Largest COVID Scam Ever: Scammers Allegedly Filed for 600 Million of Fake Benefits
Feds have charged six New Yorkers in a COVID-19 tax fraud conspiracy.
If convicted, each defendant faces up to a maximum of 55 years in prison for Paycheck Protection Program loan fraud, conspiracy and wire fraud, according to the DOJ press release.
COVID-19 Relief Programs
On March 13, 2020, the President of the United States declared a national emergency due to the spread of COVID-19, as detailed in the indictment. The Coronavirus Aid, Relief, and Economic Security (CARES) Act of March 27, 2020, included an employee retention credit (ERC), a refundable tax credit designed to support businesses that kept employees on the payroll during the pandemic.
ERC was extended by the American Rescue Plan Act and The Taxpayer Certainty and Disaster Tax Relief Act of 2020, allowing employers to offset employment taxes up to 50% of a maximum of $10,000 per employee, which was $5,000, according to the indictment. In 2021, the percentage of the allowed claim was raised to 70%, letting employees claim up to $7,000 per employee.
In March 2021, employers could claim up to $5,110 per employee if they got COVID-19 and needed up to 10 days of leave, according to that indictment. Between April 1, 2021, and Sept. 31, 2021, employers could claim up to $12,000 per employee.
Allegedly Submitted Fraudulent Forms
From November 2021 to June 2023, all seven defendants allegedly submitted over 8,000 fraudulent Form 941 forms, which employers fill out quarterly for employment taxes, according to the indictment. Using different locations and business entities, the defendants reportedly claimed more tax credits than were allowed.
Between March 2022 and September 2022, Tiffany Williams, Keith Williams and Davis reportedly prepared seven Form 941 reports, claiming around $287,173, according to the indictment. The defendants allegedly claimed the same wages for the Sick and Family Leave Wage Credit (SFLC) and the ERC, which was not permitted by law.
Between May 2022 and February 2023, Keith Williams, Hames, and Lewis are accused of filing 22 Form 941 reports, claiming a total of $1.43 million by claiming SELC and ERC for the same wages, according to the indictment. Keith Williams and Lewis also reportedly claimed $645,848 from false Form 941 reports between June 2022 and November 2022.
The defendants allegedly communicated with one another via various means, including WhatsApp, phone calls and text messages, according to the indictment. In those messages, the defendants reportedly discussed plans regarding false statements to give to the IRS when called to check on the refund status, as well as the instructions they received from their clients and co-conspirators on whose behalf they were making the filings.
The defendants are also accused of filling out applications for the Paycheck Protection Program (PPP) loans using false tax documents that claimed to have paid wages to employees that did not exist, according to the indictment. Some of the tax forms submitted with the applications for the PPP loans were allegedly never filed or reported to the IRS.
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