There are 47 defendants in a federal lawsuit filed against the perpetrators of a $250 million scheme to defraud a pandemic-related relief program that earmarked funds for starving children. The Department of Justice announced that it was the largest pandemic relief fraud to date. The defendants have been charged with wire fraud, conspiracy to commit wire fraud, money laundering, and bribery. Federal prosecutors will push hard for maximum sentences as the federal government tends to take it personally when you deprive needy children of necessary food.
The fraud targeted the Federal Child Nutrition Program. The program sends federal funds to state governments to ensure that children in need are provided with daily meals. Each state has its own agency that oversees these federal funds. Reimbursements are conducted on a per-meal basis, and providers are allowed to keep 15% of the disbursed funds for administrative costs. Individual sponsors apply for applications through their state government and then coordinate meal plans with children in need. During the COVID pandemic, the federal government waived some of the requirements allowing for-profit businesses to partake in the program. It also allowed off-site food distribution for children.
The scheme called for the opening of fake food distribution sites to secure federal money from state governments. The fraudsters are accused of opening fake food distribution sites and then lying about how many meals they serve. The defendants created shell companies to take the funds, and then more shell companies to launder the proceeds. They submitted falsified reports to the federal government and fake attendance rosters of children who were served meals. They then used the proceeds to buy luxury items. The defendants used a website that randomly generates fake names and an Excel formula to randomly generate ages between 7 and 17.
Understanding the Charges
Fraud is bad. Fraud against the government is really bad. Fraud against a government program earmarked for disaster relief is the worst, and the penalty structure of fraud-related crimes reflects this. Defendants can face up to 30 years in prison for defrauding a pandemic relief program, and these particular defendants are facing three other counts in connection with the fraud, as well. While it is unlikely they will remain in prison for the rest of their lives, the government will be looking to put them away for a decade or more.
Fraud takes a long time to investigate, so perpetrators think that they are getting away with the fraud even as law enforcement moves in. In this case, the fraudster was brazen enough to file a civil rights lawsuit against the investigators for shutting down her operation on the grounds of discrimination.
Talk to a Chicago Criminal Defense Attorney Today
David Freidberg handles federal cases involving fraud allegations. Call today at (312) 560-7100 to schedule an appointment, and our Chicago federal fraud defense lawyers can begin preparing your defense immediately.