7 Charged In America’s Biggest COVID Tax Credit Fraud Scheme

Authored by Naveen Athrappully via The Epoch Times,

A group of seven who allegedly sought to steal hundreds of millions of dollars in the country’s “largest COVID-19 tax credit scheme” by falsely claiming pandemic-era benefits were charged on Jan. 22, according to the Department of Justice (DOJ).

An indictment unsealed in New York state charged the seven people with “operating a multi-state conspiracy in which they attempted to defraud the United States of more than $600 million by filing more than 8,000 false tax returns claiming COVID-19-related employment tax credits,” the agency said in a statement. The fraud targeted programs like the employee retention credit (ERC) and the paid sick and family leave credit (SFLC), which were passed in response to the COVID-19 pandemic.

The ERC gave tax credits to businesses, incentivizing them to keep employees on their payroll, while SFLC was a reimbursement made to businesses to support employees who were “on sick or family leave and could not work because of COVID-19.”

The charges were made against Keith Williams, Jamari Lewis, Morais Dicks, Janine Davis, Tiffany Williams, James Hames Jr., and Ewendra Mathurin; all of whom are either current or former residents of New York.

Between November 2021 and June 2023, the defendants “repeatedly exploited” ERC and SFLC programs, the DOJ said.

“The scheme was allegedly headquartered at Credit Reset, a purported credit repair business Keith Williams owned and operated.”

The defendants acted as tax preparers and allegedly filed over 8,000 fake employment tax returns on behalf of themselves and clients, claiming COVID tax credits from the IRS. In some of the fake returns, they allegedly claimed SFLC which exceeded reported wages, according to the department.

The defendants managed to secure refund checks from the Treasury, while also profiting by charging clients a fee or percentage of the tax refunds they received, the agency accused.

“The defendants allegedly concealed their preparation of the false tax returns by not listing themselves as the paid preparer on the tax returns and by using Virtual Private Networks (VPNs) to obscure their IP addresses while filing the false returns,” the DOJ said.

“If a client did not have a business, members of the conspiracy allegedly would sometimes sell shell companies to them in order to file false tax returns.”

The fraudsters reportedly filed for $600 million in tax credits as part of the scheme, of which the IRS disbursed about $45 million. Authorities charged the defendants with 45 criminal counts, including wire fraud, conspiracy to defraud the United States, and assisting in preparing false tax returns.

Some of the defendants also allegedly submitted false applications for loans under the pandemic-era Paycheck Protection Program (PPP). Six people allegedly involved in the PPP fraud were charged with wire fraud as well.

If convicted, the defendants face prison terms ranging from three to 30 years per count, depending on the charge.

Tackling Pandemic Fraud

The DOJ had previously charged several hundred individuals with fraud related to COVID-19. In August 2023, the agency announced 718 enforcement actions for alleged COVID-19 fraud offenses involving $836 million. This included federal criminal charges against 371 defendants.

Many of the cases involved pandemic unemployment insurance benefit fraud, as well as fraud related to the Economic Injury Disaster Loans and PPP.

In March last year, the IRS announced that its Criminal Investigation (CI) unit had investigated 1,644 tax and money laundering cases worth $8.9 billion that were linked to COVID fraud.

The cases involved fraudulently obtained loans, payments, and credits aimed at supporting American workers and small businesses.

“In the last year alone, we have opened nearly 700 new COVID fraud investigations that collectively add up to $5 billion in potential fraud,” CI Chief Guy Ficco said at the time. “Our special agents continue to seek out fraudsters who stole money from government loan programs for their personal gain.”

This month, Sen. Joni Ernst (R-Iowa) announced the introduction of the “Complete COVID Collections Act” that seeks to extend authorization of the Special Inspector General for Pandemic Recovery (SIGPR) through 2030.

SIGPR, created as a watchdog to oversee loans provided under the Coronavirus Aid, Relief, and Economic Security Act, is scheduled to expire in March 2025. Extending the authorization allows the SIGPR to continue pursuing people who stole COVID funds reserved for small businesses, Ernst said.

“Con artists took advantage of small businesses’ pain during COVID to defraud government programs designed to help hardworking Americans,” Ernst said.

“While we are $36 trillion in debt, we especially cannot afford to leave more than $200 billion floating around, especially in the hands of fraudsters. My Republican colleagues and I are making sure that all resources are available in this fight to get taxpayers’ money back and hold these criminals accountable.”