 975 COVID-related fraud cases with alleged fraud totaling $3.2B
PHILADELPHIA – Three years after the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, IRS Criminal Investigation (IRS-CI) has investigated 975 tax and money laundering cases related to COVID fraud with alleged fraud in these cases totaling $3.2 billion. These cases include a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families, and small businesses.
Of those cases, 458 individuals have been indicted for their alleged COVID-related crimes, and 236 individuals have been sentenced to an average of 37 months in federal prison. Throughout the three years, CI has a nearly 100% conviction rate in prosecuted cases.
Case examples include:
Man Gets Over 2 1⁄2 Years for Stealing Pandemic Unemployment Assistance Funds While Incarcerated
Kenneth Huggins Jr., of Coatesville, PA, was sentenced to 33 months in prison, followed by three years of supervised release for filing a fraudulent application for pandemic unemployment compensation while he was imprisoned on a state drug trafficking sentence, thus making him ineligible to receive those benefits. Huggins Jr. previously pleaded guilty to charges of mail fraud and conspiracy to commit mail fraud.
Huggins Jr., along with other individuals, were involved in a scheme to file false Pandemic Unemployment Assistance (PUA) claims. Beginning in July 2020, Huggins Jr. abused the emergency benefits program by arranging to have his mother (co-defendant Patrice Hawthorne) and cousin (co-defendant Dashona Lawrence) submit a fraudulent PUA claim on his behalf. At the time of the scheme, Huggins Jr. had been an inmate at Chester County Prison since before the pandemic began Huggins Jr. and his mother, Hawthorne, conspired over a series of recorded prison telephone calls to submit a fraudulent application for PUA benefit payments on Huggins’s behalf. The application falsely stated that Huggins was available for immediate employment and that he was currently unemployed due to the COVID-19 pandemic, when in fact he had been incarcerated since January 2020 at Chester County Prison and was not unemployed due to the pandemic. Huggins Jr. ultimately received more than $12,000 in unemployment benefits.
Huggins Jr. also attempted to convince his co-defendants to file fraudulent PUA applications for two of his fellow inmates. His fellow inmates were also ineligible for benefits because they were not unemployed as a result of the pandemic. Huggins Jr. planned to keep the vast majority of any funds paid to those inmates for himself.
Woman Sentenced To Prison For Stealing Pandemic Unemployment Assistance Funds
Emily Baier, of West Chester, PA, was sentenced to 14 months in prison and five years of supervised release for falsely claiming and taking approximately $47,000 in pandemic unemployment compensation authorized by the CARES Act.
Baier took advantage of and unlawfully profited from the PUA program by submitting and continuing to certify fraudulent PUA claims for herself and for inmates of Chester County Prison, including co-conspirator Jacob Fulton, knowing that neither she nor these inmates were entitled to these benefits. Specifically, she filed a PUA claim for herself knowing that she was not eligible for such benefits because she was not unemployed due to the COVID-19 pandemic. Baier continued to submit weekly submissions of certification that she and Fulton were eligible for these benefits, all while knowing that neither of them was eligible for these benefits. Baier and Fulton also conspired to file PUA claims on behalf of at least two other inmates and take a cut of the claim payments for themselves.
Man Sentenced for Stealing Pandemic Unemployment Assistance Funds
Jacob Fulton, of Coatesville, PA, was sentenced to 18 months in prison, five years of supervised release, and ordered to pay full restitution for falsely claiming and taking approximately $32,000 in Pandemic Unemployment Compensation authorized by the CARES Act.
Fulton filed a PUA claim for himself knowing that he was not eligible for such benefits because he was not unemployed as a result of the COVID-19 pandemic. After Fulton was arrested and sent to Chester County Prison in July 2020, he continued to submit weekly certifications that he was eligible for these benefits (with the aid of his co-defendant), all while knowing that he was not eligible for these benefits because he was in prison. At the same time, Fulton conspired to file PUA claims on behalf of at least two other inmates and take a cut of the claim payments for himself.
IRS-CI encourages the public to share information regarding known or suspected fraud attempts against any of the programs offered through the CARES Act. To report a suspected crime, taxpayers may visit IRS.gov.
The CARES Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional funding, and in December 2020, another $284 billion.
The PPP allows qualifying small businesses and certain other organizations to receive loans with a maturity of two to five years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
To learn more about COVID-19 scams and other financial schemes visit IRS.gov. Official IRS information about COVID-19 and Economic Impact Payments can be found on the Coronavirus Tax Relief page, which is updated frequently.