Billions of dollars have been lost to Covid Relief Fraud across the country. But one city eclipses all the others, according to the FBI: Miami, Florida dubbed the Capital of Covid Fraud. Scott Thuman reports.
White sandy beaches and swaying palm trees, Miami has become one of the nation’s hot spots for luxury lifestyles.
But some wanting to feed that first-class life, are cutting corners and breaking the law.
Miami has become ground zero for Covid Relief Fraud.
Scott: I was doing some Googling. And the first phrase I put in was Covid Relief Fraud. And the word Florida popped up next on its own.
Jay Bernardo: Yes.
Jay Bernardo is the FBI’s Assistant Special Agent in leading the Covid-19 fraud investigations in south Florida.
Scott: If you had to describe the scope of it. Are there numbers to back up how big it is?
Bernardo: Not yet because it's still ongoing as we speak. I mean some of these programs are still open and operational. It's going to be in the billions.
The coronavirus aid, relief, and economic security (CARES) act, was signed in March of 2020 it was -supposed- to provide emergency financial assistance to millions of Americans suffering from hard times, brought by the pandemic. And South Florida became the fraud capital.
Scott: Why is it so popular here?
Bernardo: Miami is a financial hub in and out of South America, Central America and the Caribbean, as well as a gateway physical hub. So, people are always coming through here. They use all the banking systems here from South America. It's a very transient population.
Daya Nathan: We've prosecuted over 40 cases relating to Cares Act Fraud. The loss amount associated with those cases is $75-100 million.
Scott: That's just in 40 cases?
Nathan: That's just in 40 cases.
Daya Nathan is an Assistant United States Attorney. She is part of the Department of Justice’s task force in charge of prosecuting Covid-related fraud.
Scott: How was it so big then?
Nathan: Well, some of the cases involve preparers, for example, who have filed over a hundred applications, seeking a total of $25 million or higher in benefits. We have an individual who got, just one person, $3.9 million in fraudulently obtained loan proceeds from the PPP program. Actually, to date our office has seized over $20 million in assets relating to Cares Act fraud. So that's money and assets that we got back and that we can return to the federal government.
Scott: What kind of assets?
Nathan: Most of what we've seen so far has been money in bank accounts, cash, jewelry, cars. There is some real property that we're working on seizing as well, but “real property,” I mean, houses. We've seen some unique cases in our district. We've seen some of our defendants allegedly spend funds on $300,000 Lamborghinis, on clothing purchases at Christian Dior, at Louis Vuitton, at Gucci, on gambling, $50,000 plus at a casino. So, these expenditures were well outside of the intent of the programs.
Scott: So, some pretty lavish shopping sprees it sounds like.
Nathan: Some pretty lavish shopping sprees with money that was meant to go back into the economy by making payroll and by helping small businesses, not by buying cars.
NFL player Joshua Bellamy has been charged with stealing $1.2 million through the Paycheck Protection Program.
Hasan Brown pled guilty to helping steal $24 million of covid-19 relief money by using stolen identities and shell companies he initially intended to commit bank fraud with.
According to the Department of Justice, the money is being stolen in three key ways.
1. Business owners inflate payroll expenses to get larger loans through the Paycheck Protection Program.
2. Serial fraud applying for loans using dormant corporations and shell companies to apply for multiple loans.
3. And lastly, organized criminal networks.
Bernardo: We've seen in a lot of the violent gangs here in the area, funding their lifestyle through Covid-related fraud. So instead of what your typical drugs and guns, they're using financial crime as a way to profit and perpetuate their lifestyle and their gang activity. So we have started a task force here too this summer to try and address that.
Scott: What kind of punishment do they face?
Nathan: Generally, we're charging these defendants with wire fraud or bank fraud or conspiracies to commit those crimes. They're looking at 20 years per count. So many of them are charged with multiple counts. They could face over 20 years for the crime at large.
Scott: What's the future? Do you see this getting better, getting worse, growing or eventually dissipating as COVID has in some ways?
Nathan: We are continuing to investigate these cases. The fraud is ongoing in the sense that people are still spending ill-gotten gains. People are still living off of ill-gotten gains. So, there is a reason to continue to prosecute these cases.
Scott: Is there a message out of all of this? Is there a warning if you will, that the FBI is trying to send out to people?
Bernardo: We don't stop. We don't forget. And we won't quit. So, it's a formidable force, and it will take us a while, but we'll get to them.
Sharyl (on-camera): Where are all the leads coming from for these cases?
Scott (on-camera): Well, surprisingly, according to the FBI, a majority of the tips they get are from leads that have been called in from everyday people who saw something and reported it. What's different is in past years, they would get maybe a few hundred tips on financial fraud cases. This past year, 150,000 + have come specific only to the Cares Act financial fraud.