The greedy took from the needy: US Attorney says he's fighting for every penny of COVID relief fraud

Between 2020 and 2021, the U.S. government essentially co-signed on $800 billion worth of loans to help them keep businesses open and employees on the payroll during the pandemic.

Once businesses proved the money was used properly, those loans were forgiven. To date, that’s the case for about 90% of the loans, according to data from the Small Business Administration.

While loan approvals and in some cases, loan forgiveness were given the fast-track because of the pandemic, WRAL Investigates found the effort to track down fraudulent payments will take years.

U.S. Attorney for the Eastern District of North Carolina Michael Easley Jr. said tens of millions of dollars – if not more – ended up in the wrong hands during the pandemic and the government wants it back.

Easley said his federal task force will investigate people who took money meant for struggling businesses to survive the pandemic.

“The government took very swift action to make billions of dollars available for the needy and it won’t up in the hands of the greedy,” Easley said.

That swift action is specifically known as the Paycheck Protection Program or PPP. Easley said tracking down PPP fraud is a huge priority for his office and on some levels, it’s personal.

“There is something about COVID fraud cases that should make all of us angry,” Easley said.

Robert Royster, the owner of Ruckus Pizza, Pasta and Spirits, explained how his business used PPP loans for legitimate reasons in a 2020 interview with WRAL Investigates.

“It paid our rent. It paid our power bills,” Royster said. “It paid the staff we had until we could kind of get our feet back under us.”

Other businesses’ uses of the loans aren’t legitimate.

About a year ago, Easley created a task force with members of his office and several other agencies. The goal is to find and recover fraudulent use of PPP money. Easley said the work is starting to pay off.

Easley said the task force has gotten about 30 indictments and the task force has another 30 pending. He would not talk about the pending cases until they’re indicted.

"The sum total of cash related to those approximately 200 subjects is $40 million, so it’s a significant chunk of change," Easley said.

Easley also wouldn’t comment on a case WRAL Investigates received a tip on.

After searching through hundreds of thousands of loans in North Carolina alone, WRAL Investigates found seven companies in Garner and Raleigh that received 13 loans totaling almost $1.5 million. The companies are tied to a Garner couple.

Through extensive web searches, it appears only one business has a physical location with employees. Many of the other entities appeared interconnected, with similar number of employees listed on their PPP loans.

WRAL Investigates went to the one active business and asked to speak with the owner. We also emailed and delivered a letter with our findings and questions. So far, no response defending the need for all the taxpayer relief money.

WRAL Investigates is not identifying the companies or the couple because there are no charges and investigators would not comment on whether they’re looking into the loans.

Not addressing that specific case, Easley discussed red flags the members of the task force can hone in on.

"If you claim that you have a company and that company doesn’t exist, that is knowable," Easley said. "If you claim to have employees that you do not have or have never paid payroll tax for, that is knowable."

Easley says 60% of the cases in the district’s Economic Crimes Section are COVID-related. He said the number could grow, "This task force is not going to let off the throttle."

Congress recently agreed on expanding the time to prosecute PPP fraud cases until 2030. Easley warns, if you cheated the system, you’re not in the clear.

"They may get a knock on the door," he said. "[It] could be this year, could be this week, could be years from now.

"We’re very much taking a long view of this and we don’t intend to go away until we get back every penny that we can get back for the taxpayers."

Easley said as the task force continues its work, it will also get faster. However, many PPP fraud cases can be very complex.

Several North Carolinians were just charged in a case that actually has roots in Texas, where a lead conspirator essentially sold a playbook on PPP fraud in exchange for kickbacks. The scheme involved middlemen who also received kickbacks and the recruitment of people who agreed to receive phony paychecks from "businesses" that received PPP. For their role, the recruits also got to keep a small amount from that fake paycheck that even included time periods worked in the "notes" section of the checks.

People found guilty of PPP fraud could face a variety of federal criminal charges, including wire fraud and money laundering. Aside from paying fines, the government can also file forfeiture notices to seize bank accounts and property if they can link it to PPP funding.