IRS-CI Uncovers $10B COVID Fraud Five Years Post-CARES Act

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IRS-CI Uncovers $10 Billion in COVID Fraud Five Years After CARES Act

Five years after the CARES Act was passed, the IRS Criminal Investigation (IRS-CI) has identified $10 billion in attempted fraud, launching 2,039 investigations targeting tax and money laundering schemes tied to pandemic relief programs. These cases involve fraudulent loans, tax credits, and financial assistance originally intended to support American workers, small businesses, and families.

As of February 28, 1,028 individuals have been indicted, with 569 sentenced to an average of 31 months in prison. With a 97.4% conviction rate, IRS-CI remains aggressive in prosecuting fraudsters, and ongoing investigations continue to uncover more misuse of COVID relief funds.

Cracking Down on COVID Fraud

According to IRS-CI Chief Guy Ficco, the agency’s financial crime experts have worked tirelessly to track and expose fraud tied to pandemic relief. Over the past year alone, 380 new cases have been launched. Ficco condemned fraudsters who exploited relief programs, noting that many used the stolen funds for personal luxuries while legitimate businesses suffered financial hardships.

One major focus has been fraud involving the Employee Retention Credit (ERC) – a refundable tax credit designed to assist businesses impacted by COVID-19. The IRS-CI has opened 545 investigations into ERC fraud, covering more than $5.6 billion in fraudulent claims spanning tax years 2020-2023. Seventy-five individuals have been charged, with 38 convicted and 18 sentenced to an average of 21 months in prison.

High-Profile COVID Fraud Cases

Nationwide PPP Loan Fraud Scheme

More than 20 defendants have been sentenced in a multimillion-dollar Paycheck Protection Program (PPP) fraud case. Scheme organizers helped individuals falsify business records to obtain loans, inflating employee counts and payroll amounts in exchange for a 25% cut of the proceeds. Participants were even coached on how to make the loans appear legitimate for 100% loan forgiveness.

Key figures in the scheme:

• Toni A. Smith and Dontae Antonio Murphy were sentenced to 15 and 12 months, respectively.
• A former Harlem Globetrotter was sentenced to seven years in prison in December.
• Rami Saab (aka “Rami Hasan”) was sentenced to 10 years in March 2024.

$47 Million Employee Retention Credit Fraud

In January, Lakisha Pearson, former owner of Unity Tax Express, was sentenced to 52 months in prison and ordered to repay $15.9 million in restitution. Pearson falsely claimed the IRS Employee Retention Tax Credit on behalf of clients, filing fraudulent returns totaling nearly $47 million while collecting kickbacks. Many claimants mistakenly believed they had received a government grant, unaware they were part of a fraudulent scheme.

IRS-CI’s Mission in Combatting Financial Crimes

As the law enforcement arm of the IRS, IRS-CI is responsible for investigating financial crimes such as tax fraud, money laundering, healthcare fraud, and identity theft. Special agents are the only federal law enforcement officers with direct jurisdiction over violations of the Internal Revenue Code and maintain a 90% federal conviction rate. With 20 field offices across the U.S. and 14 international attaché posts, the agency remains at the forefront of tackling fraud.

Reporting CARES Act Fraud

The IRS urges the public to report suspected CARES Act fraud to their local IRS-CI field office. As pandemic-related relief programs continue to be reviewed, more cases are expected to surface, ensuring that fraudsters are held accountable.

Have insights on CARES Act fraud cases? Share your thoughts below or report fraud to the IRS-CI!

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