DOJ COVID-19 Fraud Enforcement Task Force — Fact Sheet: Combatting COVID-19 Fraud

Source document: Montenegro together with Tamara Dadyan, who fled after failing to report to serve her sentence; document type: criminal-prosecutions.

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Last updated March 10, 2022
Fact Sheet: Combatting COVID-19 Fraud
In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal
the resources of the Department of Justice in partnership with agencies across government to enhance
efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and
prosecute the most culpable domestic and international criminal actors and assists agencies tasked with
administering relief programs to prevent fraud by, among other methods, augmenting and incorporating
existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and
their schemes, and sharing and harnessing information and insights gained from prior enforcement
efforts.

PPP and EIDL fraud
Prominent among the department’s efforts have been cases involving PPP and EIDL fraud. Across the
department, including the Criminal Division’s Fraud Section and U.S. Attorney’s Offices, approximately
500 defendants have been charged in over 340 cases with alleged intended losses of over $700 million.
•
Relatedly, the department has seized over $1 billion in EIDL loan proceeds, primarily through the
work of the U.S. Attorney’s Office for the District of Colorado and their partners at the U.S. Secret
Service.
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Fraudsters have targeted the EIDL program, which was designed to provide loans to small
businesses, agricultural and non-profit entities, by applying for advances and loans on behalf of
ineligible newly-created, shell, or non-existent businesses, and diverting the funds for illegal
purposes. The EIDL Fraud Task Force in Colorado, comprised of personnel from five federal law
enforcement agencies and federal prosecutors, is investigating a broad swath of allegedly
fraudulently loans and their applicants. It is working to identify individual wrongdoers and
networks of fraudsters appropriate for prosecution.
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The PPP and EIDL criminal cases involve a range of conduct, from individual business owners who
have inflated their payroll expenses to obtain larger loans than they otherwise would have
qualified for, to serial fraudsters who revived dormant corporations and purchased shell
companies with no actual operations to apply for multiple loans falsely stating they had significant
payroll, to organized criminal networks submitting identical loan applications and supporting
documents under the names of different companies. Most charged defendants have
misappropriated loan proceeds for prohibited purposes, such as the purchase of houses, cars,
jewelry, and other luxury items.
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In one case, U.S. v. Dinesh Sah, in the Northern District of Texas, the defendant applied for 15
different PPP loans to eight different lenders, using 11 different companies, seeking a total of
$24.8 million. The defendant obtained approximately $17.3 million and used the proceeds to
purchase multiple homes, jewelry, and luxury vehicles. In 2021, Sah pleaded guilty to wire fraud
and money laundering offenses and was sentenced to more than 11 years in prison.
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In U.S. v. Richard Ayvazyan, et al., in the Central District of California, eight defendants applied for
at least 151 PPP and EIDL loans seeking over $21 million using stolen and fictitious identities and
sham companies, and laundered the proceeds through a web of bank accounts to purchase real
estate, securities, jewelry, and other luxury goods. In 2021, four of those eight defendants were
convicted at trial and the other four pleaded guilty. Two of the defendants in that scheme, Richard
Ayvazyan and Marietta Terabelian, were sentenced in absentia – as they fled and failed to appear

Last updated March 10, 2022
in court after their trial convictions – to 17 years and six years, respectively. Two other defendants
in that scheme, Tamara Dadyan and Artur Ayvazyan, were sentenced to 130 months and five
years, respectively. Richard Ayvazyan and Marietta Terabelian were recently arrested in
Montenegro together with Tamara Dadyan, who fled after failing to report to serve her sentence.
The three fugitives remain in custody pending extradition to the United States.
•
In U.S. v. Amir Aqeel, et al., in the Southern District of Texas, 15 individuals across two states
allegedly applied for more than 80 false and fraudulent PPP loan applications seeking over $35
million by falsifying the number of employees and the average monthly payroll expenses of the
applicant businesses. Six of the defendants have pleaded guilty and the remaining co-conspirators
are pending trial.
•
In U.S. v. Eric Shibley, in the Western District of Washington, the defendant, a Seattle doctor, was
convicted at trial of wire fraud, bank fraud, and money laundering in connection with his scheme
to fraudulently seek over $3.5 million in PPP and EIDL funds in the names of businesses with no
actual operations or by otherwise misrepresenting the business’s eligibility for those loans.

UI Fraud
Due to the COVID-19 pandemic, up to $860 billion in federal funds has been appropriated for UI benefits
through September 2021. Early investigation and analysis indicate that international organized criminal
groups have targeted these funds by using stolen identities to file for UI benefits. Domestic criminals,
ranging from identity thieves to violent street gangs to prison inmates, have also committed UI fraud. In
response, the department established the National Unemployment Insurance Fraud Task Force, a
prosecutor-led multi-agency task force with representatives from more than eight different federal law
enforcement agencies to coordinate those efforts. U.S. Attorney’s Offices around the country have
worked with law enforcement partners to investigate and arrest those responsible for committing UI
fraud. Since the start of the pandemic, over 430 defendants have been charged and arrested for federal
offenses related to UI fraud.
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In one case, U.S. v. Njokem, et al., in the District of Maryland, three conspirators were indicted
and arrested for conspiring to file more than $2.7 million in fraudulent UI claims from February
2020 through February 2021.

