Vice President JD Vance and the U.S. Justice Department announced federal fraud charges against nearly 80 defendants Monday, tied to a crackdown on fraud involving the COVID-19-era Paycheck Protection Program.
Another 80 defendants also faced charges or were sentenced for COVID-19 fraud.
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‘Heartland Fraud Surge’
Vance announced the charges and concluded the operation in a press conference Monday. He said charges stem from a June 12 through Sept. 1 enforcement push dubbed “Heartland fraud surge.”
The operation involved prosecutors from 44 U.S. Attorney’s Offices and more than 20 federal and state investigative partners. Prosecutors charged more than 160 defendants and estimated about $245 million in intended losses to taxpayers.
The Justice Department launched the investigation more than five years after the government issued emergency loans to people and companies struggling across the country because of the COVID-19 pandemic.
The fraud
Officials tied the cases to the Paycheck Protection Program, saying individuals filed claims for employees who didn’t exist. The DOJ also says businesses sought Economic Injury Disaster Loans for damage that did not occur.
Other cases involve fabricated businesses, false payroll and revenue information and identity theft.
“Pandemic loan relief was meant to keep American small businesses alive during government lockdowns — not line the pockets of fraudsters,” Attorney General Todd Blanche said Monday. “The defendants charged during our summer surge allegedly fabricated businesses, submitted false payroll and revenue claims, stole identities, and concealed foreign ties on their applications — but they will now be prosecuted to the fullest extent of the law.”
How was the fraud discovered?
The new barrage of cases, and the operation itself, come years after federal watchdogs concluded that safeguards meant to prevent fraud were weakened or delayed.
Because of the onslaught of applications when the government introduced the programs in 2020, screening tools couldn’t keep up, and some were even implemented after millions of dollars were distributed.
CBS News reports that the Small Business Administration’s inspector general estimated that more than $200 billion distributed through COVID-era programs shows signs of fraud.
Now, Blanche said prosecutors have the funding and staff to take on those fraud cases.
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