In response to assertions that the Biden administration has not done enough to pursue pandemic-era fraud, on March 2, 2023, the White House proposed a framework for a “whole-of-government” anti-fraud effort with the US Department of Justice (DOJ) at the helm.

The president proposed extending the statute of limitations for pandemic-era fraud programs from its present five years to 10 years—at least through 2029. The framework would devote significant resources to prosecutors in Washington and in the 93 US attorney offices around the country, as well as to agents from a wide variety of investigative agencies. In addition, the framework would break down several barriers to information gathering, primarily by the US Department of Labor Office of Inspector General (DOL OIG) and provide considerable resources for prevention and education.

While the bulk of these proposals would require congressional action, some might be funded from alternative sources, which are at least arguably under the control of the executive branch. Accordingly, some of these proposals might escape the constitutionally mandated appropriations process, perhaps in recognition of political tensions leading up to the 2024 elections.

Coupled with recently promulgated DOJ policies regarding the targeting of individuals in corporate matters as well as a focus on early and complete corporate self-disclosure, this may result in a more targeted and effective effort than that which occurred to address alleged fraud associated with government “bailout” programs in the late 1990s and early 2010s.

The proposals include the following:

• Tripling the current size of COVID-19 Fraud Strike Force Teams from three to 10, with each strike force headed by a supervisory assistant United States attorney (AUSA), along with a team of AUSAs, investigators, and analysts drawn from across the federal law enforcement community
• Increasing the statute of limitations for serious systemic pandemic fraud from five to 10 years, meaning that cases could be brought at least into 2029
• Increasing the administrative claims cap from $150,000 to $1 million
• Reestablishing the DOL IG’s authority to easily access multistate data to track unemployment fraud across state lines
• Providing additional resources to IGs and the Pandemic Response Accountability Committee (PRAC)

In addition, the framework would provide funding for prevention and consumer education efforts to protect against fraud and identity theft.

With the exception of the statute of limitations extension, these proposals do not change existing federal law. However, they do change the resources and time frames available to pursue pandemic-era fraud. If past is prologue, this increases pressure at every level of government to bring cases and achieve significant results.

Recent policy statements issued by DOJ increase the risk to businesses and individuals that become aware of fraud and do not report it. This also includes evidence of fraud that comes to light during diligence relating to merger and acquisition transactions. The temptation to say nothing and hope for the best will have to be weighed against the risk of eliciting little sympathy, including for individuals, should fraud otherwise come to light.

TAKEAWAYS

• The framework is largely in the form of proposals and most will require congressional action before becoming law.
• The framework is nonetheless evidence of the collective seriousness with which pandemic-era fraud is being taken by the president, federal prosecutors, and investigative agencies.
• Combined with other recent DOJ prosecutorial policy changes, this proposed framework creates pressure for individuals and businesses facing allegations of pandemic-era fraud. They will need to make independent decisions in this context, given the government’s apparent focus on individual accountability and corporate self-disclosure.

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