Idaho COVID fraud task force has a message for white-collar criminals: ‘You can’t hide it’
‘We’re going to find that out, one way or another,’ officials say
Josh Hurwit was a federal prosecutor in the office of the U.S. Attorney for the District of Idaho for 10 years before he was chosen in April to lead the office, as Idaho’s top federal attorney.
The office has seen many health care fraud cases in that time, he said.
As with all white-collar crime, COVID-19 fraud is a tricky knot to untie. Investigators must trace a paper trail that winds through various government offices and private institutions — a trail of bank account records, tax returns, business filings, application forms, database entries and human interactions that, together, allow them to build a case against a defendant.
Hurwit’s staff are accustomed to working cooperatively with other law enforcement and regulatory agencies.
But a specific type of fraud sometimes calls for a specific team to combat it, Hurwit told the Sun.
That’s why his office recently announced the creation of a COVID-19 fraud task force, made up of 10 agencies.
The Internal Revenue Service nationwide has worked on at least 840 tax and money laundering investigations tied to COVID fraud, totaling more than $3.1 billion, according to the IRS.
Mark Weymouth, an IRS supervisory special agent, leads the IRS criminal investigation team in Idaho.
Weymouth’s agents work with other federal agencies, including the U.S. Department of Justice, to identify all kinds of fraud related to taxes — money laundering, fraudulent tax returns and, most recently, fraud related to COVID-19 pandemic assistance programs.
Weymouth moved into the Boise IRS office in the midst of the pandemic. Almost immediately, he began working together with Hurwit on a COVID-19 fraud case: an investigation into a human resources manager whose employer, Fry Foods, operated a plant in Ontario, Oregon — just over the Oregon-Idaho border — that experienced a coronavirus outbreak in spring 2020 and arranged for employees and their families to receive COVID-19 tests.
The investigation found that manager, Douglas Wold, used the testing program to defraud Fry Foods and spent nearly $70,000 of the ill-gotten gains to buy a boat and trailer. Hurwit described that example as a “COVID testing fraud scheme, coupled with money laundering, coupled with a more traditional sort of embezzlement, wire-fraud-type scheme.”
Wold was sentenced in December to three years and five months in federal prison for wire fraud, mail fraud and money laundering.
The Idaho Capital Sun sat down with Hurwit and Weymouth at the U.S. Attorney’s offices in Boise last month to learn more about the task force’s efforts.
Josh Hurwit: We’ve worked in the health care space, in terms of fraud, for many years. Even before the pandemic, (Medicare and Medicaid) billing fraud, things like that, were on our radar and something that we prosecuted.
In addition, we do work on the civil side — not criminal cases, but civil enforcement actions (such as) when it comes to the opioid crisis and overprescription by certain providers to folks that are dependent on opioids.
The task force is really an outgrowth of our normal white-collar crime efforts. But given the widespread nature of what we’re seeing, it made sense to bring all of our partner agencies (such as the IRS, FBI and Small Business Association) and put them together in a more formalized way, working with a couple of our prosecutors to review leads, develop cases, be able to assign the right agency partner to work with us.
We’ve seen several cases since the very outset of the pandemic, and so we knew that there was going to be a large amount of fraud associated with all the relief programs that were rolled out.
I don’t think that’s a surprise. But that’s borne out across the country. We’ve talked about over $100 billion (in) fraud, perhaps, nationwide. In Idaho, you know, we’re gonna be in the millions of dollars; we already are, with just the five cases that we’ve publicly been able to file on.
To have this group of 10 agencies, each with a little bit of different expertise, really helps us tackle the problem.
Idaho Capital Sun: What sorts of tips have you received? What types of fraud?
Hurwit: We’ve seen different types of fraud. We even have some of the lesser known relief programs that have been targeted — so, rental assistance, other housing type assistance programs, with the farming program — the Coronavirus Farm Assistance Program — not necessarily as well known as (the Paycheck Protection Program, or PPP). We’ve seen indicators of fraud within all those programs.
