Federal Seizure Warrants Freeze Funds Tied To COVID-19 Unemployment Fraud Scheme

CHARLOTTE, N.C. – The U.S. Attorney’s Office has taken swift action to seize $48,742.50 in funds held at bank accounts allegedly used to perpetuate COVID-19 unemployment fraud, announced U.S. Attorney Andrew Murray.  The federal asset forfeiture seizure warrants executed by the United States Secret Service were unsealed by the Court today.

Reginald A. DeMatteis, Special Agent in Charge of the United States Secret Service, Charlotte Field Office, joins U.S. Attorney Murray in making today’s announcement.

In a memorandum issued on March 16, 2020, Attorney General William P. Bar directed U.S. Attorney’s Offices across the country to remain vigilant in detecting, investigating, and prosecuting wrongdoing related to COVID-19, and to prioritize the investigation and prosecution of criminal conduct exploiting the coronavirus epidemic.

In making today’s announcement, U.S. Attorney Murray said, “We will not allow scammers to profit from the COVID-19 crisis. Federal prosecutors in this Office have been working closely with federal, state and local authorities to ensure that we swiftly investigate possible misconduct related to the coronavirus, and use all enforcement tools available to end the fraud and punish the perpetrators.”

“Today’s announcement illustrates the Secret Service’s commitment to combating COVID-19 unemployment fraud,” said Special Agent in Charge DeMatteis. “The actions taken by the Secret Service and the U.S. Attorney’s Office prevented legitimate unemployment funds from getting into the wrong hands. The Secret Service will continue to work closely with the U.S. Attorney’s Office to investigate and prosecute criminals who attempt to defraud the critical COVID-19 relief programs and the American taxpayer.”

As alleged in the affidavit filed in support of the federal warrants, the seizures stem from an ongoing investigation of a COVID-19 unemployment fraud scheme that implicates bank accounts in the Western District of North Carolina.  These bank accounts were allegedly used to transfer money from unemployment benefit programs to fraudsters. Both the federal government and state governments have recently implemented unemployment benefit programs to disburse money to certain qualifying individuals who have become unemployed as a result of the recent coronavirus outbreak.  These programs provide means for impacted individuals to apply online for unemployment benefits and to receive much-needed funds.  In some instances, fraudsters have targeted these benefit programs and have exploited them for their benefit. 

According to allegations in the affidavit, to carry out the scheme, the fraudsters used victims’ stolen identities to apply for unemployment benefits online. The scammers then used the bank accounts of yet another set of unsuspecting individuals as “money mule” accounts, to receive and transfer the stolen benefits. “Money mule accounts” are bank accounts used by fraudsters as a pass through means of moving fraudulently-obtained funds. Oftentimes, the unwitting money mule victims, typically acting at the direction of the fraudsters, receive fraud proceeds and conduct financial transactions with those proceeds, or transfer the money from the money mule account to other bank accounts, often located overseas. In many instances, the account holders are not aware they are being exploited to carry out financial fraud.

As alleged in the federal affidavit, in some instances in this case, the individuals who opened the money mule accounts believed themselves to be engaged in online romantic relationships with the fraudsters.  The funds identified for seizure in this case were deposited as a result of fraud on coronavirus-related unemployment benefit programs, into many such money mule accounts, including accounts purportedly opened by individuals in the Western District of North Carolina.

Commending the investigative work of the United States Secret Service, U.S. Attorney Murray said, “I thank the U.S. Secret Service for acting quickly to stop this fraud. My office will continue to with work federal, state, and local law enforcement and stakeholder banks, to make sure domestic or foreign criminals do not profit from pillaging important COVID-19 relief programs.”

U.S. Attorney Murray also noted that the public plays an important role in stopping COVID-19 fraud and urged everyone to remain alert about possible coronavirus scams. “If you are engaged in an online-only relationship and your paramour asks you to open a new bank account, or use your existing account to transfer funds, think twice. A fraudster posing as a romantic online partner could be using you and your accounts as a repository to launder stolen money. Don’t let a scammer turn you into a money mule. Be extra vigilant about online scams, and if the circumstances are suspicious get in touch with law enforcement right away.” 

The U.S. Secret Service is in charge of the investigation, which is ongoing.  Assistant U.S. Attorney Benjamin Bain-Creed, of the U.S. Attorney’s Office in Charlotte, is handling the federal civil court proceedings.

The Department of Justice remains vigilant in detecting, investigating, and prosecuting wrongdoing related to the COVID-19 pandemic.  Under the leadership of Attorney General Barr, U.S. Attorneys appointed Coronavirus Fraud Coordinators to work with federal, state, local and tribal law enforcement partners to protect the public from scammers who are attempting to prey upon fears. If you think you are a victim of a scam or attempted fraud involving COVID-19, you can report the fraud by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form.  Members of the public in the Western District of North Carolina are also encouraged to call 704-344-6222 to reach their local Coronavirus Fraud Coordinator.