In 2020, Congress passed the $2.2 trillion CARES Act in response to the COVID-19 pandemic, providing economic assistance to American workers, families, small businesses, and industries. The Act included various programs such as individual payments, extended unemployment assistance, and small business relief, including the Employee Retention Credit (ERC) and the Paycheck Protection Program (PPP). Unfortunately, some individuals took advantage of these programs, leading to IRS-Criminal Investigation (CI) opening 1,644 COVID-related tax and money laundering cases potentially totaling $8.9 billion.
The PPP loans were intended to help small businesses keep their workers on payroll during the pandemic, with loans being guaranteed by the Small Business Administration (SBA). The loans covered payroll costs, benefits, mortgage interest, rent, utilities, and worker protection costs related to the pandemic. Meanwhile, the EIDL program aimed to support small businesses’ recovery, providing loan funds for working capital and standard operating expenses that had to be repaid. EIDL advance funds, however, did not need to be repaid and were awarded to eligible applicants.
As of February 29, 2024, 795 people have been indicted for COVID-related crimes, with 373 individuals sentenced to an average of 34 months in federal prison. IRS Commissioner Danny Werfel emphasized the vital role of IRS-CI in protecting against fraud and ensuring fairness in the tax system. With nearly 700 new COVID fraud investigations opened in the last year alone, CI Chief Guy Ficco stressed the importance of continuing to pursue fraudsters who exploited government loan programs for personal gain.
Recent cases highlight the severity of COVID-related fraud, with individuals like Rami Saab and Terrence L. Pounds sentenced to years in prison for their roles in fraudulent schemes. Saab was convicted of fraudulently obtaining PPP and EIDL loans amounting to millions of dollars, which were then laundered to associates overseas. Pounds, on the other hand, obtained SBA loans under false pretenses for nonprofit organizations, ultimately facing a 94-month prison sentence and forfeiting luxury vehicles purchased with the scheme’s funds.
CI encourages the public to report any known or suspected fraud related to the CARES Act by contacting their local CI field office. As the criminal investigative arm of the IRS, CI is responsible for conducting financial crime investigations, including tax fraud, money laundering, and public corruption. With 20 field offices nationwide and 12 attaché posts abroad, the agency plays a crucial role in protecting taxpayers against fraud in pandemic-era programs and enforcing the tax code to ensure compliance and integrity.
