More Than 3,100 Charged With Pandemic Relief Fraud, Justice Department Says

WASHINGTON — For more than two years, Leon Haynes, a New Jersey tax preparer, told some of his clients that the federal government was giving out “free money” in the form of pandemic relief to people who owned businesses. According to federal prosecutors, Haynes filed more than 1,000 false tax forms, fraudulently claiming more than $124 million in COVID-19 employment tax credits for businesses that he and others owned.

Haynes was arrested at the end of July.

The complaint is one of several COVID-19 fraud cases detailed Wednesday by the Justice Department, which has been cracking down on businesses and individuals who inappropriately pocketed federal relief aid.

As of this week, the federal government has charged 3,195 defendants for offenses related to pandemic fraud and seized more than $1.4 billion in relief funds, according to data released by the department.

That included the results of a three-month “sweep” to combat COVID-19 fraud, which ended in July and involved more than 50 U.S. attorneys offices and dozens of federal, state and local law enforcement agencies.

The sweep resulted in criminal charges against 371 defendants, with 119 convicted or pleading guilty. The Justice Department claimed 63 defendants had connections to violent crime and 25 had purported connections to transnational crime networks.

The exact amount stolen is unknown, but the Small Business Administration’s inspector general estimated that more than $200 billion — or at least 17% of the roughly $1.2 trillion in pandemic loans the agency doled out — was disbursed to “potentially fraudulent actors.”

The Justice Department does not have a specific goal for the amount of money it is trying to recoup, but prosecutors and investigators are working to “claw back as much of that money as possible,” said Michael Galdo, the department’s acting director of COVID-19 fraud enforcement.

The cases highlighted by the Justice Department revealed the scope of fraud that occurred at a moment when the federal government, in an attempt to keep the economy afloat, rushed to get money out the door quickly and with little oversight. A flood of criminals exploited many of those programs, taking advantage of what they saw as easy money. The Justice Department listed a range of fraud schemes, including defendants who were accused of using the money to solicit a murder and individuals who laundered funds by shipping cars to Nigeria.

This article originally appeared in <a href="https://www.nytimes.com/2023/08/23/business/pandemic-relief-fraud-justice-department.html">The New York Times</a>.