COVID-19 Health Care Fraud Enforcement
The Criminal Division Health Care Fraud Unit has charged criminal cases involving various fraud schemes
that were designed to exploit the COVID-19 pandemic. These cases include clinical laboratory testing
schemes where COVID-19 testing was offered in order to obtain Medicare beneficiary information that
then was used to submit medical claims to health care insurance programs for unrelated and medically
unnecessary – and far more expensive – testing; telemedicine fraud that exploited policies that were put
in place by Centers for Medicare & Medicaid Services to enable increased access to care during the COVID-
19 pandemic; CARES Act Provider Relief Fund fraud, in which monies provided for needed medical care
were misappropriated by health care providers for personal purposes; COVID-19 vaccine and vaccination
record card fraud; and schemes by health care providers to defraud investors or consumers in connection
with the pandemic.

Last updated March 10, 2022
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In May, the department announced a coordinated law enforcement action to combat health care
fraud related to COVID-19 that included criminal charges against a telemedicine company
executive, physician, marketers, and medical business owners for COVID-19 related fraud
schemes with losses exceeding $143 million.
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In U.S. v. Stein et al., in the Southern District of Florida, two defendants have been charged in
connection with the alleged exploitation of temporary waivers of telehealth restrictions, which
resulted in the submission of over $73 million in claims for medically unnecessary cancer and
cardiovascular genetic testing.
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In  U.S. v. Staley, in the Southern District of California, a physician who attempted to profit from
the pandemic by marketing a “miracle cure” for COVID-19, pleaded guilty and  admitted that he
tried to smuggle hydroxychloroquine into the United States to sell in his coronavirus “treatment
kits.”
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Through the department’s International Computer Hacking and Intellectual Property (ICHIP)
program, jointly administered by the Criminal Division’s Office of Overseas Prosecutorial
Development, Assistance and Training (OPDAT) and the Computer Crime and Intellectual Property
Section (CCIPS), ICHIP advisors have provided assistance and case-based mentoring to foreign
counterparts around the globe to help detect, investigate and prosecute fraud related to the
pandemic. The ICHIPs have helped counterparts combat cyber-enabled crime (e.g., online fraud)
and intellectual property crime, including fraudulent and mislabeled COVID-19 treatments and
sales of counterfeit pharmaceuticals. ICHIPs conducted webinars for foreign prosecutors and law
enforcement in Asia, Africa, Europe, South and Central America and Mexico on detecting online
fraudulent sales of COVID-19 vaccines and counterfeit pharmaceuticals. This has resulted in the
take down of multiple online COVID-19 scams and significant seizures of counterfeit medicines
and medical supplies such as masks, gloves, hand sanitizers and other illicit goods.
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The department also continued its efforts to combat coronavirus-related fraud schemes targeting
American consumers through criminal and civil actions. With scammers around the world
attempting to sell fake and unlawful cures, treatments, and personal protective equipment, the
department brought dozens of civil and criminal enforcement actions during the pandemic to
safeguard Americans’ health and economic security. In 2021, the department prosecuted, secured
civil injunctions, or instituted proceedings against more than a dozen defendants who sold
products, such as vitamin supplements and “colloidal silver” supplements, using false or
unapproved claims about the products’ abilities to prevent or treat COVID-19 infections. The
department has also worked to shutter hundreds of fraudulent websites that were facilitating
consumer scams and is coordinating with numerous agency partners to prevent and deter
vaccine-related fraud.
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The department is using numerous civil tools to address fraud in connection with pandemic relief
programs. Since enactment of the CARES Act, the Civil Fraud Section has opened over 240 civil
investigations into more than 1,800 individuals and entities for alleged misconduct in connection
with over $6 billion in pandemic relief program funds. The department also has reached civil
settlements under the False Claims Act (FCA) and the Financial Institutions Reform, Recovery, and
Enforcement Act (FIRREA) that have avoided millions of dollars in losses to the government.
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For example, the department recently reached several civil settlements involving small businesses
that knowingly received multiple PPP loans in violation of the program rule in effect during the
first round of PPP disbursements that limited a borrower to one PPP loan.
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In one settlement, Sandeep S. Walia, M.D. and his medical practice, Walia PMC, paid $70,000 in
damages and penalties to resolve allegations under the FCA and FIRREA that Dr. Walia, on behalf
of his practice, falsely certified in an application for a second PPP loan that the medical practice

Last updated March 10, 2022
had not previously received a PPP loan. As part of the civil settlement, the medical practice also
agreed to repay the second PPP loan to the lender, with interest, relieving the SBA of liability for
the federal guaranty of over $430,000 on the improper loan.
•
Similarly, Sextant Marine Consulting LLC, a Florida-based duct cleaning company, paid $30,000 in
damages and civil penalties to settle allegations that it violated the FCA by obtaining more than
one PPP loan in 2020. Sextant also repaid the duplicative PPP funds in full to its lender, relieving
the SBA of liability to the lender for the federal guaranty of approximately $170,000 on the
improper loan.
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The department has also pursued cases against eligible borrowers for using PPP funds to pay for
impermissible expenses, such as https://www.justice.gov/opa/pr/owner-jet-charter-company-
settles-false-claims-act-allegations-regarding-misappropriation, the owner of jet charter
company All in Jets LLC dba JetReady (JetReady) who paid $287,055 to settle allegations that he
diverted PPP funds to pay for personal, non-company related expenses.

Indictments and other criminal charges referenced above are merely allegations, and all defendants are
presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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