Federal COVID Relief Fraud - All Programs Explained
You took PPP money during the pandemic. Maybe you filed for unemployment when your business slowed down. Claimed the Employee Retention Credit through your accountant. Perhaps all three. Everyone did something in 2020 and 2021. The government was throwing money at businesses and individuals - confusing applications, contradictory guidance, desperate circumstances. Years passed. You moved on. You assumed the government had moved on too.
It hasn't. And there are five separate enforcement machines hunting for you.
The federal government didn't create one COVID fraud task force - they created five. PPP and EIDL have their own. The Employee Retention Credit has another. Unemployment fraud has a third. Healthcare fraud has a fourth. And a coordinated COVID-19 Fraud Enforcement Task Force sits above them all. Each program has its own investigators, its own prosecutors, its own data analytics teams. Congress extended the statute of limitations to 10 years. That 2020 relief you thought was forgotten? It's prosecutable until 2030. The conviction rate? 97.4%.
Welcome to Spodek Law Group. We handle federal COVID relief fraud defense across all programs - PPP, EIDL, Employee Retention Credit, unemployment insurance fraud, and healthcare billing fraud tied to the pandemic. If you're under investigation from any agency, if you've received a letter or a subpoena, or if federal agents have contacted you - this article explains the scope of what you're facing.
Five Programs, Five Enforcement Machines
The CARES Act and subsequent relief legislation created multiple programs to help Americans survive the pandemic. Each program attracted fraud. And each developed its own enforcement infrastructure that continues operating today.
The programs and there enforcement apparatus:
- PPP (Paycheck Protection Program): SBA Office of Inspector General leads investigations, DOJ Fraud Section prosecutes. As of December 2023: 1,255 criminal indictments, 985 arrests, 683 convictions. SBA-OIG has identified over $1 billion in forfeitable COVID fraud proceeds.
- EIDL (Economic Injury Disaster Loans): Same enforcement apparatus as PPP. Often charged together. Many defendants face exposure in both programs simultaneously.
- Employee Retention Credit (ERC): IRS Criminal Investigation leads enforcement, DOJ Tax Division prosecutes. As of February 2025: 545 investigations involving $5.6 billion in fraudulent claims. 75 investigations have resulted in federal charges.
- Unemployment Insurance (PUA/FPUC): Department of Labor OIG leads investigations with five regional strike forces. Over 205,000 cases investigated, 1,700+ indictments, more then 39,000 months of incarceration ordered.
- Healthcare Fraud: HHS OIG and FBI handle COVID testing fraud, vaccine billing fraud, telemedicine schemes. Separate enforcement track entirely.
Touch multiple programs, face multiple concurrent investigations.
This isn't theoretical. Edward Whitaker and Schunda Coleman of North Carolina operated a scheme facilitating $15 million in fraudulent PPP and EIDL loans. December 2025: Whitaker got 120 months in federal prison. His wife got 84 months. Both ordered to pay over $10 million in restitution. They touched two programs. They faced overlapping charges from multiple fraud statutes.
One scheme that spans programs generates exponentially more charges. Wire fraud carries 20-30 years. Bank fraud carries 30 years. False statements to the SBA carries 30 years. Money laundering carries 20 years. Aggravated identity theft adds a mandatory consecutive 2 years. Tax fraud adds 5 years per count. Your theoretical exposure from one pandemic relief application that touched multiple programs can exceed 100 years.
The 10-Year Clock and What It Means
In August 2022, President Biden signed two pieces of legislation most people completly missed.
The PPP and Bank Fraud Enforcement Harmonization Act extended the statute of limitations from 5 years to 10 years for PPP fraud. The COVID-19 EIDL Fraud Statute of Limitations Act did the same for EIDL fraud. Both laws applied retroactively.
That means a PPP loan from 2020 is prosecutable until 2030. An EIDL loan from 2021 until 2031. The government gave itself a full decade to build cases. And there using it.
The DOJ currently has 1,648 open uncharged criminal matters related to COVID relief fraud. The Department of Labor OIG has 157,000 open UI fraud hotline complaints. These aren't closed files. There active investigations waiting for prosecutors to have bandwidth.
But here's what most people dont realize about the Employee Retention Credit.
The ERC enforcement hammer is just starting to fall. IRS Criminal Investigation has initiated 545 investigations involving $5.6 billion in fraudulent ERC claims. So far, 75 of those investigations have resulted in federal charges. The largest scheme was just indicted in January 2025 - seven defendants, $600 million in fraudulent claims across 8,000 fake applications, operating through a credit repair business called "Credit Reset."
The IRS has already sent 28,000 disallowance notices on ERC claims totaling $5 billion. There now sending 30,000 "clawback" letters demanding return of ERC funds already paid out.
If you claimed the Employee Retention Credit through an aggressive promoter - one of those companies running radio ads promising you "free money" - your in a database. The question isn't whether the IRS will review your claim. Its when.
