Highlights of GAO-24-106353: COVID-19: Insights from Fraud Schemes and Federal Response Efforts

Summary

Highlights page of GAO-24-106353, a November 2023 report to congressional committees titled "COVID-19: Insights from Fraud Schemes and Federal Response Efforts." GAO reports that DOJ brought federal fraud-related charges against at least 2,191 individuals or entities in COVID-19 cases as of June 30, 2023, and that at least 1,525 were found guilty or liable. Examples include an alleged conspiracy to obtain more than $240 million from a federal child nutrition program and two company owners who applied for 14 Paycheck Protection Program loans and 12 COVID-19 Economic Injury Disaster Loans. The COVID-19 Fraud Enforcement Task Force reported actions against fraudsters responsible for approximately $836 million in fraud. GAO says the 10 actions for Congress it identified in March 2022 all remain open.

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“Highlights of GAO-24-106353: COVID-19: Insights from Fraud Schemes and Federal Response Efforts.” Original at www.gao.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/highlights-of-gao-24-106353-covid-19-insights-from-fraud-schemes-and-f-6b53871d90/, SHA-256 437438a95a5dd16369356cd07b50466ea56b792d37aa3e7d6c06da4aa5d75e6a.

Full text

November 2023

COVID-19
Insights from Fraud Schemes and Federal Response
Efforts
Highlights of GAO-24-106353, a report to
congressional committees

Why GAO Did This Study What GAO Found
Since March 2020, Congress provided The Department of Justice (DOJ) has brought federal fraud-related charges
over $4.6 trillion to help the nation against at least 2,191 individuals or entities in cases involving federal COVID-19
respond to and recover from the relief programs, consumer scams, and other types of fraud as of June 30, 2023.
COVID-19 pandemic. The public health Based on GAO’s analysis of the cases announced in DOJ press releases, at
crisis, economic instability, and least 1,525 individuals or entities facing fraud-related charges were found guilty
increased flow of federal funds or liable. Courts have ordered individuals to pay restitution ranging up to over
associated with the pandemic $60 million and serve prison terms up to 10 years or more. GAO’s analysis of
increased pressures on federal agency fraud schemes highlights the resulting financial losses and impacts on taxpayers,
operations and presented opportunities
agency reputation, federal program goals, and health and safety. Agencies can
for individuals to commit fraud. The
use information about schemes to improve their fraud risk management efforts.
COVID-19 pandemic saw an increase
in the number of fraud-related charges, Examples of Fraud Schemes Involving Federal COVID-19 Relief Programs or Consumer Scams
including schemes by individuals and
large complex syndicates. Key mechanism Fraud scheme description
A group allegedly conspired to obtain more than $240 million from a
The CARES Act of 2020 includes a federal child nutrition program in a complex fraud scheme. Individuals
provision for GAO to report regularly colluded to open shell companies acting as program sites to claim
on the federal response to the they were serving thousands of meals a day to underserved children
pandemic. Conspiracy during the pandemic. Instead, these funds were diverted for self-
enrichment. Four individuals pleaded guilty but have not been
This report describes: (1) the status of sentenced. Over 40 others are awaiting trial.
federal COVID-19 fraud-related cases Two company owners attempted to obtain a total of $5 million by
announced by DOJ, including applying for 14 Paycheck Protection Program loans and 12 COVID-19
examples of fraud schemes and (2) Economic Injury Disaster Loans. They submitted fabricated tax and
examples of federal efforts that have other documents inflating the companies’ number of employees and
been taken to combat COVID-19 fraud. Misrepresentation payroll. The owners received almost $650,000 in funds they used for
personal items, such as a luxury car. Both pleaded guilty, were
GAO reviewed public statements from ordered to pay more than $800,000 in restitution, and were sentenced
DOJ from March 2020 through June to 2 to 3 years in prison.
2023 to identify federal fraud-related A company owner sold and mailed pesticide marketed as an air
cases. Specifically, GAO identified purifier to kill airborne viruses such as COVID-19. The product
cases involving COVID-19 relief contained sodium chlorite, a substance declared unmailable under
program fraud; consumer scams; and U.S. postal regulations because of its propensity to cause a fire or
other types of fraud. GAO then Mislabeling explosion. The owner was sentenced to 8 months in prison and
ordered to pay a total penalty of $556,443 through restitution, fines,
analyzed court documents for details
and forfeiture.
on fraud schemes. GAO also reviewed
A licensed medical practitioner pleaded guilty to selling homeopathic
federal agency documentation and
immunizations, falsely claiming they provided immunity to COVID-19.
rules, proposed legislation, and She received over $74,000 for fabricated COVID-19 vaccination and
proposed antifraud efforts. immunization records, knowing this would mislead school officials
Health care fraud enforcing the state’s vaccination laws. She was sentenced to almost 3
What GAO Recommends years in prison.
Source: GAO Antifraud Resource and analysis of court documentation (information); Icons-Studio/stock.adobe.com (icons). | GAO-24-
In March 2022, GAO identified 10 106353
actions Congress could take to
Various interagency task forces and the Pandemic Response Accountability
strengthen internal controls and
financial and fraud risk management
Committee (PRAC) were established to combat COVID-19 fraud. For example,
practices across the government. All the COVID-19 Fraud Enforcement Task Force conducted an enforcement sweep
10 remain open. and reported taking law enforcement actions against fraudsters responsible for
approximately $836 million in fraud. Similarly, the PRAC estimated its information
View GAO-24-106353. For more information, and resource sharing with investigative agencies supported hundreds of criminal
contact Rebecca Shea at (202) 512-6722 or convictions and the recovery of more than $1 billion.
shear@gao.gov.
United States Government Accountability Office

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