Statement of Kevin Chambers, Director for COVID-19 Fraud Enforcement (June 14, 2022)

Summary

This is the statement of Kevin Chambers, Director for COVID-19 Fraud Enforcement, presented June 14, 2022, to the Select Subcommittee on the Coronavirus Crisis. It states that as of May 2022, United States Attorneys' offices have criminally charged approximately 1,261 defendants and the Criminal Division's Fraud Section approximately 220 defendants in pandemic fraud related matters. It also describes over 300 civil investigations into more than 2,300 individuals and entities, with the cases as of March 2022 involving over $6 billion in pandemic relief loans. It says the Department is establishing strike force teams, and that the President's 2022 Budget requested $41.2 million for DOJ's COVID-19 fraud enforcement efforts, an amount Congress did not approve.

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“Statement of Kevin Chambers, Director for COVID-19 Fraud Enforcement (June 14, 2022).” Original at docs.house.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/hhrg-117-vc00-wstate-chambersk-20220614-5f7869097dad-7cc64a8715/, SHA-256 5f7869097dad8a52f07ba40c04c3c10d10425dfc04defb724344c46840f64e68.

Full text

STATEMENT OF

KEVIN CHAMBERS
DIRECTOR FOR COVID-19 FRAUD ENFORCEMENT

BEFORE THE

SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS
U.S. HOUSE OF REPRESENTATIVES

AT A HEARING CONCERNING

FRAUD COMMITTED AGAINST
PANDEMIC RELIEF PROGRAMS

PRESENTED

JUNE 14, 2022
STATEMENT OF
KEVIN CHAMBERS
DIRECTOR FOR COVID-19 FRAUD ENFORCEMENT

BEFORE THE
SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS
U.S HOUSE OF REPRESENTATIVES

AT HEARING CONCERNING
FRAUD COMMITTED AGAINST
PANDEMIC RELIEF PROGRAMS

PRESENTED
JUNE 14, 2022

Mr. Chairman, ranking member and members of the committee, my name is Kevin
Chambers. I am an Associate Deputy Attorney General and, since March of this year I have
been serving as the Department’s Director of Covid-19 Fraud Enforcement. I would like to
thank you for the opportunity to appear before the Committee on this important issue. This
committee is appropriately focused on and concerned about waste, fraud and abuse arising from
pandemic relief. Know that the Department fully shares this concern and is committed to doing
all that we can, along with our agency partners, to identify and investigate potential fraud and,
where appropriate, vigorously prosecute that fraud, bringing to bear all appropriate criminal and
civil tools.

This is not a new commitment. The Department of Justice has been prosecuting
pandemic-related fraud since COVID-19 arrived on our shores. In March 2020, the Attorney
General directed all United States Attorneys’ offices to prioritize the investigation and
prosecution of Coronavirus-related fraud schemes. Indeed, I am proud to say that members of
my leadership team are amongst the prosecutors and trial attorneys who have been working on
these matters since the Department’s very first enforcement action in March 2020, when the
Department brought civil charges against fraudsters attempting to take advantage of a frightened
public by selling bogus vaccine kits.

Since then, the women and men of the Department have continued to work tirelessly to
enforce this directive. As of May 2022, U.S. Attorneys’ Offices have criminally charged
approximately 1,261 defendants and the Criminal Division’s Fraud Section has criminally
charged approximately 220 defendants in pandemic fraud related matters. These cases, most of
which are still in progress have involved over $1.1billion in losses as of March 2022. Many
more matters are in the investigative stage. Additionally, there are over 300 civil investigations
into more than 2,300 individuals and entities for alleged misconduct in connection with
pandemic fraud—the vast majority of these civil matters relate to the Small Business
Administration Paycheck Protection Program (SBA PPP) fraud. As of March 2022, these cases
involve over $6 billion in pandemic relief loans. As with our criminal matters, our civil
attorneys are tirelessly working on other not-yet-public matters not included in these totals.

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Among the public cases are a few that I would like to highlight and which are demonstrative of
the Department’s fraud enforcement work.

In the Western District of Washington, prosecutors secured a guilty plea from a Nigerian
citizen who used the stolen identities of more than 20,000 Americans to file for more than $2
million in government benefits, including from multiple state unemployment insurance benefit
systems during the pandemic. https://www.justice.gov/usao-wdwa/pr/nigerian-citizen-pleads-
guilty-covid-19-unemployment-fraud-washington-and-17-other.

In the Eastern District of Michigan, two defendants were charged with filing at least 470
claims for fraudulent unemployment insurance benefits in 5 States. This activity is believed to
have caused actual losses of over $4 million and intended losses of over $13 million.
https://www.justice.gov/usao-edmi/pr/two-defendants-charged-unemployment-insurance-benefit-
fraud-combined-actual-losses.

In the Central District of California, the Criminal Division’s Fraud Section and the U.S.
Attorney’s Office convicted seven defendants of using dozens of fake and stolen, or synthetic
identities to submit fraudulent applications for approximately 150 PPP and EIDL loans. Two
defendants, including the lead defendant, fled post trial; he was sentenced in absentia to 17 years.
https://www.justice.gov/opa/pr/seven-members-los-angeles-based-fraud-ring-sentenced-
multimillion-dollar-covid-19-relief.

