Whenever there is some sort of crisis it seems to produce a new group of people looking to take advantage of a bad situation for financial gain. As we come into the next quarter, I am looking at what type of fraud will come out of Covid-19. Here are a few things I believe will be on the DOJ’s radar this year.
SBA Fraud
I have recently spoken with members of law enforcement and they tell me the number of fraudulent loan applications for SBA and PPP is staggering. The amount of dormant LLCs that have been resurrected to attempt this type of fraud has been enormous. If you are charged with this type of crime keep in mind that you may not only be charged with the amount you received but with the amount you attempted to receive from the government which could be much higher.
Price Gouging on PPE 
I am seeing a lot of price gouging on essential products, like masks, gowns, ventilators and sanitizers, already. It’s become a huge business in a short period of time. Many brokers such as small business lenders have flocked to selling disaster relief products. I am seeing people markup masks as much as 2-300 percent. In addition, many counterfeit masks are coming from China. Like other disasters in the past, you are going to see people trying to take advantage of a bad situation to make money illegally, I think the FBI will be looking into this area and making arrests shortly.
Securities Fraud
I have already seen a handful of small-cap companies change their business to COVID-19 related products in the past month. Many of these companies have been issued trading halts by the SEC. If you are out there committing securities fraud, you are most likely going to get caught. If you are trying to defraud people by saying you have a service for COVID-19 when in reality you have a shell company with a bunch of fake press releases, the Federal Government is going to come after you very hard.
