Federal and state governments have directed the law enforcement to prioritize investigations of fraud schemes arising out of the coronavirus emergency. The U.S. Attorney General has directed Department of Justice to make prosecuting COVID-19 fraud a significant priority. The Texas Attorney General has also made prosecuting fraud and price gouging related to the coronavirus pandemic a top law enforcement priority.
What Is COVID-19 Fraud?
Fraud schemes generally involve a material misstatement, misrepresentation or omission relating to a good or service that is presented to and relied upon in making a decision whether to purchase a product, fund a loan, or provide insurance. In some cases, the “scheme” may involve an agreement between an industry insider or insiders— to siphon money or equity out of a transaction.
A critical fact in any fraud case is whether the fraudulent statement is “material;” whether the allegedly harmed party knew about the falsehood; and whether the alleged victim conducted a diligent review before executing its decision.
Payment Protection Plan Fraud
The Small Business Administration’s Payment Protection Plan, a creation of the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act, creates potential for fraud investigations and enforcement actions by the federal government. Unclear lending applications, regulations, and directions by lenders created uncertainty about information required on loan forms. There continues to be confusion about how and when the loans will be repaid or forgiven. There is also uncertainty as to the status of PPP loans in relation to other loans, mortgages, and lines of credit a small business may have or require in the future. These uncertainties may unwittingly expose small businesses to federal criminal investigations.
Texas COVID-19 Fraud Defense Attorneys
White collar fraud cases are often complex, since they may involve prior civil litigation and large amounts of “paper.” Thus, these cases require significant document review so that the attorney understands the facts and can present a viable defense. These cases frequently involve large amounts of alleged “loss” that, at the federal level, could expose a defendant to lengthy sentences. Loss calculations in and fraud cases require knowledgeable attorneys that understand how to lower or offset “loss” and thus limit a defendant’s prospective sentence.
As stated above, frauds may be prosecuted by federal or state authorities. Often, the prosecution alleges conspiracy, but the crime may also involve bank fraud, false statements to federally backed institutions, mail and wire fraud. Significantly, frauds that affect a federally insured financial institution have a 10-year statute of limitations.