U.S. Department of Labor OIG, United States Attorney Erek L. Barron Announces that the Maryland United States Attorney’s Office Continues the Fight Against Fraud, Waste and Abuse Related to the COVID-19 Pandemic (USAO D-MD 08/29/2023) (2023-09-05)

Summary

A press release from the U.S. Attorney's Office, District of Maryland, dated August 29, 2023, in which U.S. Attorney Erek L. Barron reports on the office's work against COVID-19 fraud as a national strike force. It states that since the Maryland COVID-19 Fraud Strike Force was established in August 2022, more than 20 defendants have been charged with an alleged loss of approximately $40 million, and that 19 active civil fraud cases are pending with approximately $30 million in potential loss. Examples include Keon Ball, sentenced to more than five years for a wire fraud conspiracy and aggravated identity theft, and twin brothers Jerry and Jaleel Phillips, sentenced to seven years and 30 months. The office also reports shutting down 17 fraudulent websites and the August 4, 2023 conviction of Ron Elfenbein on five counts of health care fraud.

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PRESS RELEASE



United States Attorney Erek L.
Barron Announces that the
Maryland United States Attorney’s
Office Continues the Fight Against
Fraud, Waste and Abuse Related to
the COVID-19 Pandemic
Tuesday, August 29, 2023

For Immediate Release

U.S. Attorney's Office, District of Maryland



Maryland U.S. Attorney’s Office is One of Five National
Specialized COVID-19 Strike Forces

Baltimore, Maryland – Erek L. Barron, the United States Attorney for Maryland,
announced that the U.S. Attorney’s Office continues to prioritize the investigation and
prosecution of fraud, waste and abuse relating to pandemic relief enacted by Congress,
including fraud involving the Coronavirus Aid, Relief, and Economic Security (“CARES”)
Act. The CARES Act was designed to provide emergency financial assistance to
Americans suffering the economic effects caused by the COVID-19 pandemic. Attorney
General Merrick B. Garland previously selected the Maryland U.S. Attorney’s Office to
help lead the U.S. Justice Department’s response to COVID-19 fraud, along with U.S.
Attorney’s Offices in California and Miami, Florida.

On August 23, 2023, the Justice Department announced the results of a coordinated,
nationwide enforcement action to combat COVID-19 fraud, including federal criminal
charges filed against 371 defendants for offenses related to over $836 million in alleged
COVID-19 fraud. Deputy Attorney General Lisa Monaco also announced the formation
of additional Strike Forces in the New Jersey and Colorado U.S. Attorney’s Offices.
“Maryland’s Strike Force has proven through dedicated resources, partnerships with
local, state and federal law enforcement, that those who would steal from American
taxpayers are held accountable and our efforts to investigate and prosecute is making a
demonstrated difference,” said U.S. Attorney Erek L. Barron. “We cannot, and will not,
tolerate those who would take advantage of a global pandemic by stealing funds and
defrauding programs intended to help Americans who were suffering during the
pandemic.”

Led by senior Assistant United States Attorneys Harry Gruber and Paul Riley as well as
specially assigned Fraud and Public Corruption Assistant U.S. Attorneys and support
staff, the Maryland Strike Force is one of three Strike Force Teams established
throughout the United States by the U.S. Department of Justice to investigate and
prosecute COVID-19 fraud, including fraud relating to the CARES Act. The Strike Forces
focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal
organizations and transnational actors. The Strike Forces are interagency law
enforcement efforts, using prosecutor-led and data analyst-driven teams designed to
identify and bring to justice those who stole pandemic relief funds.

Since establishing the Maryland COVID-19 Fraud Strike Force in August 2022, the
number of pandemic fraud-related criminal investigations and prosecutions has
significantly increased. More than 20 defendants have been charged for various
offenses with an alleged loss of approximately $40 million. In addition, there are
numerous ongoing criminal COVID-19 fraud investigations. Some of our ongoing
COVID-19 fraud investigations involve other criminal activity, including those by repeat
violent offenders. The Office’s civil enforcement is also quite active, with 19 active civil
fraud cases pending with a total of 19 defendants and approximately $30 million in
potential loss.

As further commitment to fight pandemic fraud, waste and abuse, the Maryland U.S.
Attorney’s Office has also established partnerships with Special Inspector for Pandemic
Recovery (SIGPR) General Brian D. Miller. The collaboration with SIGPR allows the U.S.
Attorney’s Office and SIGPR to enhance their efforts to combat CARES Act funding
fraud, waste and abuse with an emphasis on swift accountability for large-scale and
organized fraud schemes. The Maryland U.S. Attorney’s Office has also partnered with
the U.S. Department of Labor, Office of Inspector General (DOL-OIG), Office of
Investigations. The DOL-OIG partnership includes four DOL-OIG Special Agents working
on location in the Maryland U.S. Attorney’s Office, allowing for a quicker response and
more comprehensive and coordinated investigations involving CARES Act fraud, waste
and abuse and the ability to specifically target suspects of violent crime who are illegally
exploiting the CARES Act and other pandemic related programs.
As highlighted below, the Maryland U.S. Attorney’s Office’s efforts to combat COVID-19
related fraud, waste and abuse including schemes targeting the Paycheck Protection
Program (“PPP”), Economic Injury Disaster Loan (“EIDL”) program and Unemployment
Insurance (“UI”) programs have led to significant results.