These are just a few examples. While we are proud of the work done so far, it is no time
to pat ourselves on the back. Beginning in 2020 through the end of last year, the United States
Government committed $5 trillion dollars in financial relief for the American people. This
unprecedented aid helped to make sure that small business owners could continue to pay their
employees and, where workers had to be let go, it helped provide them with the funds they
needed to cover daily expenses and take care of their families as the pandemic continued. It
provided funds to health care providers which they were able to use to attempt to stay ahead of
the pandemic and obtain the supplies needed to save lives.

However, as with any government relief program, there were those – here and abroad –
who saw these pandemic relief programs as an opportunity for personal enrichment. They
knowingly took advantage of the online systems that were set up to increase access to these
programs. These thieves employed a number of schemes, some complex, to carry out their
selfish ends.

Criminals have purchased stolen identities online and filed for unemployment insurance
relief benefits, using bank accounts opened online to receive the funds and money mules to help
transfer the benefits overseas. Criminals have created fictitious businesses and received funds in
their names. Criminals have used COVID-19 ruses to trick unsuspecting citizens into clicking on
links in emails that instead delivered malware onto their computers designed to steal their
personal and financial information. Criminals have sold fraudulent COVID-19 cures online,
preying on people’s desperation early in the pandemic. Criminals have worked together online in
loose networks, facilitated by encrypted messaging applications to coordinate the filing of
fraudulent benefits, using the same stolen identities to file for SBA loans and unemployment

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insurance benefits. Based on public assessments made by our colleagues in the Offices of
Inspectors General, it is safe to say that the total amount of fraud, like the amount of relief
provided to the American people, is unprecedented.

This is not imaginary money. Each dollar stolen from a relief package was a dollar stolen
from the owner of a small restaurant who wanted nothing more than to keep her staff on the
payroll, despite an empty restaurant. Each dollar stolen was a dollar that could have gone toward
helping unemployed parents feed their children. Each dollar stolen was a dollar that could have
been used to obtain protective gear, or COVID tests, or other scarce equipment. Instead of going
to where the money was needed, these criminals used stolen pandemic relief money to purchase
luxury cars and jewelry, fund lavish vacations, close on vacation homes, gamble at casinos, or
sent the money to overseas bank accounts.

Some of these criminals took to social media to boast about their misconduct, brazenly
flaunting the proceeds of their crimes and flouting the intended purpose of the government relief.
Some of these criminals even posted about how others could similarly exploit vulnerabilities in
federal relief programs. As maddening as each of these posts was, they also were of important
evidentiary value. Each post and text formed a digital footprint, memorializing the crimes and
leaving an evidentiary trail used to resolve the matter, whether through a civil settlement,
negotiated guilty plea, or criminal conviction. This and other data were critical in bringing
justice in these cases.

I focus on data because data is a critical part of our fraud enforcement. Indeed, as we
enter the next phase of our effort to root out fraud we will start with the data. And because most
of these pandemic relief funds were applied for via online applications, there is plenty of data.
Our partners have received unemployment insurance data from all fifty states and relevant U.S.
territories, and the SBA has millions of EIDL and PPP loan applications. For each potentially
fraudulent application for relief, someone had to provide information. That information could
have been a name, an address, an email or IP address, a bank account and countless other types
of information. We have tens of millions of identifiers and data points that has been flagged by
our agency partners as being connected to potential fraud. Of course, some of the data was fake,
but even where that is the case, we have and will continue to use advanced analytical tools to
identify patterns and trends that will lead us to those who put themselves above the safety and
security of the American people.

This will be a tremendous undertaking, and we have identified skilled prosecutors across
the Department of Justice who will lead the effort to prosecute these cases. We are also
supported by investigators from across the federal government who have committed dedicated
resources to assist in the investigations. I would like to thank DOL-OIG, DHS-OIG, FBI, HSI,
IRS-CI, SBA-OIG, USPIS, and USSS for their support and partnership. Finally, dedicated
analysts will pore through millions of pieces of data, identifying potential fraud and creating the
leads that will lead to investigation and, ultimately, convictions.

We are in the process of establishing strike force teams that will focus upon large-scale
pandemic-related fraud committed by organized criminal networks. The strike force teams will
also combat fraud committed by overseas actors, who we believe have often stolen the identities

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of American workers to further their criminal ends and who have victimized other Americans by
tricking them into moving money from our shores to foreign countries. These strike force teams
will supplement the incredibly hard work already underway throughout the Department. We will
soon provide more specific information about the establishment of these teams.

Because of the unprecedented scope of this fraud, the enormous amount of data, and the
years of work ahead, this effort will require additional resources. The President's 2022 Budget
requested $41.2 million for DOJ's COVID-19 fraud enforcement efforts. Unfortunately, that
amount was not approved by Congress, and the President's 2023 Budget has re-requested the
same amount. These resources will allow us to speed up our data analysis and identification of
fraudulent schemes, increasing our ability to recover funds. Our experience so far shows a return
on investment for COVID-19 fraud resources that far exceeds the expense. We ask for your
continued support to properly staff this effort with the agents, analysts, and prosecutors needed to
bring these criminals to justice and seize their ill-gotten gains.

Once again, thank you for your attention to this matter and for the invitation to meet with
this committee.

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