Idaho COVID-19 Fraud Task Force launched

BOISE, Idaho (KIFI) – U.S. Attorney Josh Hurwit announced the formation of the District of Idaho’s COVID‑19 Fraud Task Force and highlighted the District of Idaho’s ongoing efforts to combat pandemic‑related fraud. Those efforts have included complementary actions by the Criminal, Civil, and Asset Recovery Divisions, along with federal, state and local law enforcement agencies.

“The Task Force represents a continuation of my office’s commitment to combatting pandemic‑related fraud,” U.S. Attorney Hurwit said. “It brings together a broad group of law enforcement agencies with prosecutors who will work jointly to hold accountable criminals who unjustly enriched themselves at the expense of taxpayers by defrauding economic aid programs.”

The U.S. Attorney’s Office announce the following agencies are part of the Task Force:

• U.S. Small Business Administration, Office of Inspector General
• Internal Revenue Service, Criminal Investigation
• U.S. Department of Treasury, Inspector General for Tax Administration
• Federal Bureau of Investigation
• Federal Deposit Insurance Corporation, Office of Inspector General
• Social Security Administration, Office of Inspector General
• U.S. Department of Agriculture, Office of Inspector General
• U.S. Department of Health and Human Services, Office of Inspector General
• U.S. Postal Inspection Service
• U.S. Secret Service, Boise Resident Agency and Spokane Resident Office

“Those that commit fraud against SBA’s programs will be brought to justice and held accountable,” SBA OIG’s Western Region Special Agent in Charge Weston King said. “OIG remains committed to rooting out bad actors and protecting the integrity of SBA programs. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and commitment to seeing justice served.”

“Investigating claims of COVID-19 relief fraud remains a top priority for IRS Criminal Investigation,” said Andy Tsui, IRS Criminal Investigation Special Agent in Charge, Denver Field Office. “IRS-CI has investigated over 800 cases of COVID-19 related fraud and we will continue to hold accountable those that steal funds intended to help American workers, families and small businesses.”

“The Treasury Inspector General for Tax Administration joined the U.S. Attorney's Office for the District of Idaho to identify and investigate fraud, waste, and abuse of COVID-19 related government assistance programs,” Treasury Inspector General for Tax Administration J. Russell George said. “We are committed to working with our law enforcement partners to aggressively investigate those who endeavor to corrupt these programs through the misuse of IRS systems and fraudulent IRS documents in furtherance of their schemes.”

The Task Force will identify, investigate and prosecute those whose defrauded economic aid programs intended to help individuals and small businesses negatively impacted by the COVID‑19 pandemic. That includes programs such as the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), Coronavirus Farm Assistance Program (CFAP), Emergency Rental Assistance Program (ERAP), and Unemployment Insurance (UI). To fraudulently obtain these funds, criminals have created businesses, committed identity theft, and inflated the size and scope of actual businesses.

Case Examples

In conjunction with the announcement, U.S. Attorney Hurwit also announced Nicholas Jones, 36, of Boise, was sentenced to 30 months in federal prison for wire fraud and filing falsified campaign finance disclosures related to his run for the U.S. House of Representatives in 2020. Jones was also ordered to pay a $100,000 fine, and the U.S. Attorney’s Office has already received a separate restitution payment of over $90,000 from Jones.

Jones, a small business owner, applied for and received COVID-19 relief funds, including PPP and EIDL funds, totaling $753,600. Despite certifying that these funds would only be used for business-related expenditures, Jones used a significant portion of the funds for personal expenses, including car payments, life insurance policies, and his mortgage. He also purchased a significant amount of stocks and investments with the relief funds.

In addition, Jones ran as a candidate for U.S. House of Representatives in 2020. He used a portion of COVID-19 relief funds he received for campaign purposes. In addition to paying for political advertising, he used PPP funds to pay his restaurant employees not to work for the restaurant, but to work for his congressional campaign, including by making phone calls and hanging campaign flyers.

In imposing his sentence, Chief United States District Judge David C. Nye said that Jones had to bear the consequences of his conduct, which included misusing “money that was significant and no longer available for its intended purpose.”

Other examples of cases that the COVID-19 Fraud Task Force investigated and led to charges include:

• Douglas Wold, 50, of Meridian, was sentenced to 41 months in federal prison for wire fraud, mail fraud, and money laundering in December 2021. During the early months of the pandemic, Wold committed wire fraud by submitting fraudulent payroll requests to his employer. He also committed mail fraud with respect to a COVID-19 testing program by issuing fraudulent invoices to his employer Fry Foods in the name of his business, Hala Lallo Health, when, in fact, the testing was provided by another entity and at a greatly lower cost. Wold deposited the funds he received into a bank account he controlled and did not pay the health provider that actually conducted the testing. Wold committed money laundering by transferring $69,116.48 in proceeds from his frauds for the purchase of a speedboat and trailer, which the Government has since recovered.

• Jeff C. Vogt, of Caldwell, fraudulently obtained $250,000 in CFAP funds based on his false claim that he produced 22,480,000 pounds of dry onions that were shipped but not sold between January 15, 2020 and April 15, 2020. A civil complaint was filed against Vogt alleging violations of the False Claims Act and common law fraud. After Vogt failed to respond, a default judgment for $761,665 was entered against him.

• Lawrence Sikutwa, 43, of Boise, was charged with bank fraud, aggravated identity theft, and money laundering charges in an indictment filed in October 2022. The charges arise from a scheme to defraud two banks by obtaining $337,976 in PPP loans and then allegedly using the loan proceeds for personal and other non-business related expenses. According to court documents, the loan applications were allegedly fraudulent because, among other things, they contained false representations and certifications about the businesses’ average monthly payroll, the number of employees, and the intended use of the funds for business-related expenses, including payroll.

• Khadijah Chapman, 58, of Atlanta, Georgia; Daniel Labrum, 41, of South Jordan, Utah; and Eric O’Neil, 57, of Bethel, Connecticut, were charged in three separate indictments filed in July 2022 with bank fraud for fraudulently obtaining PPP loans from a financial institution located in Boise. According to court documents, the defendants, along with others, allegedly falsified information and submitted fraudulent documents to collectively obtain over $2.4 million in relief funding guaranteed by the SBA for small businesses struggling with the economic impact of COVID-19.

Citizens and others who suspect fraud or other criminal wrongdoing related to the pandemic should report it to the COVID-19 Pandemic Fraud Hotline at www.pandemicoversight.gov/contact/about-hotline. Idahoans are also encouraged to report COVID-19 fraud directly to the U.S. Attorney’s Office at (208) 334-1211.