During the coronavirus pandemic, the federal government has taken significant actions to try and cushion the hard impacts of the economic crisis. With over 11 trillion dollars available through a variety of federal assistance programs, federal investigators and prosecutors have identified several cases where these funds have been fraudulently obtained.
One way the federal government has responded to the economic challenges of the COVID crisis is through the Paycheck Protection Plan. The purpose of the PPP loan program is to allow small businesses to stay open during this unprecedented financial crisis and continue paying wages to employees. An Arkansas woman was indicted by a grand jury for allegedly requesting fraudulent PPP loans.3 She obtained nearly $2 million in PPP loans for two of her companies that were no longer in good standing with the Arkansas Secretary of State. Two days after receiving PPP funds, she made an $8,000 payment on her student loan debt.
A Los Angeles man has also been reported misappropriating PPP loans totaling $9 million. Andrew Marnell allegedly transferred millions of obtained funds to his brokerage account in order to engage in stock trading. Additionally, Marnell also spent hundreds of thousands of dollars at the Bellagio Hotel & Casino in Las Vegas. Marnell was charged with bank fraud and faces up to 30 years in prison.4
Besides attempting to spot and stop abuse of the federal programs connected to the crisis, federal investigators have also been active in attempting to identify and curtail crimes where consumer fears about COVID have been exploited. A federal grand jury indicted Huu Tieu for alleged mail fraud for introducing a misbranded drug into interstate commerce with the intent to defraud.5 Tieu is the CEO of Golden Sunrise Pharmaceutical Inc., which since April had been selling a package of herbal mixtures that he claimed could treat COVID-19. On his website and Facebook pages, Tieu falsely claimed his dietary supplement was the first in the country to have been approved by the FDA to treat COVID-19.
The U.S. Attorney’s Office in Kentucky filed a lawsuit to shut down six websites and a Facebook page that were attempting to “pre-register” consumers for a then-nonexistent COVID-19 vaccine in exchange for $100 worth of Bitcoin.6 Luke John Flint, the man responsible for running the sites, has not yet been criminally charged, but agreed to sign a civil injunction shutting down those sites. At the time, there was no known vaccine. Flint is not a licensed medical professional, nor is he registered with the FDA to distribute the currently available vaccines for COVID-19.
In an attempt to keep the economy afloat and businesses solvent during the COVID health crisis, the government fast-tracked its economic aid. This made it easier for people to misrepresent intentionally and unintentionally to receive government assistance. Others have used this public health crisis and the fears associated with it to scam people and businesses. If you have been a victim of a COVID-related scam, you should contact the National Center for Disaster Fraud Hotline at 866-720-5721 or Justice.gov/DisasterComplaintForm. If you are approached by law enforcement or others about disaster assistance you have obtained, you should consult an experienced criminal defense lawyer about the ramifications of cooperating with officials under your unique circumstances.