Stephen J. Cox, U.S. attorneyfor the Eastern District of Texas/courtesy photo

Millions of Americans and small businesses are suffering theeconomic effects caused by the Covid-19 pandemic. In response, Congress passedthe Coronavirus Aid, Relief, and Economic Security (CARES) Act.This historic legislation, which includes over $2 trillion inemergency financial assistance, was designed to provide immediatehelp for small businesses, healthcare providers, andindividuals.

The CARES Act includes the Paycheck Protection Program (PPP),which provides nearly $650 billion in loans to businesses, as well asEconomic Impact Payments (EIPs) to provide relief to individualtaxpayers and families. The CARES Act also includes other programsto help small- and medium-sized businesses, and assistance tohospitals and other healthcare providers on the front lines of thecoronavirus response.

This federal response to the current crisis is vital to theeconomy, but like many good federal programs, there is risk offraud. For example, the PPP requires borrowers to make certaincertifications regarding their eligibility and the use of thefunds, but some borrowers make misrepresentations in bad faith.When fraudsters unlawfully take money to which they are notentitled, they deplete the program and divert funds from those whoneed it most. The Department of Justice (DOJ) is committed topursuing wrongdoing related to Covid-19, including these fraudulentschemes. The U.S. Attorney's Office for the Eastern District ofTexas (EDTX) shares this priority and will deploy all criminal andcivil enforcement tools available to combat such misconduct.

In the few short months since passage of the CARES Act, we haveinitiated multiple criminal actions and investigations. We arepursuing individuals who used stolen identities to obtain EIPs. Wealso have partnered with the DOJ's Criminal Division to chargeseveral individuals who, as alleged, knowingly provided falseinformation to obtain millions of dollars in PPP loans. In onecase, rather than using PPP funds for purposes authorized by theCARES Act, the funds were allegedly used to purchase luxuryvehicles and to fund personal investment accounts. In addition tocriminal efforts, we are looking to the False Claims Act (FCA), apowerful civil statute that allows the United States to recoupmoney that has been lost due to fraud. The FCA allows thegovernment to obtain treble damages and civil penalties from thosewho defraud federal programs, such as the CARES Act.

We will be vigorous in our enforcement efforts. Even so, werecognize that some businesses have voiced concerns aboutincreasingly complicated program rules and regulations creatingtraps not only for the unwary, but for the many companies thatsought assistance in good faith.  For example, some havepredicted FCA litigation based on inadvertent foot faults orregulatory defects, a risk that could increase with additionaldisclosures of funding recipients, investigative reporting, andpublic criticism. Rest assured that we will be careful not todiscourage legitimate businesses from accessing the importantfinancial resources that Congress made available through the CARESAct. We will not punish companies that accessed stimulus funds ingood-faith compliance with the rules. Nor will we seek outapplicants who made technical mistakes in processing paperwork orhonestly misunderstood regulatory or certification requirements.Our focus is on fraud.

So what can the public do? Simply put: If you see something, saysomething. Report borrowers who knowingly provided falseinformation in loan applications, individuals who unlawfullyobtained EIPs, and those who knowingly misused CARES Act funds. Weare working with banks and other financial institutions to helpidentify potential fraudsters. But we also need the public'sassistance. If you know of, or suspect, fraud related to the CARESAct, please contact the National Disaster Fraud Hotline at866-720-5721.

The EDTX and our law enforcement partners are ready to take onthose who attempt to illegally profit from the coronaviruspandemic. And we need your help to wage this fight.

Stephen J. Cox is the 39th U.S. attorneyfor the Eastern District of Texas (EDTX). As the chief federal lawenforcement officer in EDTX, Cox supervises the prosecution of allfederal crimes and the litigation of all civil matters in which theUnited States has an interest. As U.S. attorney, Cox leads a staffof over 120 prosecutors, civil litigators, and support personnellocated in Beaumont, Plano, Tyler, Sherman, Lufkin, andTexarkana.

From: Texas Lawyer