The Covid-19 pandemic will go down as an unparalleled piece of world history, an event that effectively forced the greater part of the developed world to completely shut down for the better part of 2020 to deal with the effects of a rapidly spreading outbreak that moved from the east to all-but-engulf the western hemisphere over just a matter of weeks. With millions of global citizens ultimately succumbing to the outbreak, Covid quickly became one of the deadliest plagues in human history and by far the deadliest pandemic in American history. Yet while much of the hysteria surrounding the virus has largely subsided over the years to follow, the economic effects of the virus are expected to linger over the better part of the next decade. At the time, rampant business closures meant mass layoffs and furloughs. This coupled with major drawdowns in the stock market and crypto space, as well as a run of bank failures culminated in a near-immediate economic recession. In an effort to boost the economy, the U.S. government sought to ease monetary policy in order to keep credit flowing. The United States launched the unprecedented Paycheck Protection Program (PPP) and distributed billions of dollars worth of funds as part of financial stimulus packages to qualifying American citizens levied in order combat lost wages and promote consumer spending. This period also saw an increase in fiscal spending and ultimately lead to major interest rate cuts by the Federal Reserve – moves that have been correlated to current inflation rates rising to the highest levels seen in decades.
American financial institutions and consumers alike are still experiencing the ramifications of the virus, whether it be on their daily workflow and/or orientation – this as many domestic businesses have continued to allow a remote working environment since 2020 – or on their very bottom-line. Furthermore, the recession period also proved a major opportunity for financial criminals, this as the mass shift to online banking and business in general saw a major uptick in fraud and scams aimed at vulnerable demographics (i.e. the elderly, the impoverished, and often those collecting funds from unemployment insurance programs enacted by the federal government). All told, billions of dollars were collectively lost as a result of various fraud schemes that took place during the pandemic, with the U.S. Justice Department ultimately moving to create multiple Covid fraud task forces aimed at levying nationwide enforcement actions against individuals and entities found to have unjustly benefitted at the expense of American businesses and families during this national emergency. As the initial shock factor of the pandemic opened the door for exploitation of unsuspecting individuals and broader financial markets on criminals’ behalves, the coordinated response of the American government to this trend of financial crime ultimately lead to a turning of the tides in favor of federal authorities and prosecutors.
Last week, the DOJ’s COVID-19 Fraud Enforcement Task Force (CFETF) released its 2024 report detailing how their efforts, as well as those of associated member agencies, have helped to bring fraudsters to justice and return stolen funds to the appropriate parties. The CFETF boasts a wide reach in that it is comprised of several major U.S. Justice Department components including its Criminal and Civil Divisions, the U.S. Federal Bureau of Investigation, Organized Crime Drug Enforcement Task Forces, Homeland Security Investigations, IRS Criminal Investigations, and the U.S. Secret Service, among other key parties. The early results of these government-backed “strike” forces have been rather significant, but also point to the true scope of the nefarious activities taking place between 2020 – 2024
“Since I established the COVID-19 Fraud Enforcement Task Force three years ago, we have charged more than 3,500 defendants, seized or forfeited over $1.4 billion in stolen COVID-19 relief funds, and filed more than 400 civil lawsuits resulting in court judgements and settlements,” said Attorney General Merrick B. Garland in a statement released on April 9th. “Our work is not over. We will continue our efforts to investigate and prosecute pandemic relief fraud and to recover the assets that have been stolen from American taxpayers.”1
To date, the efforts of the collective task force has recovered a considerable chunk of the $2 billion+ in total estimated losses stemming from collective Covid relief fraud practices. In addition to the total of seized/forfeited funds mentioned by Attorney General Garland, associated civil enforcement actions (i.e. closed settlements and judgments) have also amounted to an additional $100 million+ collected on the government’s behalf. Backing their efforts, the DOJ has deployed a unique data-driven prosecution strategy utilizing analytics and trend identification technology that has utilized information collected from various individual Covid-relief and federal/state unemployment databases and ledgers to identify individuals and firms that were involved in fraud related to economic relief funds. CFETF members also established the National Unemployment Insurance Fraud Task Force which is backed by a data-sharing and lead development process housed within the Organized Crime Drug Enforcement Task Force’s International Organized Crime Intelligence Operation Center, using similar data to target other avenues of Covid-related fraud.
Given the early success of these programs, the CFETF is now expanding their reach from strictly prosecuting and collecting on behalf of domestic fraud cases to taking on foreign crime related to pandemic relief. The CFETF has established five strike teams focusing on more-complex cases that have been committed by overseas organizations, organized criminal groups, and by more violent offenders. These offices are located in U.S. Attorney’s Office hubs in Maryland, New Jersey, Colorado, Florida, and California. Thus far these teams are responsible for the indictments of 250 defendants with ties to gang violence, international fraud schemes, and widespread cyber-crime. While their early returns remain tangible, the DOJ maintains that their work is far from finished. COVID-19 Fraud Enforcement Task Force Director Michael C. Galdo stated, “The CFETF and its member agencies have ongoing investigations into hundreds of identity thieves, transnational fraud and money laundering networks, large-dollar individual fraudsters, and the businesses that facilitated these crimes. CFETF member agencies have improved their data analytics capabilities and are using these new skills to investigate fraud more efficiently and effectively.”1
The CFETF 2024 Report can be found its entirety here.
Citations
- “Covid-19 Fraud Enforcement Task Force Releases 2024 Report.” Office of Public Affairs, United States Department of Justice, 9 Apr. 2024.
