IRS CI’s Early Enforcement Efforts Make Clear that COVID-Related Fraud Remains a Top Enforcement Priority in 2024

While the national public health emergency related to the COVID-19 pandemic may have ended in 2023, combating COVID-related fraud remains a top federal law enforcement priority in 2024. The Internal Revenue Service (IRS) is one of several agencies involved in the government’s ongoing response, and IRS Criminal Investigation (IRS CI) is actively pursuing investigations targeting all forms of COVID-related tax fraud. For entities and individuals facing scrutiny from IRS CI, promptly engaging an experienced Texas IRS dispute lawyer is a key first step toward avoiding unnecessary adverse consequences.

COVID-Related IRS CI Enforcement Efforts in 2024

Here is a look at some of IRS CI’s COVID-related enforcement actions so far in 2024:

11 Defendants Indicted in Paycheck Protection Program (PPP) Fraud Scheme

On February 22, 2024, IRS CI announced the indictments of 11 individuals who are charged with fraudulently obtaining more than $220,000 in PPP loans during the pandemic. The defendants, who reside in Texas and other states, are facing a 13-count indictment which includes charges for wire fraud, conspiracy, and other federal crimes.

According to IRS CI, the defendants worked together to submit fraudulent PPP loan applications that “falsely stated either the existence of a sole proprietorship prior to the pandemic or greatly inflated the revenues of any ‘businesses’ that did exist in 2019.” Among other allegations, the defendants are accused of creating fictitious bank records, IRS forms, and other fraudulent financial documents to support their loan applications.

Alleged Theft of More Than $1.1 Million in Economic Injury Disaster Loan (EIDL) Funds Leads to Eight-Count Indictment

Also on February 22, 2024, IRS CI announced the indictment of an individual who is charged with fraudulently obtaining more than $1.1 million through the EIDL program during the COVID-19 pandemic. According to IRS CI, the defendant falsely claimed to operate a business with more than half a million dollars in revenue and expenses and used these false representations to fraudulently apply for EIDL loans in 2020 and 2021. After receiving the loan proceeds, the defendant allegedly wired the funds to accounts that he personally controlled and then used them to buy jewelry and invest in securities. The defendant is facing charges including wire fraud, theft of public funds and money laundering—and, if convicted, faces up to 20 years in federal prison.

$2.1 Million COVID-19 Fraud Scheme Leads to 33-Month Federal Prison Term

On February 21, 2024, IRS CI announced the sentencing of a defendant who was convicted of fraudulently obtaining more than $2.1 million in PPP and EIDL loans. Along with a 33-month prison term, the defendant was also sentenced to three years of supervised release and must repay the full amount of the loan funds that he fraudulently obtained. According to IRS CI, the defendant successfully submitted 11 fraudulent PPP loan applications and three fraudulent EIDL loan applications, all of which included fabricated payroll records and federal tax returns.

Two Individuals Convicted of Executing $11 Million PPP Loan Fraud Scheme

On February 16, 2024, IRS CI announced the convictions of two individuals who were found guilty of perpetrating an $11 million PPP fraud scheme. The defendants faced charges for bank fraud, wire fraud, conspiracy, making false statements to a federally insured financial institution, and money laundering after submitting fraudulent PPP loan applications on behalf of 14 businesses that they claimed had approximately 60 employees and $300,000 in average monthly payroll expenses. According to IRS CI, after receiving the loan proceeds, the defendants “laundered certain of the funds through a series of transactions that were devised to disguise the origins of the funds and how the funds were spent.” The defendants face between 20 and 30 years in prison for each charge.

Indictment Alleges Defendant Perpetrated $2.5 Million COVID-Relief Fraud Scheme

On February 8, 2024, IRS CI announced the indictment of a defendant who is charged with perpetrating a $2.5 million COVID-relief fraud scheme under the PPP. The defendant, who is facing multiple charges under the federal bank fraud and money laundering statutes, is accused of submitting false PPP loan applications to three separate banks and then using the proceeds to purchase real estate and luxury items.

Three Defendants Sentenced to Prison Time for COVID-19 Fraud

On February 6, 2024, IRS CI announced the sentencing of three defendants who were found guilty of being involved in a “COVID-19 fraud ring” that obtained approximately $3.5 million in fraudulent PPP loans during the pandemic. The defendants received sentences ranging from two years to three years and ten months. According to IRS CI, the defendants submitted fraudulently PPP loan applications on behalf of fictitious businesses purportedly located in multiple cities, successfully obtaining loans that they intended to use for non-business-related purposes.

Disaster Relief Loan “Consultant” Pleads Guilty to $1.2 Million COVID-19 Fraud Scheme

On January 29, 2024, IRS CI announced that a self-proclaimed disaster relief loan “consultant” has pleaded guilty to obtaining more than $1.2 million in fraudulent PPP and EIDL loans for himself and others. According to IRS CI, the defendant acknowledged submitting false information on PPP and EIDL loan applications as well as submitting fake employment data and fraudulent tax returns in support of the applications.

PPP, EIDL and ERC Fraud Are All Top Federal Law Enforcement Priorities in 2024

While all of these recent cases involve fraud under the PPP and EIDL programs, PPP and EIDL fraud are just two of several COVID-related enforcement priorities for IRS CI and other federal law enforcement authorities. Fraud under the Employee Retention Credit (ERC) program is a top enforcement priority as well, and both the IRS and IRS CI are aggressively targeting ERC fraud in 2024. Business owners and other high-net-worth and high-income individuals who have concerns about facing scrutiny related to any of these programs should consult with experienced tax counsel promptly—as failing to proactively resolve COVID-related tax controversies has the potential to lead to serious criminal charges.

Request an Appointment with a Texas IRS Dispute Lawyer at Brown Tax, P.C.

Our lawyers represent high-net-worth and high-income clients in significant COVID-related tax controversies. If you are facing scrutiny from IRS CI—or if you have concerns about facing scrutiny from IRS CI—we encourage you to contact us promptly to request an appointment with a Texas IRS dispute lawyer at Brown Tax, P.C.