The Internal Revenue Service’s Criminal Investigation unit investigated approximately 1,000 tax and money laundering cases related to COVID-19 relief, with the suspected fraud exceeding $3.2 billion.
American workers, families, and small businesses were defrauded of loans, credits, and payments in the 975 cases. 458 people have been indicted for COVID-related crimes, and 236 have been sentenced to 37 months in federal prison.
COVID-19 Tax Fraud
The CARES Act, which was passed on March 27, 2020, was created in response to the difficulties the US economy was experiencing as a result of the Covid pandemic.
After almost three years, IRS Criminal Investigation (IRS-CI) reports that it has looked into 975 tax and money laundering cases involving COVID-19.
The IRS-CI investigations led to the indictments of 458 people for alleged Covid fraud-related crimes, and sentences of 236 people to an average of 37 months in federal prison. In prosecuted cases over the same time frame, CI has a conviction rate that is virtually 100%.
Any criminal searching to take advantage of the CARES Act should be aware that doing so will have serious repercussions and that it will not be long before they are held accountable, according to IRS-CI Chief Jim Lee.
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IRS Investigates Fraud Incidents
For fraudulently obtaining $5 million in Covid-relief loans, Mustafa Qadiri, of Irvine, California, was sentenced to 54 months in federal prison in February 2023. He used the money to purchase Ferrari, Bentley, and Lamborghini vehicles.
In addition, he was hit with a $20,000 fine and a $2.86 million restitution mandate. Qadiri claimed to have operated four Newport Beach-based firms, none of which were in operating and submitted fictitious and fraudulent PPP loan applications to three banks on behalf of those companies.
Qadiri produced phony quarterly federal tax return forms, lied about the number of employees to whom the companies received wages, changed bank account records to reflect inflated balances, and utilized another person’s name, Social Security number, and signature to apply for one of the loans.
The criminal investigative division of the IRS, known as IRS-CI, is in charge of looking into financial crimes such as tax fraud, drug trafficking, money laundering, public corruption, healthcare fraud, identity theft, and more.
IRS-CI special agents are the only federal law enforcement officers with investigative power over infractions of the Internal Tax Code, and they have a conviction rate of more than 90%.
If calls, emails, or other correspondence purporting to be from the Treasury, ignore it.
Please do not reply if the Department is asking for personal financial information, an advance payment, or any other type of charge, including the purchase of gift cards, in exchange for grants or stimulus payments relating to Covid. Please contact the FBI at www.ic3.gov if you think they are scams.
Call the National Center for Disaster Fraud Hotline at (866) 720-5721 or submit a web complaint form to report claims of attempted fraud involving COVID-19.
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