Investigations Newsletter: Seven Individuals Charged in $16 Million COVID-Relief Fraud Scheme | Arent Fox | #cyberfraud | #criminal | #cybercrimnals


Seven Individuals Charged in $16 Million COVID-Relief Fraud Scheme

In an indictment unsealed on November 17, seven individuals were charged with conspiracy to commit wire fraud and wire fraud for allegedly submitting at least 80 fraudulent Paycheck Protection Program (PPP) loan applications that falsified the number of employees and average monthly payroll expenses of the applicant businesses. In support of the applications, defendants allegedly submitted fraudulent bank records and fake federal tax forms. The defendants allegedly obtained approximately $16 million in forgivable PPP loans as a result of the fraudulent applications and spent some of the money on luxury items, such as a Porsche and a Lamborghini.

Read DOJ’s press release here.

Textile Company Charged with Violating the False Claims Act For Bribing an Amtrak Official

Delaware corporation First Statement Manufacturing, Inc. (FSM) was charged with violating the False Claims Act for allegedly bribing a former Amtrak official with cash, kickbacks, and vacations, in exchange for bidding information that enabled FSM to secure a total of six contracts from Amtrak between August 2015 and April 2018. According to DOJ’s press release, FSM allegedly paid the former Amtrak official through a fake consulting company, and once FSM won the Amtrak contracts, it provided the government with substandard textile products and conspired with the former Amtrak official to inflate prices of its products. FSM and the government agreed to enter a Consent Judgment that, if approved by the Court, would require FSM to pay $393,250.07.

The former Amtrak official and FSM’s Vice President for Marketing and Contract Administration were previously prosecuted for their roles in the scheme and were sentenced to one year and one day and eighteen months in prison, respectively. FMS’s Chief Executive Vice President and Chief Financial officer awaits sentencing.

Read DOJ’s press release here.

Former CEO of a Government Contractor Charged with Defrauding the U.S. Government

Paul Daigle, the former CEO of a U.S. government contractor based in Huntsville, Alabama, was charged with conspiracy, wire fraud, and false claims for his alleged participation in schemes to defraud the Department of Defense (DOD). The Huntsville company, which has not been named at this time, served as a subcontractor on DOD aviation contracts related to DOD’s military efforts in Afghanistan. According to DOJ’s press release, between 2013 and 2017, the former CEO mapped employees to labor categories on government contracts who did not satisfy the minimum qualifications, thereby causing the government to overpay for unqualified labor. Daigle allegedly directed employees to obtain fake degrees on the internet so that they would appear to be qualified. Daigle was also charged for his role in a second scheme for allegedly charging the government for work unrelated to government contracts.

Read DOJ’s press release here.



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