Date: March 26, 2025
Contact: newsroom@ci.irs.gov
WASHINGTON — Five years after the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, IRS Criminal Investigation (IRS-CI) has launched 2,039 tax and money laundering cases related to COVID fraud, with attempted fraud in these cases totaling $10 billion. These cases include a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families, and small businesses.
As of Feb. 28, 1,028 people have been indicted for their alleged COVID-related crimes, and 569 individuals have been sentenced to an average of 31 months in federal prison. IRS-CI has obtained a 97.4% conviction rate in prosecuted COVID fraud cases. Many investigations are ongoing.
“It’s been five years since Congress enacted the CARES Act, and our special agents have used their financial acumen to root out thousands of instances of fraud, waste and abuse tied to CARES Act programs. In the past year alone, our special agents initiated 380 new investigations into COVID fraud,” said IRS-CI Chief Guy Ficco. “CARES Act fraudsters have no regard for their fellow Americans. In many cases they stole funds and spent them on luxury items ranging from trips to cars – all while businesses who should have received these funds – were floundering due to unprecedented economic hardship.”
As part of its COVID fraud investigations, IRS-CI has been extremely focused on investigating instances of Employee Retention Credit (ERC) fraud, a refundable tax credit for certain eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. As of Feb. 28, IRS-CI has initiated 545 investigations, involving more than $5.6 billion in ERC fraud in tax years, 2020, 2021, 2022 and 2023. Seventy-five of the 545 investigations have resulted in federal charges. Thus far, 38 defendants in those cases have been convicted, with 18 defendants sentenced to an average of 21 months in prison.
Recent COVID fraud sentencings include:
Over 20 defendants sentenced to prison in multimillion dollar national COVID-19 fraud scheme
To date, 26 defendants have been sentenced as part of this scheme. In August, Toni A. Smith and Dontae Antonio Murphy, were sentenced to 15 and 12 months in prison, respectively, for obtaining fraudulent Paycheck Protection Program (PPP) loans for their purported janitorial and cleaning services companies. They conspired with additional defendants to help fraudsters across the country illegally obtain millions in PPP loans. Other conspirators created fraudulent documents and applications in support of the scheme that grossly inflated the number of employees and wages paid to employees for a 25% cut of loan proceeds. Then, the conspirators texted scheme participants with additional directions on how to make it appear that PPP loans were paid to employees, while keeping the bulk of the proceeds for themselves. The fraudulent payroll records were then submitted to the Small Business Administration to obtain 100% loan forgiveness. A former Harlem Globetrotter was sentenced in December to seven years in prison for his involvement in the scheme, and scheme participant Rami Saab, known as “Rami Hasan,” was sentenced in March 2024 to 10 years in prison.
Marshall County woman sentenced to 52 months in prison for COVID IRS fraud
In January, Lakisha Pearson was sentenced to 52 months in prison and ordered to repay $15.9 million in restitution for mail fraud in connection with falsely claiming the IRS Employee Retention Tax Credit for others. Pearson, the former owner of Unity Tax Express, filed false tax credit claims for others totaling nearly $47 million in exchange for kickbacks from these individuals; the claimants, however, thought they had been given a government grant and were not aware that Pearson had filed fraudulent tax returns on their behalf.
The CARES Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering from the economic effects of the COVID-19 pandemic.
IRS-CI encourages the public to share information regarding known or suspected fraud tied to the CARES Act by contacting their local IRS-CI field office.
IRS-CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a 90% federal conviction rate. The agency has 20 field offices located across the U.S. and 14 attaché posts abroad.