Agency has investigated 975 COVID-related fraud cases with alleged fraud totaling $3.2B Date: March 23, 2023 Contact: newsroom@ci.irs.gov WASHINGTON — Three years after the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, IRS Criminal Investigation (IRS-CI) has investigated 975 tax and money laundering cases related to COVID fraud with alleged fraud in these cases totaling $3.2 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. Of those cases, 458 individuals have been indicted for their alleged COVID-related crimes, and 236 individuals have been sentenced to an average of 37 months in federal prison. Throughout the three years, CI has a nearly 100% conviction rate in prosecuted cases. "IRS-CI is proud to lead the fight against COVID-related fraud. While COVID illnesses no longer lead the nightly news, the effects from the disease and the fraud perpetrated on the various COVID-related relief programs have not left our sights. Any criminal looking to exploit the CARES Act should know that there are serious consequences for stealing from hardworking Americans, and it's only a matter of time before they are held to account," said IRS-CI Chief Jim Lee. Case examples include: Irvine man sentenced to 4½ years in federal prison for fraudulently obtaining $5 million in COVID loans he spent on sports cars Mustafa Qadiri, of Irvine, California, was sentenced to 54 months in federal prison in February 2023 for fraudulently obtaining $5 million in COVID-relief loans for his sham businesses, which he used to buy Ferrari, Bentley and Lamborghini cars. He was also fined $20,000 and ordered to pay $2.86 million in restitution. Qadiri claimed to have operated four Newport Beach-based companies, none of which were in operation and submitted false and fraudulent Paycheck Protection Program (PPP) loan applications to three banks on behalf of those companies. Qadiri falsified the number of employees to whom the companies paid wages, altered bank account records to include inflated balances, and provided fictitious quarterly federal tax return forms. Qadiri also used someone else's name, Social Security number and signature to fraudulently apply for one of the loans. New York woman sentenced for $9.2 million COVID-19 relief fraud Sherry Joseph, of New York, New York, was sentenced to 45 months in prison in January 2023 for her role in submitting $9.2 million in fraudulent, forgivable PPP loan applications under the CARES Act. Joseph recruited multiple individuals to apply for the loans in exchange for kickbacks from their PPP loan proceeds. Joseph used aliases to send the personal information of her recruits to co-conspirators, who used that information to prepare fraudulent PPP loan applications that included falsified bank statements and payroll tax forms and misrepresented the borrowing entities' payroll amounts and number of employees. Joseph engaged in the scheme while on pretrial release for separate federal fraud-related offenses in the District of New Jersey. In addition to her prison sentence, Joseph was ordered to serve three years of supervised release and pay $1.61 million in restitution and forfeit $55,000. IRS-CI encourages the public to share information regarding known or suspected fraud attempts against any of the programs offered through the CARES Act. To report a suspected crime, taxpayers should contact an IRS-CI field office. Contact information for IRS-CI field offices can be found in the 2022 IRS-CI Annual Report PDF. The CARES Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional funding, and in December 2020, another $284 billion. The PPP allows qualifying small businesses and certain other organizations to receive loans with a maturity of two to five years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses. To learn more about COVID-19 scams and other financial schemes visit IRS.gov. Official IRS information about COVID-19 and Economic Impact Payments can be found on the Coronavirus Tax Relief page, which is updated frequently. IRS-CI is the criminal investigative 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, boasting a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
