Can I Receive a Cash Reward for Reporting Coronavirus Fraud?
After every major disaster, there is marked increase in fraud. We saw it after Hurricanes Katrina and Maria. It’s not just natural disasters like hurricanes, either. As our banking system teetered on the brink of collapse in 2008, we saw another wave of fraud, this time centered around mortgages and banking.
As companies feel the pressure to make ends meet, some think that fraud is the answer. Falsification of financial statements, ripping off stimulus programs and even ripping off the public become more common. We have already seen a doctor prosecuted for peddling phony coronavirus vaccines and charging Medicare for the worthless vaccines!
Fraud typically blossoms when three factors are present; pressure, opportunity and rationalization. With unemployment rivaling that of the Great Depression and many businesses closed or empty, the pressures on American businesses have never been greater.
To keep our economy afloat, Congress and the President have rolled out stimulus programs that are pumping trillions of dollars into the economy. Because the COVID-19 crisis was so sudden, Congress and the regulatory agencies didn’t have much time to write careful regulations. Most of the current relief programs were slapped together in a matter of days.
Rationalization is the third side of the fraud triangle. With so much money being pumped into the economy, it is easy to simply convince yourself that no one will miss a couple million bucks. Their convoluted thought process goes like this, by taking and spending money they are really just helping the economy.
Coronavirus created the perfect storm and already we are seeing billions of dollars in fraud taking place. That’s not a misprint.
What is the solution? Whistleblowers. Let me explain.
Because the economy is so weak, tax revenues are down. When America most needs more prosecutors and agents to ferret out crime, we have no money to pay for them.
We truly are experiencing the perfect storm. And whistleblowers can help.
Coronavirus Whistleblower Claims
The year was 1863, Abraham Lincoln was president and America found itself in a bloody Civil War. Like today, tax revenues were down – worse than they are today – yet fraud was rampant. Whatever tax revenues the government collected were needed for the war.
So what did President Lincoln do? He convinced Congress to pass the federal False Claims Act. That law allowed private citizens file anti-fraud lawsuits in the name of the United States. If their lawyers were successful in prosecuting one of these cases, their whistleblower client could keep a portion of the recover.
Fast forward to 2020 and that Civil War era law is still on the books. In fact, each year whistleblowers help the government collect billions of dollars annually from companies and individuals who tried to rip off taxpayers. And the whistleblowers who brought these cases get paid several hundreds of millions of dollars.
To qualify for a reward, you must have inside “original source” information about fraud involving government programs or funds. If your case is successful, you can keep between 15% and 30% of whatever the government collects from wrongdoers.
With $2 trillion in new stimulus money and very few government watchdogs to watch for fraud, it has become a fraudsters paradise. And that’s why we need you.
Mahany Law Launches Coronavirus Whistleblower Initiative
The whistleblower lawyers at Mahany Law have a long history of fighting fraud and representing whistleblowers. In the last several years we have helped the government collect over $16 billion in revenue and our whistleblowers have received over $100 million in rewards.
Our fraud fighting team consists of former prosecutors, special agents, investigators and senior government officials. No one has our experience or track record. Period. But the real reason for our success is always our whistleblower clients. And you could be next.
Another key to our success is our close working relationships with state and federal prosecutors, the FBI, Justice Department officials, the IRS and SEC. In fact, when the government has been too busy or otherwise unable to prosecute a whistleblower case, they know we have the experience to step in and take the case all the way through trial.
Many so-called whistleblower lawyers look for an easy win but when the government fails to prosecute, many of these same firms bail. They simply have never pursued a declined case. (This is why it is so important to find the right whistleblower lawyers to handle your case.)
If you have information about a person or company committing coronavirus stimulus funds fraud, contact us online, by email or by phone 202-800-9791. (We accept cases nationwide.) We are happy to evaluate your case without fee or obligation.
Coronavirus Fraud – Where Is the Money Coming From?