      Paycheck Protection Program and Economic Injury Disaster Loans Fraud

The PPP and EIDL fraud cases charged federally in Maryland since passage of the CARES
Act involve a range of conduct, including many individuals who used shell business
entities to fraudulently apply on multiple occasions for benefit funds that they used their
personal benefit, such as the purchase of houses, cars, jewelry, high-end electronics and
other luxury goods. Some conduct also involves legitimate business owners who
inflated their payroll expenses to obtain larger loans than they otherwise would have
qualified for, and/or used funds for improper purposes.

For example, in U.S. v. Keon Ball, defendant Ball was sentenced to more than five years
in federal prison for a wire fraud conspiracy and aggravated identity theft in relation to
multiple identity theft schemes and fraud schemes—including schemes conducted while
on probation for a past state fraud conviction and while on pre-trial release in
connection with state fraud charges.

Specifically, in June and July 2020, defendant Ball submitted fraudulent PPP loan
applications and obtained $256,664 in government-backed PPP funds for purported
businesses that did not exist in any legitimate capacity. Included with each application
were fraudulent documents, including fabricated Internal Revenue Service forms, that
contained false information concerning purported wages paid and purported number of
employees of each business. In total, defendant Ball caused a loss of $750,000 and
intended losses of over $1,450,000 and used the identifying information of more than
10 victims in connection with his schemes. In addition to his prison sentence, defendant
Ball was ordered to pay at least $715,504 in restitution.

                            Unemployment Insurance Fraud

The CARES Act also expanded states’ ability to provide UI benefits for many workers
impacted by the COVID-19 pandemic, including for workers who are not ordinarily
eligible for unemployment benefits. Many of the defendants charged in Maryland used
the personal identifying information (“PII”) of individuals without their knowledge or
permission to fraudulently obtain identity documents and obtain UI benefits.

In U.S. v. Jerry Phillips, twin brothers and co-defendants Jerry and Jaleel Phillips were
sentenced to seven years and 30 months in prison, respectively, and were ordered to
pay more than $1 million in restitution, for a wire fraud scheme to fraudulently obtain
more than $1 million in PPP and EIDL loans, and UI benefits. Defendant Jerry Phillips
also pleaded guilty to aggravated identity theft and possession of a machine gun. The
Phillips brothers admitted that they created and used fictitious aliases, used the personal
identifying information of real people, and used defunct corporate entities or new
business entities with no actual business operations to repeatedly obtain EIDL and PPP
loans, and UI benefits. Law enforcement also recovered four “ghost guns” during a
search of the Phillips’ residence that defendant Jerry Phillips had purchased
online. Defendant Jerry Phillips illegally modified one of the ghost guns into a machine
gun.

                  Examples of COVID-19 CARES Act Cases in Maryland

The cases in the chart below highlight that many Maryland U.S. Attorney defendants
participated in other fraud schemes, including elder fraud and business email
compromise schemes. In addition, a number of defendants possessed illegal firearms,
including privately manufactured firearms, commonly called “ghost guns.”


                                                           Intended
                     Case
  Case                            Program Targeted         Loss
                     number
                                                           to Taxpayer


  U.S. v.
                     23-CR-
  Reginald                        PPP                       $1,400,000
  Davis**            269


  U.S. v. David      23-CR-
                                  PPP, EIDL                 $1,500,000
  Epstein**          210


  U.S. v.
                     23-CR-
  Denish                          PPP, EIDL                 $2,500,000
  Sahadevan*         191


  U.S. v.
  Tomeka
                     23-CR-
  Glenn and                       PPP                         $305,854
  Kevin              027
  Davis**
U.S. v. Ryan     23-CR-
                          UI       $25,000
E. Dales**       026


U.S. v.          23-CR-
                          PPP     $734,609
Bearden**        023


U.S. v.
                 22-CR-
Mikiyas                   EIDL   $1,600,000
Kefyalew**       382


U.S. v.
Yannice          22-CR-
                          PPP     $674,216
Nunez, et.       342
al.**


U.S. v. Ayaz     22-CR-
                          PPP     $250,723
Qureshi*         330


U.S. v.
Sherrie          22-CR-
                          PPP     $419,100
Lynne            308
Bryant


U.S. v. Raissa
                 22-CR-
Kaossele et.              EIDL    $475,000
al.,**           303


U.S. v. Larry    22-CR-
                          PPP     $262,252
Walker*          290


U.S. v.
Tyshawna         22-CR-
Davis, et.                UI     $3,000,000
                 248
al.,**
U.S. v.
                22-CR-
Alexander                PPP               $1,317,352
Barabash        232


U.S. v. Dana    22-CR-
                         PPP, EIDL           $50,036
Hayes, Jr.      224


U.S. v.
Michael         22-CR-
                         UI                $1,600,000
Makoge et.      219
al.,*


