COVID Frauds of the Week: Fraud on Stimulus Programs and Consumers
Like the virus itself, fraud that exploits the COVID-19 pandemic just will not go away, so we are back with another installment of our continuing series highlighting related government enforcement actions. This week, we saw a continued enforcement focus in two areas: fraud on stimulus programs and consumers.
Three charges this week highlighted the government’s ongoing efforts to expose and bring to justice those who tried to get easy money from critical stimulus programs. This time, it’s Florida in the spotlight, as two Miami residents were charged by government prosecutors with fraud in connection with the Paycheck Protection Program (PPP) loan program.
First, Dennis Nobbe was criminally charged in the Southern District of Florida with various forms of fraud related to an alleged scheme that mingled healthcare, consumer, and PPP fraud. Nobbe allegedly exploited patients of his chiropractic practice by encouraging them to apply for credit cards offered by other physicians, whom Nobbe had allegedly bribed to open merchant accounts. Once the patients had the cards, Nobbe allegedly charged unnecessary services (which he sometimes did not even provide) to them, wracking up huge debts for the patients. If that weren’t enough, he then allegedly fraudulently obtained over $200,000 in PPP loans, which he used to pay his own expenses.
Second, David T. Hines was also criminally charged, in the same district. His alleged scheme was simpler, but involved even more brazen fraud on the PPP. According to the unsealed criminal complaint, Hines made numerous applications to the PPP on behalf of various entities. In total, he sought around $13.5 million in PPP loans based on allegedly false applications. Fortunately, banks paid out only $3.9 million that he had requested. Now, Hines faces forfeiture of that smaller, but still sizable haul, including the over $318,000 Lamborghini he allegedly purchased with a portion of the proceeds. So much for subtlety.
Meanwhile, in Pennsylvania, federal prosecutors announced that they had prevented over $44 million from being stolen from the Pandemic Unemployment Assistance (PUA) fund in Pennsylvania. By working with the U.S. Department of Labor Office of Inspector General, prosecutors were able to use data analytics to spot and shut down bogus claims before they were paid. According to the announcement, many of the fraudulent claims were based on identity thefts, where fraudsters used stolen information to apply for payments.
The two other notable prosecutions this week involve consumer fraud, showing government enforcers are still keeping a close eye on schemes to defraud consumers in this time of heightened anxiety – and thus vulnerability.
The New York State Attorney General entered into an agreement with a broker of personal protective equipment (PPE) that will stop them from selling PPE and covid test kits. The proposed consent order and judgment would conclude a lawsuit against Frank Borgese and his company, IMPACT Medical, which alleged that the defendants had tried to take advantage of the pandemic by purporting to sell critical N95 masks that they did not have the ability to provide. They had allegedly offered sales to both state governments and various healthcare systems while knowing they were unable to follow through. As New York Attorney General Letitia James aptly put it, “This reprehensible conduct is as illegal as it is immoral.” The state’s action comes as part of a broader task force engaged to root out similar frauds.
Similarly, federal prosecutors indicted a Utah resident for allegedly falsely representing himself as a physician and selling a bogus coronavirus treatment. As set out in the indictment, Gordon H. Pedersen allegedly sold products containing silver that he trumpeted as a treatment and cure to the disease, which they are not. He also allegedly donned a white labcoat and stethoscope in his advertising videos to further his false claims that he was a doctor. The indictment followed on an earlier emergency action to enjoin further sales of the product.
- COVID-19 Fraud
- The Paycheck Protection Program is a Big Solution to a Big Problem, but it Needs Big Oversight
- COVID Frauds of the Week: Fraud on the PPP
- COVID Frauds of the Week: More Fraud on the PPP
- COVID Frauds of the Week: Consumer and Investor Fraud
- Our Posts on Other COVID-19 Frauds
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