NC branch of U.S. Attorney's Office launches program to catch people defrauding government using PPP loans

Billions of dollars of federal COVID-19 funds have ended up in the hands of fraudsters, according to the U.S. Attorney's office for the Eastern District of North Carolina.

U.S. Attorney Michael Francis Easley Jr. launched a new federal task force to go after thieves who are trying to recoup the cash.

"There were a lot of folks who took advantage of that crisis to profit for themselves," he said.

Easley said his office is investigating dozens of potential COVID-19 relief fraud cases. A Garner man pleaded guilty to wire fraud and bank fraud after filing 14 fraudulent Paycheck Protection Program (PPP) applications, seeking $6.1 million dollars. The owner of a Charlotte restaurant and his son were also charged for allegedly receiving more than $1.7 million in fraudulent benefits, and Durham attorney Tiffany Russell pleaded guilty to bank fraud and stealing Social Security numbers. Investigators said she filed 10 loan applications, lied about the number of employees at her law firm and used more than $1 million in COVID-19 relief to purchase six properties.

Easley said there were "networks" of criminals sharing ways to defraud the system.

Many criminals will submit fraudulent applications for established businesses that don't have any operations or employees, Easley said. The new task force is a way to deter others from defrauding and lying to the government.

“We want to ensure not just that we prosecute those who commit crimes, but that we also ensure crime doesn’t pay," Easley said. "We can have civil remedies and forfeitures of funds that were taken based on false representations and lies to the government.”

Struggling business owners say federal loans helped keep them afloat during the pandemic

“We were losing $300,000 a month in our restaurants," said Greg Hatem, owner of Empire Eats, a restaurant group based in Raleigh.

Hatem said he used more than $1 million in federal PPP loans to keep the lights on and pay his 300 employees.

“It meant everything to us and our employees because that was the only way they were going to survive," he said.

With his restaurants bouncing back, Hatem thinks about the businesses that didn’t make it — and how the stolen funds that could have saved them.

“It was day-to-day, and those funds could not come soon enough," he said. “Those are some folks who don’t need to be out there in business pulling away funds from the rest of us. A lot of people are still struggling.”

Dozens cases of PPP fraud under investigation across eastern NC

Easley said to expect dozens of charges to emerge out of the Triangle and in eastern North Carolina related to PPP fraud.

“We are looking at a significant number of leads right now, and as the years roll on, we will have more opportunity to go back and do deep analysis," he said.

Even though the worst of the pandemic appears to be behind us, Easley said law enforcement efforts still have a long way to go.