U.S. v.
                22-mj-
Ahmed                    PPP, EIDL        $10,000,000
                1286
Sary**


U.S. v. Ron     22-CR-
                         Medicare         $15,000,000
Elfenbein*      146


U.S. v.
                22-CR-
Mboutchock               EIDL, Medicaid    $3,500,000
Kabiwa*         109


U.S. v. Jerry
                22-CR-
Phillips et.             PPP, EIDL, UI     $1,235,213
al.,            073


U.S. v.
                21-CR-
Nichelle                 PPP, EIDL         $1,835,340
Henson**        470


U.S. v.
                21-CR-
Oluwaseyi                UI                 $486,119
Akinyemi        454
  U.S. v.            21-CR-
                                  UI                         $1,500,000
  Olaolu Alabi       413


  U.S. v.
  Rudolph            21-CR-
  Elwood                          PPP                        $3,500,000
                     371
  Brooks, Jr. *


  U.S. v.
  Gladstone          21-CR-
                                  UI                         $2,700,000
  Njokem et.         338
  al.,


  U.S. v.
  Brandon            21-CR-
                                  PPP                          $305,854
  Fitzgerald-        250
  Holley


  U.S. v.
                     21-CR-
  Christopher                     UI                           $176,970
  Guy                238


  U.S. v.
                     21-CR-
  Medard                          UI                           $618,767
  Ulysse             054


  U.S. v. Idowu      20-CR-
                                  UI                         $1,793,472
  Raji               369


  U.S. v. Keon       20-CR-
                                  PPP                        $1,500,000
  Ball et. al.,      248


*Defendant(s) is pending sentencing
** Defendant(s) indicted. An indictment is not a finding of guilt. An individual charged by
indictment is presumed innocent unless and until proven guilty at some later criminal
proceedings.
                       Other COVID-19 Related Fraud Schemes

Additional COVID-19 related cases brought by the Maryland U.S. Attorney’s Office
include shutting down fraudulent websites believed to have been used to collect the
personal information of individuals visiting the site; the prosecution of health care fraud
related to billing of COVID-19 related treatment or testing; and the prosecution of
threats against federal officials involved in COVID-19 pandemic policy.

To date, the U.S. Attorney’s Office for the District of Maryland has shut down 17
fraudulent websites which appear to have been used to collect the personal information
of individuals visiting the site, in order to use the information for nefarious purposes,
including fraud, phishing attacks, and/or deployment of malware. The seized websites
were almost identical to the names of authentic U.S. websites, including COVID-19
vaccine manufacturers, retailers, and purported COVID-19 treatment. Several of the
seized websites purported to sell vaccines and other treatments for the COVID-19
virus. Often, the fake domains mimicked the stylistic designs and language of the
authentic U.S. website. After the seizures, individuals visiting the website see a message
that the website has been seized by the federal government and are redirected to
another website for additional information.

On August 4, 2023, a federal jury convicted medical doctor Ron Elfenbein for five counts
of health care fraud related to the submission of false and fraudulent claims to Medicare
and other insurers for patients who received COVID-19 tests at sites operated by the
defendant. In total, defendant Elfenbein submitted more than $15 million in claims to
Medicare and other insurers for patients who received COVID-19 tests at sites operated
by defendant Elfenbein. Sentencing is scheduled for November 7, 2023 at 4:00 p.m.

On August 4, 2022, Thomas Patrick Connally, Jr. was sentenced to 37 months in federal
prison for making threats against a federal official, specifically for sending emails
threatening harm the then Director of the National Institute of Allergy and Infectious
Diseases at the National Institutes of Health (NIH). Defendant Connally further admitted
to threatening the Assistant Secretary for Health at the U.S. Department of Health and
Human Services, as well as a Massachusetts public health official and a religious
leader. Defendant Connally admitted that he sent the threats with the intent to
intimidate or interfere with the performance of these public officials’ duties and with the
intent to retaliate against these government officials for performing their official duties,
including discussing COVID-19 and its testing and prevention.

U.S. Attorney Erek Barron recognized the efforts of a wide range of law enforcement
partners for their work in COVID-19 related cases, including the DOL-OIG, the IRS-CI, the
FBI, SIGPR, the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S.
Secret Service, the Department of Defense Office of Inspector General, Defense Criminal
Investigative Service, and the Offices of Inspectors General from SBA, Department of
Homeland Security, Social Security Administration, Federal Deposit Insurance
Corporation, Department of Health and Human Services, and the Department of
Veterans Affairs.

For more information on the Department’s response to the pandemic, please
visit https://www.justice.gov/coronavirus.

To report a COVID-19-related fraud scheme or suspicious activity, contact the National
Center for Disaster Fraud (NCDF) by calling the NCDF Hotline at 1-866-720-5721 or via
the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-
complaint-form.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources
available to fight fraud, please visit www.justice.gov/usao-
md and https://www.justice.gov/usao-md/report-fraud.

                                          ###

Contact

Marcia Lubin
(410) 209-4854

Updated August 29, 2023



Topic

CORONAVIRUS

Component

USAO - Maryland

CORONAVIRUS


Component
USAO - Maryland


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