Different programs have different managing agencies, and we’re able to work with them to look at indicators of fraud. That’s how we’re generating leads, and then we get leads from members of the community, from financial institutions, from other businesses that have been victimized in some way.
Mark Weymouth: And you may end up with other crimes in addition, that lead to money laundering, right? Money laundering requires a specified unlawful activity. So, there might be identity theft. Somebody could totally set up a fake business, using a real person’s name but not theirs, and then apply for a loan through that. We’ve seen that in other cases across the country. There’s just a slew of crimes that could be associated with these types of investigations.
Hurwit: We have several ongoing investigations. To give you a sense of the scope, that we’re just getting started: We’ve already charged five cases. And we have many leads that we’re working on, and we think this work is going to continue for several years.
The Sun: For several years? Even though the money’s already been tapped?
Weymouth: That is a historical crime, right? Because they’ve already received the money. And if they’ve misused it, or didn’t use it the way it’s appropriated for, for the purposes of the loan, then we’re going to find that out one way or another. We take that very seriously, that type of fraud.
You can’t hide it. If you took the money that was for your employees, and you bought a fancy car, you did something wrong. We’re gonna investigate that.
The Sun: How are these cases different from other cases your office pursues?
Hurwit: A lot of our cases are quick. So, a drug case, for example: Someone’s pulled over on the side of a road, and their trunk has pounds of meth in it. We know that a crime has been committed. And as a matter of starting the process with financial crimes, in general, we have to figure out: Has there been a crime, or is there another explanation? And then: Was it committed with criminal intent, or was it some other explanation?
We are seeing situations in which criminals, you know, invent businesses to obtain the (pandemic) loans, and they’re obviously not going to be able to spend it on the appropriate purposes — because there’s no business there.
We indicted a case last week that involved this type of fact pattern. The allegation is that on three occasions, he applied for loans for a business that was non-existent.
The Sun: Is there anything unique about Idaho, in the types of fraud that you’re seeing here with regard to pandemic aid?
Weymouth: (Compared with more populated states), the numbers are a little smaller. The amounts in the fraud are a little smaller. It doesn’t make it any less egregious. We may have a case in another state where it’s $10 million … and, here, it might be half as much. It’s still millions of dollars, it doesn’t stop the case from being any less important. This is money that was destined for hardworking Americans and small businesses. And, because of maybe a small few, others may not have gotten those relief funds.
The Sun: Big picture, what do you hope to accomplish with this task force?
Hurwit: We hope to prosecute as many viable, worthwhile cases as we can, like we always do, and recover the funds that were stolen, essentially, from taxpayers and from programs that were designated to help small businesses and workers and renters during a crucial time of need.
That type of criminal behavior is always unacceptable — but it’s a little more, to me, glaring, when we’re in a nationwide crisis that the pandemic presented, we all needed to band together to support each other, to get through it. And a small few decided to take advantage of that and really slap everyone else in the face. So, we want to send that message and recover the money for the taxpayers.
The Sun: The pandemic became politicized. How do you navigate that in prosecuting fraud related to it?
Hurwit: We approach our work a-politically. We take a set of facts that justifies an investigation, and we follow where it leads. We make decisions based on the facts, and if there’s political noise about it, that doesn’t affect us.
Weymouth: Largely, the types of cases that the COVID fraud task force takes on really has nothing to do with politics. And if politics comes in, (the agents) discuss it from a standpoint of, ‘Can you be impartial?’ And if they can’t be impartial, if they feel like they would be swayed one way or the other, then we have another case agent work on it.
It’s the same thing as if it’s your neighbor, and you’re conducting an investigation, well, that agent’s not going to work the case, right? We have a very open discussion about that to ensure that doesn’t happen.
But, really, these types of cases, they’re not political in any way.
Hurwit: Just as, there’s no reason for this task force to be politicized. That’s my belief. We’re going after people that committed fraud, and they stole money from all of us.
Weymouth: That money is going to a cabin instead of going to people who supposedly are your employees? I don’t care what the politics are. That’s just illegal.
Editor’s note: This interview was edited for length and clarity.