Newly Appointed Director Set to Lead the Next Phase of DOJ-Initiated COVID-19 Anti-Fraud Enforcement
On March 10, the Department of Justice (DOJ) announced the appointment of a new director for the COVID-19 Fraud Enforcement Task Force. Associate deputy attorney general Kevin Chambers will serve as director and continue criminal and civil efforts to curb fraud under pandemic relief programs. In the announcement, Chambers indicated a “focus on large-scale criminal enterprises and foreign actors who sought to profit at the expense of the American people.” To assist in this goal, the DOJ announced the establishment of “Strike Teams to prepare for the next phase in the Justice Department’s efforts to fight pandemic fraud.”
The task force, which was created in May of 2021, discussed in their inaugural meeting an aim to “combat fraud related to COVID-19 relief programs like the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) program, as well as unemployment insurance benefits.” Indeed, to date the DOJ has brought both civil and criminal enforcement actions totaling $8 billion in alleged fraudulent conduct. According to the DOJ, of those $8 billion an alleged $6 billion or more is subject to ongoing civil investigations. According to the Arnold & Porter CARES Act Fraud Tracker, which tracks DOJ-initiated criminal prosecutions, an alleged $2.5 billion of the $8 billion are subject to ongoing criminal prosecutions. Also, according to the tracker, the most frequent enforcement actions appeared under the PPP, Pandemic Unemployment Assistance (PUA) and EIDL programs.
The PPP, EIDL, and other recognizable programs such as the Unemployment Insurance (UI) programs were products of the Coronavirus Aid, Relief, and Economic Security Act (CARES ACT). The CARES Act has been described as the largest economic stimulus package in US history with the purpose of “provid[ing] fast and direct economic assistance for American Workers, families, small businesses, and industries.” The Act created new government programs and expanded upon those already in existence to distribute more than two trillion dollars to the American economy.
Congress passed the CARES Act in March of 2020. Only two months later, two individuals in Rhode Island faced charges. By June of 2020, the DOJ declared its intention to “use every enforcement tool available to prevent wrongdoers from exploiting the COVID-19 crisis.” In December of 2021, the Secret Service announced there to be over 900 active investigations related to pandemic fraud, over $2.3 billion in stolen funds which had been returned, and an estimated $98.8 billion in additional fraudulent funds not yet recovered. In announcing a new director, the DOJ increased the number of active criminal investigations to over one thousand, and nearly 250 civil investigations implicating 1,800 individuals.
Now, as Chambers settles into his new role, questions arise on what COVID-19 related anti-fraud actions exist on the horizon. The announcement of a new director and newly established teams utilizing data provided from state unemployment offices to guide future charges suggest that aggressive enforcement remains a top priority for the DOJ.
*Maya Kouassi contributed to this Advisory. Ms. Kouassi is a graduate of the City University of New York and is employed at Arnold & Porter's New York office. She is not admitted to the practice of law.
© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.