Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, families and small businesses were able to receive assistance during the pandemic. Some, however, received funds fraudulently and used the money for personal benefit.
The Criminal Investigations (CI) unit within the IRS has “investigated 1,644 tax and money laundering cases related to COVID fraud potentially totaling $8.9 billion, with well over half that amount coming from cases opened in the last year,” reads a statement from the IRS.
Of the 795 people indicted, 373 have received an average 34-month prison sentence.
IRS Commissioner Danny Werfel said, “The work by IRS Criminal Investigation provides a vital role in protecting against fraud and serves a key part in the agency’s wider efforts to ensure fairness in the nation’s tax system. Protecting taxpayers against fraud in pandemic-era programs is just one example of the important role that CI plays in the law enforcement community. A healthy budget for the IRS helps us get the job done, and the work of CI provides a critical safety net to protect the nation against fraud.”
Some of the recent sentences include Rami Saab from Long Island, New York, and Terrence L. Pounds from Toledo, Ohio.
Saab was described as the “mastermind behind a sprawling conspiracy to fraudulently obtain loans amid the COVID-19 pandemic.” He and his conspirators received “$9.6 million in emergency-relief funds intended for distressed small businesses.”
Pounds “obtained millions of dollars in loans and then used the money to purchase several new vehicles, which were later forfeited to the U.S. government.” He claimed the loans were for “nonprofit, faith-based organizations with over $1 million in revenue and 15 employees.”
https://twitter.com/IRS_CI/status/1773704393654768086
A September report from the Government Accountability Office (GAO) found that between $100 billion to $135 billion in COVID-19 unemployment benefits was stolen.
According to the report, about 11%-15% of unemployment benefits were given to fraudsters.
“Because not all potential fraud will be investigated and adjudicated through judicial or other systems, the full extent of [unemployment insurance] fraud during the pandemic will likely never be known with certainty,” the report states.
The report adds, “The unprecedented demand for UI benefits and the need to quickly implement the new programs during the pandemic increased the risk of fraud.”
The increased use of the UI system “drew attention to its vulnerabilities and susceptibility to fraud, waste, abuse, and mismanagement,” GAO wrote. “In our prior work, we reviewed existing measures and estimates of fraud and found evidence of substantial levels of fraud and potential fraud in UI programs during the pandemic.”
