Nevada a hotspot for CARES Act-related fraud investigations

Nevada’s top federal prosecutor said Thursday that his office is expecting a “tidal wave” of CARES Act-related fraud investigations and subsequent prosecutions in the months to come.

Congress passed a massive $2 trillion stimulus package last March and included key provisions, such as unemployment insurance benefits and the popular Paycheck Protection Program for struggling businesses.

“Businesses were hurting and they still are,” said U.S. Attorney Nicholas Trutanich in an interview with the Review-Journal. Federal relief aid like the PPP, Trutanich said, served as a critical lifeline to keep many Nevada businesses afloat.

“Some of the businesses took advantage of that opportunity in a good way, some cut corners on compliance, and others outright defrauded the system,” he said. “There was a tidal wave of relief funding made available, and I see a tidal wave of enforcement approaching from the horizon in various forms, including prosecutions by this office like you’ve seen recently.”

Nevada a ‘hot spot’ for fraud

CARES Act-related fraud in the state has gotten so bad, the U.S. Department of Justice gave Trutanich’s office funding to bring on board an assistant U.S. attorney to prosecute only those cases. Nevada is among only 12 districts in the U.S. to have that funding.

“The Department of Justice found Nevada to be a hot spot for fraud and gave us resources that we asked for to ensure that fraudsters knew that we were going to investigate and prosecute where appropriate. Over the last few months we’ve had a lot of success in that area,” Trutanich said.

Last August, a Henderson man was charged with fraudulently obtaining $500,000 in PPP funds to buy a house through elaborate means. This week, a federal grand jury indicted a Las Vegas man who is accused of obtaining $2 million in PPP money to buy luxury cars and swanky condos.

The state Department of Employment, Training and Rehabilitation has been hit hard by fraudsters and have hampered efforts to pay out legitimate claims, a point agency officials continue to make.

In October, Trutanich’s office charged 10 people, including a Las Vegas mail carrier, accusing them of roles in obtaining unemployment benefits from DETR.

“DETR was hit hard by fraudsters. We want unemployment and (Pandemic Unemployment Assistance) insurance funds to go to those in need,” Trutanich said. With the new prosecutor, “we’ll be able to redouble our recent productivity.”

Investigations, partnerships

Some of the unemployment fraud cases involving DETR came from partnerships with local police.

“Many of these cases that we’ve prosecuted so far on unemployment fraud have stemmed from happenstance encounters with local law enforcement, and then federal investigators have been able to pull on those investigative threads and make bigger investigations,” Trutanich said.

The Nevada office is also zeroing in on larger instances of fraud cases with False Claims Act and whistleblower lawsuits and investigations from the U.S. Treasury Department’s Office of Inspector General and from the Special Inspector General for Pandemic Recovery.

In October, Trutanich’s office entered into a memorandum of understanding with the Special Inspector General for Pandemic Recovery to develop leads and prosecute bad actors. The special inspector general was created as part of the CARES Act to investigate spending of government funds meant to provide relief to people and businesses impacted by the pandemic.

“We are on high alert on all of those fronts,” Trutanich said. “We want money rightfully targeted for businesses and individuals that need it to go there. Our job is to deter fraud before it happens and prosecute it if it has already happened.”

With the “second draw” of PPP underway, Trutanich has a message for people looking to bilk taxpayers: “You should know that the U.S. attorney’s office is watching,” he said. “We’ll do everything in our power to send a message as a deterrent through investigation and prosecution.”

Contact Jonathan Ng at jng@reviewjournal.com. Follow @ByJonathanNg on Twitter.