Federal agencies intensify focus on CARES Act fraud

After the U.S. Department of Justice (DOJ) charged more than 100 people last year with fraudulently seeking more than $360 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act emergency loans and other payments, the federal government has taken additional steps to combat fraud in COVID-19 relief programs. The new efforts include expanding investigations and charging more criminal cases, initiating civil enforcement and forfeiture actions to recoup money for the U.S. Treasury, and hiring dedicated personnel to prosecute CARES Act fraud.

How we got here

In passing the CARES Act and related legislation in 2020, Congress provided for several different types of emergency pandemic relief to be administered by the Small Business Association (SBA) and other federal agencies. They included the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDLs), Pandemic Unemployment Assistance (PUA), Federal Pandemic Unemployment Compensation (FPUC), and Economic Impact Payments (EIPs).

Of the more than $2 trillion authorized under the CARES Act during 2020, more than $500 billion was allocated to PPP loans. A second round of the loans opened up in January, with applications closing on May 31, 2021. Many of the loans are forgivable if participants comply with the rules involving the use of the proceeds and related business operations, such as keeping employees on payroll.