Uncle Sam’s printing presses have been working overtime! The original coronavirus quarantine and Safer at Home orders began in March of 2020. Barely three months later, the government has authorized trillions of dollars in spending. That is a record and with the anticipated Heroes Act, will represent more money than spent on the entire federal budget last year.
As of this writing we have the following appropriations which have already been approved:
- March 6th, 2020 – Coronavirus Preparedness and Response Supplemental Appropriations Act ($8 billion)
- March 19th, 2020 – Families First Coronavirus Response Act ($3.5 billion)
- March 27th, 2020 – Coronavirus Aid, Relief, and Economic Security Act – CARES Act ($2 trillion or $2,000,000,000,000.00)
- Under debate – Health and Economic Recovery Omnibus Emergency Solutions Act –
- HEROES Act (>$3 trillion)
Yes, there will be fraud, and many opportunities to help combat that fraud and earn a reward. Probably more so than in any other time in modern history. Remember, the trillions the government spends now will need to be paid back at some point. Unless we are careful, we are guaranteeing that today’s kids will be saddled with an impossible mountain of debt. It is vital that we combat fraud in every way possible.
How is the Coronavirus Stimulus Being Spent?
The numbers are rapidly changing but as of this writing, the government has already spent hundreds of billions of dollars. Some of the money was spent in the form of $1,200 stimulus checks to help those who may have lost their job during the quarantines.
Another large amount went through the Small Business Administration in the form of Paycheck Protection Program (PPP) loans to small businesses. These loans are forgiveable if the company receiving the loans agrees to rehire or not to lay off their employees for a certain time period. Another SBA program provides low interest Economic Injury Disaster Loans (EIDL). Under either program, businesses can receive millions of dollars.
We are already investigating several PPP and EIDL scams involving businesses misspending the loan proceeds or accepting money to which they were not entitled.
Yet another chunk of the money is going to government spending on vaccines, healthcare costs, personal protective gear and the like.
The Department of Health and Human Services has already spent $140 billion on companies researching a vaccine, for companies involved in coronavirus research and developing treatments, for testing, ventilators and PPE.
The Defense Department has spent $11 billion to date, much of it on the same things as Health and Human Services.
Homeland Security isn’t involved in finding a cure and preventive vaccine but they have already spent $46 billion to date, much of it on PPE and grants to state and local disaster relief programs.
The VA has already spent $20 billion, much of that money on PPE, telemedicine and increased healthcare costs for veterans.
Trillions of Dollars in New Spending with Little Oversight, What Could Go Wrong?
We don’t criticize Congress or the agencies for rushing these new programs with little time for review. Those decisions were made because people were jobless and unable to buy groceries and because America needed PPE and a vaccine immediately, .
Most companies that receive grants or loans will do the right thing and use the money wisely. We know, however, that there are always fraudsters ready to take advantage of people in need and already we are seeing investigations and prosecutions. Before we provide some examples, here is a list of where we expect to see major coronavirus fraud cases (and therefore major whistleblower opportunities):
- Grant fraud
- Procurement fraud
- Bid rigging
- Defective products (drugs, ventilators, testing kits, masks…)
- cGMP violations (adulterated or underpotent drugs)
- Off label marketing violations
- Best price violations
- Contracting fraud
- Clinical trial fraud
- SEC violations (phony claims of cures and financial reporting fraud)
Coronavirus SEC Fraud
SEC fraud doesn’t fall under the False Claims Act but the Securities and Exchange Commission has its own robust whistleblower program that also pay rewards. We are already investigating claims by some pharmaceutical companies that say they have developed a vaccine for COVID-19 but really don’t.
Companies make these claims in the hopes of boosting their stock prices. Insiders get out while investors get worthless stock and lose their money. Another form of SEC fraud are companies that don’t want to tell their investors that they are on the verge of going under. Instead they cook their books in the hopes of fooling both investors and the public.
