CHARLOTTE — IRS Criminal Investigation released investigational statistics today about COVID-related fraud investigations conducted by the agency over the past two years.
The agency investigated 660 tax and money laundering cases related to COVID fraud, with alleged fraud in these cases totaling $1.8 billion. These cases included a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families, and small businesses.
“The Coronavirus Aid, Relief, and Economic Security Act was signed into law nearly two years ago as a safety net for Americans in light of an unprecedented health crisis. Unfortunately, even during times of crisis, criminals pop their heads out to look for ways to take advantage of those in their most vulnerable state. Thanks to the investigative work of IRS-CI special agents and our law enforcement partners, we’ve ensured criminals who try to defraud CARES Act programs face consequences for their actions,” said IRS-CI Chief Jim Lee.
“The COVID pandemic has brought out the best in some people, while bringing out the worst in others,” said Charge Donald “Trey” Eakins, IRS Criminal Investigation special agent in charge, Charlotte Field Office. “The Paycheck Protection Program was designed to help hardworking businesspeople keep their companies afloat during the pandemic — not to line the pockets of unscrupulous fraudsters. We are pleased to work with our law enforcement partners to prosecute these crimes and IRS-CI will continue to use our financial expertise to identify fraud, trace the funds, and bring the criminals to justice.”
Those consequences include a 100% conviction rate for prosecuted cases with prison sentences averaging 42 months.
Charlotte Field Office case examples include:
Archdale man is sentenced to almost three-years in-prison for Covid-19 relief fraud
Maurice Kamgaing formerly of Charlotte currently residing in Archdale, North Carolina, to 33 months in prison for fraudulently obtaining more than $1.5 million in COVID-19 relief funds. Kamgaing filed a fraudulent application for a PPP loan with the U.S. Small Business Administration (SBA) for Apiagne, Inc. (Apiagne), a company that Kamgaing incorporated in 2019. Court records show that the Apiagne PPP loan application contained false information about the number of employees and its payroll. As a result of the fraudulent representations, on or about May 6, 2020, Apiagne received a PPP loan for $856,463, which Kamgaing used for unauthorized purposes and for his personal benefit.
Father and son convicted of 1.7 million dollar COVID-19 relief fraud
Izzat Freitekh from Waxhaw, North Carolina, and his son Tarjk Freitekh from Glendale, California, owners of local popular Charlotte restaurant, La Shish Kabob, were found guilty of multiple charges on March 17, 2022.
Izzat Freitekh and Tarjk Freitekh submitted fraudulent loan applications that included false and fraudulent IRS tax documentation for over $1 million to banks in order to obtain funds through PPP. Upon receiving $1 million in PPP loan proceeds, they used the funds to unjustly enrich themselves and others by obtaining PPP loan proceeds under false and misleading pretenses, including by making false statements about the number of employees and by providing false documentation, and (ii) conceal the conspiracy. Over $1.3 million of the disbursed PPP funds have been seized and recovered.
Smyrna man charged in paycheck protection program fraud
Shawn Palmer was charged with Paycheck Protection Program fraud. Palmer is the sole owner of Palmers Transportation, Inc. and applied for and received a PPP loan of $514,370, some of which he used to buy a Maserati Quattroporte, a 2020 Freightliner Coronado, and a 2020 Ford F-350. Palmer sent documents to an individual in June 2020 who assisted him to apply for a PPP loan. The documents were then sent to Kabbage, Inc. which was a lender approved by the SBA to provide the funds. Palmer’s loan listed 27 employees in his company, when he only had two, including himself. Palmer also claimed his company’s gross revenue was less than $200,000. The application falsely represented an average monthly payroll of $205,748; gross receipts of $6,744,254.12 for tax year 2019; and represented that Palmers Transportation had gross wages of $2,322,567 and $87,311 in state income tax withholdings for the tax year 2019.
IRS-CI encourages the public to share information regarding known or suspected fraud attempts against any of the programs offered through the CARES Act. To report a suspected crime, taxpayers may visit IRS.gov.
The CARES Act was signed into law on March 27, 2020, to provide emergency financial assistance to millions of Americans suffering the economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional funding, and in December 2020, another $284 billion.
The Paycheck Protection Program allows qualifying small businesses and certain other organizations to receive loans with a maturity of two to five years and an interest rate of 1%. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
To learn more about COVID-19 scams and other financial schemes visit IRS.gov. Official IRS information about COVID-19 and Economic Impact Payments can be found on the Coronavirus Tax Relief page, which is updated frequently.
