Pandemic cheats tempted by billions

The US government was in such a rush to send out money to people and companies dealing with hardships in the first two years of the pandemic that the accompanying minimal oversight and requirements for the funds led to one of the largest frauds in the United States.

The government issued $5 trillion－$3.1 trillion and $1.9 trillion by the Trump and Biden administrations, respectively－to help the country in response to its COVID-19 outbreak.

But the fraudulent cases are so numerous that the Office of Inspector General, or OIG, at the Labor Department said it has received more than 144,000 unemployment insurance-related complaints and opened more than 39,000 investigations. The office opened about 120 cases a year before the pandemic.

The OIG estimated that more than 18.7 percent of pandemic unemployment insurance payments were "improper". With a total of $872.5 billion in such payments, that means $163 billion was paid improperly.

As of June, the Labor Department had issued 875 indictments related to unemployment insurance fraud and recovered more than $850 million. With so many fraudulent cases, officials concede that some thefts involving smaller amounts may never be prosecuted.

An inspection of the Small Business Administration by the OIG discovered that one bank account received 38 loans totaling almost $5 million, and one physical address received 97 loans totaling $1.37 million.

It was so easy to defraud the government that some lawyers representing defendants even argued that their clients should be judged less harshly for stealing because the government made it so easy.

Ashwin Ram, a lawyer for a convicted client, called the government's COVID-19 relief program a "honey trap", reported The New York Times.

Konstantinos Zarkadas, a physician in Long Island, New York, was able to apply with false information and easily receive 11 loans－for the Paycheck Protection Program, or PPP, and the Economic Injury Disaster Loan Program－totaling about $3.7 million from March to July 2020.

Spending spree

Zarkadas spent part of the money to buy himself a $1.7 million yacht and expensive watches. He was sentenced to 51 months in prison in March this year and ordered to pay $3.5 million in restitution.

At the Small Business Administration, where the PPP package totaled $739 billion, an analysis by three researchers from the University of Texas at Austin concluded that 1.41 million loans with a balance of $64.2 billion were potentially fraudulent under four suspicious indicators. The researchers said that supplemental analysis indicates that likely fraudulent loans may be twice as large.

Don Cisternino from New York was able to obtain $7.2 million in PPP loans by forging tax-related forms and tax returns. The money was used to buy luxury cars including a Lincoln Navigator, Maserati and Mercedes-Benz, and a sprawling mansion in Florida. He was arrested and charged in May.

It was so easy to get free money from the government that it became a business for some.

James Stote and Phillip Augustin, two Florida men in their 50s, first obtained PPP loans with falsified documents for Augustin's company. Easy success led the pair to file similar applications for themselves and their associates. They filed 79 applications and obtained $35 million. They now face sentences of up to 20 years in prison.

The fraud was so widely known and spread that it was discussed in chat rooms and on social media platforms. A Brooklyn-based group of 11 members filed for unemployment insurance payments with stolen identities and obtained $4.3 million.

The members of the group posted photos of themselves on social media flashing gang signs, standing in front of luxury vehicles, and holding stacks of US currency. Some appeared in a YouTube music video with lyrics such as "unemployment got us workin' a lot".

Fontrell Baines, a California rapper who performs as Nuke Bizzle, filed more than 90 false applications and obtained more than $700,000 from the federal government.