At Cincinnati, Ohio law firm Helmer, Martins, we’ve seen reports of Covid-19 related criminal fraud cases. Cases like these may also constitute False Claims Act violations.

Misrepresentations Related to Personal Protective Equipment (PPE) Sales: Attempting to take advantages of Federal, State, and Local Government entities in desperate need of PPE, several defendants have been charged with making misrepresentations about PPE.

  • New Jersey used-car salesperson Ronald Romano was arrested for wire fraud and conspiring to violate the Defense Production Act. Mr. Romano allegedly lied to New York City, misrepresenting his authorization to sell 3-M branded PPE, his ability to supply 3M-branded PPE, and his experience selling PPE. Department of Justice, New Jersey Man Arrested For $45 Million Scheme To Defraud And Price Gouge New York City During COVID-19 Pandemic (May 26, 2020).
  • Another defendant, Christopher Parris, was charged with wire fraud for allegedly making fraudulent misrepresentations about his ability to supply the Department of Veteran Affairs 125 million masks for over $750 million. Mr. Parris allegedly made similar false representations while attempting to sell PPE for use by state governments. Department of Justice, Georgia Man Arrested For Attempting to Defraud the Department of Veterans Affairs in a Multimillion-Dollar COVID-19 Scam (April 10, 2020).

Medically Unnecessary Services: Submitting claims for medically unnecessary services is a common False Claims Act scheme, and DOJ has charged a defendant with criminal wrongdoing in connection with such a scheme.

  • Apparently hoping to capitalize on public fears surrounding coronavirus, defendant Mark Schena allegedly paid kickbacks to recruiters and doctors to run medically unnecessary allergy screens on patients. Mr. Schena allegedly claimed his technology could test for Covid-19 based on a blood droplet “250,000 smaller than the technology touted by Theranos,” a disgraced and sanctioned blood testing company that also claimed an ability to run tests on small amounts of blood. Department of Justice, Medical Technology Company President Charged In Scheme To Defraud Investors And Health Care Benefit Programs In Connection With COVID-19 Testing (June 9, 2020).

False Claims for Government-backed Payroll Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL): The PPP has been a magnet for alleged fraudsters. Several defendants have been charged with making false certifications on PPP and/or EIDL applications submitted to the Small Business Administration (SBA) to obtain Government-backed loan funds. For example:

  • After allegedly attempting to take $20 million in Government-guaranteed PPP and EIDL loan funds, falsely claiming to have hundreds of employees when allegedly he was the only employee, the Government charged Muge Ma with bank fraud, wire fraud, making false statements to a bank, major fraud against the United States, and making false statements. Mr. Ma allegedly also falsely claimed to be a United States citizen on his loan application even though he is really a Chinese national. Department of Justice, Chinese National Arrested For $20 Million Scheme To Fraudulently Obtain Loans Intended To Help Small Businesses During COVID-19 Pandemic (May 21, 2020).
  • Hollywood film producer William Sadleir applied for a PPP loan, certifying that the money would be used for payroll and eligible business expenses, but then allegedly started using loan funds for impermissible purposes such as paying off personal credit card bills, a car loan, and other personal expenses. The Government charged Mr. Sadleir with wire fraud, bank fraud, and making false statements to a financial institution and to the SBA. Department of Justice, Hollywood Film Produce Charged with $1.7 Million COVID-Relief Fraud, Individual Used Funds for Personal Expenses (May 22, 2020).

These types of alleged scams and misrepresentations are also potential violations of the False Claims Act. At Helmer Martins, we have over 30 years of experience representing whistleblowers who uncover schemes to defraud the United States. For more information, or to discuss a potential case with us, please contact us.

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