Newly Appointed Director Set to Lead the Next Phase of DOJ-Initiated COVID-19 Anti-Fraud Enforcement
Last month, the Department of Justice (DOJ) announced the appointment of a new Director for the COVID-19 Fraud Enforcement Task Force, which was launched in May 2021 and has opened civil and criminal enforcement actions totaling $8 billion in alleged fraud. Based on Arnold & Porter’s CARES Act Fraud Tracker, which tracks DOJ-initiated criminal prosecutions, an alleged $2.5 billion of that $8 billion is the subject of ongoing criminal prosecutions.
Associate Deputy Attorney General Kevin Chambers will serve as the Task Force’s Director and will continue criminal and civil efforts to curb fraud under pandemic relief programs. In the announcement, Chambers indicated DOJ would “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, DOJ established “Strike Teams to prepare for the next phase in the Justice Department’s efforts to fight pandemic fraud.”
The task force discussed in its 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.” According to our Fraud Tracker, DOJ’s enforcement actions most frequently allege fraud involving the PPP, EIDL and Pandemic Unemployment Assistance (PUA).
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 $2 trillion to the American economy.
Congress passed the CARES Act in March 2020. Only two months later, two individuals in Rhode Island faced charges. By June 2020, DOJ declared its intention to “use every enforcement tool available to prevent wrongdoers from exploiting the COVID-19 crisis.” In December 2021, the Secret Service announced there were 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. Along with announcing a new director, DOJ increased the number of active criminal investigations to over 1,000, with 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 remain on the horizon. Based on the announcement of a new director as well as newly established teams utilizing data provided from state unemployment offices to guide future charges, we expect that aggressive enforcement remains a top priority for DOJ.
*Maya Kouassi contributed to this blog post. Ms. Kouassi is a graduate of the City University of New York Law School 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.