COVID-19 fraud investigations are typically carried out faster than traditional tax cases, and many leads are sourced from local law enforcement, according to an IRS Criminal Investigation division official.
In addition to requiring investigators to conduct some witness interviews on Zoom and other videoconferencing platforms, instead of in person, the pandemic has had a major impact on the IRS — and the division in particular — that stems largely from the agency's handling of COVID-19 fraud cases, said Ryan L. Korner, CI special agent in charge (Los Angeles).
“We’re working [COVID-19 fraud cases] very quickly. They’re very different than traditional tax cases that can take years. In many instances, we’re identifying perpetrators of these crimes, and within a week or a couple of days, we’re out there arresting them,” Korner said November 5 during a virtual California Tax Bar meeting.
CI is partnering with the Treasury Inspector General for Tax Administration, the Department of Labor, the Small Business Administration, and other entities such as state and local law enforcement to investigate COVID-19 fraud cases, said Korner. He added that that work has reduced the time available for CI to spend on tax cases “only by a couple percent.”
“A lot of our COVID-19-related fraud leads, for example, have come from local police departments such as Beverly Hills [California], where they see folks out there in their communities, spending these fraudulently obtained benefits that they’ve received,” said Korner.
Former IRS CI Chief Don Fort said in July that special agents in the division are taking the lead in investigating pandemic-related fraud. Jim Lee stepped into the role of CI chief in in October.
Highlighting one of the more interesting COVID-19 fraud cases, Korner discussed Fontrell Antonio Baines — a rapper known as Nuke Bizzle — who bragged in a music video called “EDD” about getting rich by committing unemployment benefits fraud. EDD is an acronym for California’s Employment Development Department, and Baines was arrested October 16 on allegations of fraudulently obtaining unemployment insurance benefits under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).
Baines, a Los Angeles resident, is alleged to have applied for over $1.2 million in unemployment benefits, including by using stolen identities, a Justice Department release said.
“Baines allegedly exploited the Pandemic Unemployment Assistance (PUA) provision of the CARES Act, which is designed to expand access to unemployment benefits to self-employed workers, independent contractors, and others who would not otherwise be eligible,” the release states.
In September former New York Jets wide receiver Josh Bellamy was arrested on charges related to his alleged participation in a scheme to file fraudulent loan applications seeking over $24 million in Paycheck Protection Program forgivable loans guaranteed by the SBA under the CARES Act, according to a September 10 Justice Department release.
Other instances of COVID-19 fraud cases reported by the Justice Department and U.S. attorney’s office have involved individuals using PPP loans and other relief funds to purchase an 18-karat gold Rolex watch, a luxury condo, and a Lamborghini Huracan.