COVID-19 Pandemic Spurs Fraud

NOTICE: If you witness misuse of CARES Act funds, you may be able to help. Contact the Arnold Law Firm at (916) 777-7777 for a confidential evaluation.

There is no denying the global COVID-19 pandemic has upended daily life for everyone. Unfortunately, there are some who illegally take advantage of these trying times.

Fraudulent use of funding provided under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is predicted. Tremendous sums of money and desperate human need create rampant opportunities for misuse of CARES Act funds.

When government funds are quickly and liberally distributed in response to a disaster, higher incidents of fraud occur.

During the financial crisis of 2008, Congress authorized $700 billion for the Troubled Asset Relief Program (TARP), intended to help stabilize the financial system. Nearly $900 million of those TARP funds were identified as fraudulently used and have been recovered as a result of reports of misuse and audits.

Like all federal monies, CARES Act funds come with requirements that must be adhered to:

• Small business relief: $350 billion for companies with no more than 500 employees to maintain payroll with up to eight (8) weeks of subsidies. Intended to prevent layoffs and closures, these funds are for payroll, mortgage interest, rent, or utilities.
• Large corporation relief: $500 billion for loans, guarantees, and related investments for big businesses. $50 billion specifically for the airline industry. Loans may not exceed five years.
• Hospitals and health care: $140 billion for the U.S. health system. $100 billion directly available to hospitals to fight COVID-19, subsidize acute treatments, and compensate hospitals for lost income from delaying elective and routine medical services. Additional funds for PPE stockpiles, expanded COVID-19 testing, and to increase Medicare/Medicaid subsidies during the pandemic.
• Unemployment/payroll tax relief: $250 billion to extend unemployment benefits up to four months, plus additional payments of $600 weekly beyond state program subsidies. Employers may delay payment of their portion of 2020 payroll taxes to 2021 and 2022.

Current crisis conditions create temptations to misuse this massive government subsidy, such as employee abuse, self-dealing, false claims, and outright theft.

If you observe fraud by an individual or company that causes losses to the government, such as misuse of CARES Act funds or another government program, you may be able to help. The False Claims Act (FCA), 31 U.S.C. 3729 et seq, gives a private individual the right to bring a claim on behalf of the government against any person who knowingly submits or causes to submit a false or fraudulent claim to the United States.

The trial lawyers at the Arnold Law Firm in Sacramento have extensive experience successfully handling intricate and delicate qui tam (also known as “whistleblower”) civil lawsuits. Our firm maintains the highest levels of discretion and advises potential whistleblowers about their options.

Contact the Arnold Law Firm at (916) 777-7777 for a confidential evaluation.