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DOJ pursues first fraud charges for use of coronavirus funds

| May 27, 2020 | Health Care Investigations |

The United States Department of Justice (DOJ) recently announced criminal charges against two New England men. The agency claims the men were attempting to defraud the government’s recently unveiled small-business lending program — a program lawmakers intended to provide aid to small businesses struggling to survive during the current coronavirus pandemic.

What happened?

According to the agency, the two applied for over $500,000 in forgivable loans guaranteed by the Small Business Administration (SBA) as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The government states the falsely claimed to have employees that would benefit from the loan.

The prosecution claims it investigated the application and found evidence the businesses claimed by the two were not in operation prior to or during the coronavirus pandemic and thus not eligible for the requested funds. The application was denied, and criminal fraud charges were filed.

First of many?

The agency worked in collaboration with a number of other government bodies, including the Internal Revenue Service’s Criminal Investigation Unit (IRS-CI) to pursue these charges. A spokesman for the IRS-CI issued a stern statement after the arrest, noting the arrest should serve as a “warning to others that the FBI” and collaborating agencies will “aggressively go after bad actors” that attempt to use the current coronavirus pandemic to commit fraud. It will specifically focus on potential violations for health care fraud, hoarding and price gouging in an attempt to use the federal economic assistance program for personal financial gain.

What does this mean for physicians and other medical professionals?

Those in the medical profession, particularly private practices, may apply for similar loans to help navigate the financial impact of the coronavirus pandemic. It is important to note the government is watching these applications carefully. Make sure the application is accurate and be prepared to back up the claim with proper documentation.

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