Already Coronavirus Whistleblower Reports Are Making a Difference
Ronald Romano Gets Prosecuted for Wire Fraud
Before New York even began its lockdown, used car salesman Ronald Romano was busy selling N95 respirators to the City of New York so that healthcare workers would be protected when hospitals began to fill. He pitched he could provide 7 million respirators to the city even though he didn’t have them. His brazen plan was to find respirators on the open market and drastically mark up the price to a desperate New York City. Price gouging is illegal during a declared emergency both under New York law and the federal Defense Production Act.
Later Romano allegedly forged a letter from a supplier saying that they had 400 million masks available. According to the complaint filed in court,
“Broker-1 also informed NYC’s Office of Citywide Procurement that Vendor-1 could sell a large volume of 3M-brand face respirators, conveying to NYC several of ROMANO’s materially false statements, including that Vendor-1 had a relationship with a hedge fund that had a contract with 3M to obtain 400 million face respirators and that the respirators would be manufactured in the United States. In reality, Vendor-1 had no ability or authority to procure or sell 3M-brand face respirators.”
State laws vary but price gouging is generally illegal during a declared state of emergency. Under the federal Defense Production Act, a whistleblower needs to show three things. First, one must show that the wrongdoer accumulated materials; second, the accumulation of at least some of the materials took place after the materials were designated as scarce and important to the national defense; and third, that the wrongdoer accumulated the materials either (a) in excess of his reasonable needs of business or personal consumption; or (b) for the purpose of resale at prices in excess of prevailing market prices.
Romano is being prosecuted by the feds. In many cases, the governments that are defrauded by these fraudsters are state and local governments. Both New York State and New York City have their own whistleblower reward laws. So do many other states.
Romano is being prosecuted for price gouging and for trying to get money for masks he didn’t even have. Another variation of the fraud is selling PPE or other goods that are defective. Right now, many of the respirators being sold to the government are counterfeit. That puts the lives of both patients and our healthcare workers / first responders at severe risk.
Sam Yates and his Phantom Employees (PPP Fraud)
Many people are barely getting by on their $1200 stimulus check. Sam Yates, however, decided to go big. He applied for a $5 million Payroll Protection Program loan by claiming he had hundreds of employees that he was trying to stay employed. The feds claim it was all a scam.
In announcing his arrest and prosecution, a Department of Homeland Security spokesperson said, “Today’s arrest should serve as a strong deterrent to anyone considering exploiting the COVID-19 pandemic to enrich themselves through fraud. These individuals have no concern for legitimate businesses whose employees and their families are hurting financially during these unprecedented times.”
Hip Hop Star Charged with Coronavirus Fraud
The feds charged Maurice Fayne a/k/a Arkansas Mo with bank fraud after he received $2,045,000 from the PPP program. Fayne, a reality TV star, claimed he owned a trucking company and needed the money to help keep his 107 employees on the payroll. Instead, the feds say Fayne used the money for back child support, a Rolex Presidential watch and 5.73 carat diamond ring for himself.
While executing a search warrant at Fayne’s home, police found a 2019 Rolls Royce that still had dealer tags on it.
In announcing his arrest, prosecutors released a statement saying, “The defendant allegedly stole money meant to assist hard-hit employees and businesses during these difficult times, and instead greedily used the money to bankroll his lavish purchases of jewelry and other personal items. The department will remain steadfast in our efforts to root out and prosecute frauds against the Paycheck Protection Program.”
The Wall Street Journal says that the SBA isn’t equipped to audit the hundreds of billions of dollars in loans that are being made. “The SBA is a shoestring agency with several thousand employees. It’s literally impossible for them to do the kind of job that taxpayers would desire.”
According to the Journal, during the 2008 financial crisis an audit found that 40% of the loans made by the SBA had inappropriate or unsupported documentation.
