A year ago, Congress agreed to spend hundreds of billions of dollars on benefits for small businesses and employees devastated by the coronavirus pandemic.
Of course, the government's handout helped the struggling economy. But it also opened the door for a menagerie of con artists to fleece the federal relief program to get rich quick.
Among them: a South Florida man alleged to have bought a Lamborghini for $318,000 with millions in COVID-19 relief loans; a Broward County tax preparer who purportedly pocketed huge commissions for filing $28 million worth of phony business loan applications; and a former NFL player from Miami accused of stealing people's identities to collect $300,000 in unemployment insurance benefits.
As the nation's No. 1 fraud capital, South Florida led the financial crime wave that followed the passage of the CARES Act, a group of federal law enforcement officials acknowledged Friday. They highlighted dozens of new and old COVID-19 criminal cases to draw attention to the escalating problem. Over the past year, South Florida's federal prosecutors have filed 38 criminal cases with $75 million in fraudulent COVID-19 relief claims — the highest number of any region in the country.
U.S. Attorney Ariana Fajardo Orshan lamented the region's dubious reputation while condemning criminals who steal from the taxpayer-funded relief program at the expense of legitimate businesses and employees desperately trying to stay afloat.
"This is very sad when you have so many Americans in this country who are starving because of the pandemic," Fajardo said during a live news conference at the U.S. Attorney's Office in Miami. "Leave the money for those who need it."
Fajardo — flanked by regional officials with the FBI, IRS, the U.S. Postal inspection Service and other federal agencies — focused on three major programs that have been exploited in the aftermath of last year's adoption of the CARES Act. They are known as the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL) and Unemployment Insurance.
Here's a trio of new cases cited by authorities:
— Wally Dorlus, 41, a Margate tax preparer and two other South Florida men are charged in a conspiracy to obtain fraudulent PPP loans from the Small Business Administration by using falsified employee, payroll and tax information. According to a criminal complaint, Dorlus received hefty kickbacks in exchange for filing more than 167 fraudulent PPP loan applications worth $28 million. Of those, 33 loans were approved by banks and funded with $5.5 million guaranteed by the SBA.
— Kenbrell Armod Thompkins, 32, a former NFL wide receiver who had played at Miami Northwestern Senior High School, is charged with stealing the identities of numerous Florida residents to obtain fraudulent unemployment insurance benefits totaling $300,000 from the state of California. That state distributed the unemployment benefit funds in the form of debit cards, which were subsequently mailed to addresses associated with Thompkins in Miami and Aventura. Thompkins is accused of withdrawing most of the funds on the debit cards at ATMs in Miami-Dade.
— Kimberly Cleare, 53, of Miami Gardens, is charged with submitting at least 13 nearly identical EIDL applications to the Small Business Administration on behalf of herself and others.
Although South Florida was the focus of Friday's news conference, an IRS official said that the agency is working on 350 criminal cases and open investigations nationwide that involve about $440 million in COVID-19 relief applications filed "fraudulently by greedy criminals." Tyler R. Hatcher, acting special agent of the IRS criminal investigations division in Miami, estimated that half of those phony loan applications — $220 million — were paid out, representing a significant loss to taxpayers. Hatcher said the IRS hopes to recover some of that money.
Despite efforts by banks to scrutinize applicants' COVID-19 loan applications, some false claims slip through because the bankers are not checking the taxpayer history of illegitimate businesses and employees. The root of the problem is that that the government, which guarantees the loans as long as they are used for payroll, rent and other legitimate expenses, pushed the relief money out as quickly as possible to boost the faltering economy.
"Yes, it's not a perfect system," said Fajardo, who resigned from her position as U.S. attorney in South Florida on Friday as part of a routine transition during a change in the presidency last fall. "There is no perfect system."
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