Congress is also moving to extend the statute of limitations for unemployment fraud. H.R. 1156, the Pandemic Unemployment Fraud Enforcement Act, passed the House in March 2025. It would extend UI fraud prosecutions from 5 years to 10 years - just like PPP and EIDL.
The government isn't done coming for pandemic relief fraud. There just getting started on some programs.
The Numbers Behind Federal COVID Fraud Prosecution
Five years after the CARES Act, the prosecution statistics tell a clear story about what happens to people who committed COVID relief fraud.
According to IRS Criminal Investigation (as of February 2025):
- 2,039 COVID fraud investigations launched
- $10 billion in attempted fraud investigated
- 1,028 people indicted
- 569 individuals sentenced to an average of 31 months in federal prison
- 97.4% conviction rate in prosecuted cases
According to the DOJ COVID-19 Fraud Enforcement Task Force (December 2024):
- 3,500+ defendants charged with federal crimes
- 2,532 found guilty
- 1,741 received prison time (81% of those convicted)
- 2,008 ordered to pay restitution (94%)
- Prison sentences ranged from 1 day to 30 years
- Majority of sentences between 1-5 years
- 440+ defendants ordered to pay $1 million or more in restitution
- Highest restitution order: over $71 million
These aren't just numbers. This is an assembly line.
The median time from referral to indictment has decreased significantly. The government has gotten faster, more efficient, and more ruthless. Early pandemic leniency is completley over.
"But I only took $50,000. Do people actualy go to prison for that amount?"
Yes.
Sean Walker of High Springs, Florida: 42 months in federal prison for $21,690 in COVID relief fraud. Herman Brunis of Cincinnati: 12 months for conspiring to commit wire fraud involving roughly $300,000. Samuel Jackson of Chicago: 18 months for fraudulently obtaining nearly $2 million through PPP and EIDL. A Camden, Maine man pleaded guilty in January 2025 for $51,666 in combined PPP and EIDL fraud.
The amount doesn't determine whether you go to prison. 81% of convicted defendants received prison time. The amount affects how long - but even small frauds result in federal prison sentences.
Prosecutors aren't giving anyone a pass based on dollar amount. They want headlines. They want deterrence. They want other people who committed fraud to see these sentences and worry.
If Your Facing Investigation
The single most important rule if you're under investigation for any COVID relief program:
Never agree to discuss the matter with a federal agent without a lawyer present.
This sounds obvious. But countless defendants have made there situation worse by talking. Federal agents are trained to seem friendly. Cooperative. Sympathetic. There not on your side. Every word you say becomes evidence. Inconsistencies in your statements - even innocent ones - become obstruction charges or false statement charges stacked on top of the underlying fraud.
The repayment trap:
Many people think returning the money will make the problem go away. It doesn't work like that.
For PPP and EIDL, voluntary repayment can be used as evidence of consciousness of guilt. You knew you shouldn't have taken it. That's what prosecutors will argue.
For ERC, the IRS created a withdrawal program - but withdrawing a fraudulent claim doesn't exempt you from criminal investigation and prosecution. The IRS has explicitly stated this. If you willfully filed a fraudulent ERC claim, withdrawing it doesn't give you immunity.
Returning the money might help at sentencing. But it doesn't stop prosecution. And done wrong, it strengthens the government's case.
If you're under investigation or concerned you might be:
- Identify which program(s) you have exposure in - PPP, EIDL, ERC, unemployment, healthcare billing
- Don't destroy any documents. Document destruction becomes its own federal charge.
- Don't discuss the matter with anyone else who may be involved. Those conversations can be used against you.
- Understand whether you're at the civil stage (where resolution without criminal charges may be possible) or the criminal stage (where defense is the priority)
- Contact a federal defense attorney immediately. The earlier you act, the more options exist.
Todd Spodek handles COVID relief fraud cases across all programs. He understands the difference between an IRS audit of your ERC claim and an IRS-CI criminal investigation. He knows when civil resolution through the SBA is still possible and when it's too late. Multi-program exposure requires someone who understands how these enforcement machines interact.
When Your Ready
If you're facing investigation for COVID relief fraud - whether PPP, EIDL, Employee Retention Credit, unemployment insurance, or healthcare billing - Spodek Law Group can help you understand where you stand.
The consultation is free. Theirs no obligation.
What you'll get is an honest assessment. Which programs are you exposed in? Which agency is investigating? Is this still civil or has it gone criminal? What are the realistic outcomes - not best-case fantasies, but actual possibilities based on how these cases play out?
Call us at 212-300-5196. The government has five more years on their clock for most programs. The ERC enforcement wave is just starting. Unemployment fraud statute extensions are moving through Congress.
Don't wait for agents to show up at your door.
Were here when you need us.