Whistleblowers can be helpful in two different areas of coronavirus PPP fraud. First, did the loan proceeds go to eligible recipients? If so, was the money properly used? (Remember, if the company says it used the money to retain workers the loans are forgiven meaning taxpayers foot the bill.)
Michigan Doc Accused of Phony COVID-19 Cure in Medicare Scam
Most folks believe that doctors and healthcare workers are the heroes of the pandemic. They are but that doesn’t mean there aren’t a few bad apples ready to scam patients and taxpayers.
The FBI raided a Sterling Township, Michigan clinic and charged Dr. Charles Mok with healthcare fraud. Online records show that Mok operated a clinic that helped patients with varicose veins, hormone replacement, stem cell therapy, skincare and weight loss. To slow the spread of the coronavirus, Michigan officials stopped non-emergency medical visits for several weeks. That meant Mok’s practice was largely on hold for two months.
Dr. Mok could have helped out at area hospitals that were swamped with COVID-19 patients while his clinic was closed. Instead, prosecutors say he took a different path. They say he began touting preventative vaccine and treatments for coronavirus. The miracle cure? Vitamin C.
They also say he was billing Medicare (meaning taxpayers) for these phony cures. Worse, authorities also say that he failed to follow proper protocols to minimize the spread of the virus. According to the complaint, “The clinics’ waiting rooms were full of patients sitting next to each other and not adhering to the six-foot social distancing recommendation by the Centers for Disease Control. Employees are working without proper PPE and are in close contact with each other and patients during examinations and treatments.”
Five of his employees tested positive for coronavirus yet continued to treat patients. We have no idea how many of his patients were infected as a result or if any of them died.
The case was brought to light by a concerned worker-turned whistleblower.
How to Earn a Coronavirus Whistleblower Reward
Our nation’s healthcare professionals, scientists and pharmaceutical workers are actively working on vaccines and cures. Their efforts also include taking care of over 2 million Americans already confirmed infected with the virus. With our economy in shambles, over 117,000 Americans dead from the virus, and record unemployment, it is vital that everyone do their part to protect, rebuild and recover. That includes fighting coronavirus fraud.
Here is what you can do.
If you have any evidence or information about persons or companies offering phony cures or vaccines, phony test kits, defective respirators or PPP, price gouging, misuse of stimulus funds or even companies lying to their investors and shareholders, blow the whistle.
Blowing the whistle means filing a sealed complaint in court. You can’t get a reward by emailing or calling a hotline. The coronavirus fraud team at Mahany Law has the experience to thoroughly investigate these cases, file the necessary lawsuit and paperwork and prosecute the case in the name of the government.
There are not rewards for every type of fraudulent behavior out there but we have found the overwhelming majority of whistleblowers are primarily motivated by doing the right thing. They understand the need to protect vulnerable members of the public and taxpayers.
Knowing that there are risks faced by whistleblowers, Congress and the state legislatures in 29 states have passed laws allowing whistleblowers to receive a cash reward for their efforts. In most jurisdictions, those rewards are between 15% and 30% of whatever the government recovers from the wrongdoer.
Just about every state makes retaliation against whistleblowers illegal too. If you are fired for blowing the whistle you could receive double damages and attorneys’ fees.
To learn more, we have several sections on our whistleblower information page dedicated to specific fraud topics including government contract fraud, Medicare fraud, SEC whistleblower cases and many others. They can all be accessed from the drop down menus at the top of the page. We also have a coronavirus information page which is primarily dedicated to those who suffered because of a coronavirus related fraud.
Ready to see if you qualify for a coronavirus whistleblower reward? Contact us online, by email or by phone 202-800-9791. We accept cases anywhere in the United States (SEC cases worldwide). All inquiries are protected by the attorney – client privilege and kept confidential. Cases accepted on a contingency fee basis meaning there is no fee unless we recover money on your behalf.
*All persons reported in this blog are presumed innocent until proven guilty. Simply because a person is indicted or arrested does mean they are guilty.