U.S. Attorney in New York Says They Will Investigate Coronavirus Credit Fraud For Years

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ALBANI. The US Department of Justice expects to spend years investigating fraud cases involving billions of dollars in aid that was designed to help small businesses stay afloat and keep their workers employed, the New York City attorney general said.

“I would be surprised if we didn’t bring these cases five, six, seven years from now,” Acting Attorney for the Northern District of New York Antoinette Bacon said in an interview at her office on Friday.

Government observers estimate that criminals have received about $ 80 billion in loans from the Small Business Administration through two pandemic initiatives funded through the CARES Act, as well as the Payroll Protection and Economic Disaster Loans Program. Millions of Americans have taken advantage of popular aid programs – especially forgivable PPP loans – to support their businesses during the pandemic. But the fountain of fast-flowing government aid has also provided an opportunity for people to try to cheat the system with lucrative schemes.

The Justice Department says it has prosecuted more than 100 defendants in at least 70 criminal cases of PPP and EIDL fraud since the start of programs launched last spring under federal CARES law.

The US Attorney’s Office in Albany has opened two charges against four people who allegedly obtained loans through programs fraudulently.

In one case, they said three men conspired to obtain fraudulent loans worth at least $ 5.6 million and worked partly on their scheme in Ulster County. One defendant from Brooklyn plead guilty in this case.

In April, they charged another person with electronic communications fraud and money laundering as a result of his alleged attempts to fraudulently obtain US $ 150,000 in PPP and EIDL loans. He is awaiting trial.

Prosecutors are continuing to investigate additional potential fraud cases in the district, they said.

“Serial scammers are looking for opportunities such as well-funded government programs, especially in times of crisis and disaster when people are desperate,” Bacon said. “CARES Law for most people meant caring for others … but for others, CARES Law was caring for themselves. It was selfishness. It was an opportunity to live a luxurious lifestyle to get rich quick. Therefore, we wanted to jump further. it’s as fast as possible. “

Within a month or two after the launch of these SBA programs, the US Attorney’s Office in Albany began tracking fraud cases, prosecutors said.

In March, the Inspector General of the Small Business Administration testified before Congress that a few days after the programs launched last year, banks began calling his office to report the alleged fraud. Complaints of fraud began to flow in the thousands. In just one year, the office has received 150 years of complaints, with tens of thousands of them yet to be processed.

Hannibal Ware, Inspector General of the Small Business Administration, said the SBA ignored repeated warnings about program fraud as it scaled back or removed controls designed to root out the abuse in order to get funds out of the way as quickly as possible.

The SBA has taken “many steps” to tighten control over fraud during the pandemic, a senior SBA administration official said this month. He noted that the inspector general did not investigate all of the $ 80 billion potential fraud estimated in the program, but used algorithms to identify loans with specific characteristics.

Bacon declined to comment on whether she believes the SBA’s credit check is sufficient given the scams she is now seeing.


She asked the public to provide advice on alleged loan fraud to the FBI in Albany, or by calling the FBI hotline at 1-800-CALL-FBI, or by sending a tip online at FBI.gov.

“We hear a lot, people say:“ Well, everyone knew that such and such was committing fraud. Everyone knew this was happening. Why are law enforcement agencies not doing anything? “- said Bacon. “Not everyone knows. We know because good, honest citizens give advice and tips. “

The SBA no longer offers PPP loans. The agency continues to offer EIDL loans and earmarked grants through the EIDL program.

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