Six individuals have been charged in a scheme to defraud the U.S. government of approximately $80 million through fraudulent check activities, as announced by federal authorities in New York. The defendants are accused of using fake identities and sham businesses to deposit checks intended for COVID-19 relief into bank accounts they controlled.
Acting U.S. Attorney Matthew Podolsky stated, "We allege that the defendants stole tens of millions of dollars in COVID-19 relief and other checks, and even used a ‘Fraud Bible’ containing instructions for committing fraud. This Office will not tolerate the exploitation of programs designed to support the public in times of crisis, and we and our law enforcement partners will hold those responsible to full account."
The alleged scheme involved depositing fraudulently obtained or counterfeit checks into accounts opened with stolen identity information. Some checks were issued by the U.S. Treasury based on false filings related to pandemic-related tax credits such as the Employee Retention Credit (ERC) and Qualified Sick Leave Wages (QSLW) credit.
FBI Acting Assistant Director Leslie R. Backschies remarked, "These six defendants allegedly used sham businesses, stolen, and fake identities to operate a multi-year check fraud scheme, resulting in $50 million in illicit funds being deposited into their accounts."
IRS Special Agent Harry T. Chavis Jr. added that "this group of suspects openly communicated about their fraud," referring to their use of a document known as the "Fraud Bible" which contained instructions for various fraudulent activities.
The indictment alleges that from 2021 to 2025, these individuals worked together using insider assistance from a bank teller among them who helped open or alter bank accounts to facilitate their fraudulent activities.
In addition to conspiracy charges related to wire fraud and money laundering, each defendant faces potential prison sentences ranging from two years for aggravated identity theft up to 30 years for conspiracy charges.
Mr. Podolsky praised the work done by law enforcement agencies including the FBI, IRS-CI, U.S. Postal Inspection Service, and New York City Police Department.
Assistant U.S. Attorneys Maggie Lynaugh, Steven J. Kochevar, and Qais Ghafary are leading the prosecution under the Office’s Complex Frauds and Cybercrime Unit.
As emphasized by authorities, all charges are allegations at this stage with each defendant presumed innocent until proven guilty in court.
