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Michigan Man Convicted for COVID-19 Relief Fraud

Richard Marley
September 15, 2021
2 minutes read
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The criminal has been sentenced to 32 months in prison for fraudulently acquiring PPP loans.

On Tuesday (14 September), a Michigan man was sentenced to 32 months in federal prison for fraudulently seeking nearly $1 million in Pay-check Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, said the Department of Justice.

The man named Michael Bischoff, 60, from Macomb County, pleaded guilty to committing bank fraud on November 23, 2020, in the Eastern District of Michigan.

Bischoff admitted to defrauding multiple financial institutions through the submission of at least 9 fraudulent PPP loan applications, all of which falsely represented information regarding his payroll, business expenses, and the number of employees working at his restaurants.

Bischoff also pleaded guilty to committing identity theft, as he used another person’s Personally Identifiable Information (PII) for gaining monetary benefits. Additionally, he submitted various fabricated tax documents to secure the PPP loans.

All in all, Bischoff fraudulently attempted to acquire approximately USD 931,000 in COVID-19 relief funds and successfully received around USD 593,590. In addition to his prison sentence, the defendant has been ordered to serve three years of supervised release, on top of being charged with USD 593,590 in restitution and an additional USD 5,000 fine.

Since the onset of the PPP loans, Fraud Section attorneys have managed to prosecute more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than USD 65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.

Numerous economies worldwide are facing the dilemma of rising COVID-19 related fraud. With the help of robust RegTech solutions such as identity verification software; fraudulent documents, transactions, and identity information can be detected within seconds.

Suggested Read: COVID Certificate Verification – Mounting Cases of Worldwide COVID-19 Fraud

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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Increasing Incidents of Fraud Becoming a Threat to UK’s National Security: UK Finance
Automated systems prevented approximately 736 million pounds ($1 billion) from being stolen through fraudulent means in the first half of 2021.

According to a Reuters report published on Wednesday (Sept. 22), UK Finance has stated that the rising incidents of fraud observed in the e-commerce and online banking sector since the start of the COVID-19 pandemic are slowly becoming “a national security threat”.

The banking industry lobby group UK Finance said that government-backed schemes have become a need of the hour to counter the rising financial crime threats.

Government-coordinated action is needed as criminals have shifted their focus to exploit weaknesses outside the banking system, according to UK Finance’s latest fraud report which covers the first half of 2021.

Read more here: https://t.co/kiWNaBxmjt pic.twitter.com/8b4N6xgafS

— UK Finance (@UKFtweets) September 22, 2021

In the first half of 2021, criminals stole nearly 754 million pounds ($1.03 billion) through bank fraud. This amount represents a 30% rise in bank-related fraud compared to the same time period in 2020, reveals a UK Finance report.

Among the rising fraud schemes was Authorized Push Payment (APP) fraud, whereby customers make payments to criminals, thinking they are legitimate entities. APP fraud went up by 71% in 2021, the report said, moving ahead of card-based fraud for the first time.

Additionally, the UK Finance’s report shows 70% of APP scams were based online and highlighted a rise in the number of online ads that seek individuals as young as 14 to turn them into so-called “money mules” for illegal activities.

The banking group asserted the need for government action through a planned Online Safety Bill, which currently does not include online ads.

“The level of fraud in the U.K. is such that it is now a national security threat,” said Katy Worobec, Managing Director for economic crime at UK Finance, in the report. “The banking sector cannot solve this on its own.”

The report further encouraged the use of automated solutions for combating financial crime, stating that bank security systems prevented approximately 736 million pounds ($1 billion) from being stolen through fraudulent means in the first half of 2021.

Last week, the Financial Conduct Authority stated that the UK lost about 570 million pounds ($778 million) in investment fraud through April 2021, an amount that makes three times the 2018 total.

Suggested Read: UK Exposed to Significant Trade-based Money Laundering Risks Post-Brexit

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A Brief Overview of 2021 AML Trends
Over the last decade, regulatory scrutiny on Anti-Money Laundering (AML) compliance has remained a key area of focus. Well into 2021, the AML landscape has substantially transformed owing to the introduction of new regulatory regimes, unexpected fraud statistics, adoption of regtech technologies, and binding standards set by the global money laundering/terrorist financing watchdog, Financial Action Task Force (FATF).

As such, financial institutions can no longer afford to lose focus on the critical responsibility of detecting, preventing, and reporting suspicious activities. At the same time, institutions are being pushed towards exploring the adoption of robust technologies for keeping pace with fraudsters and money launderers.

Brief Summary of AML Trends in 2021

New AML Guidelines

On January 1, 2021, the Anti-Money Laundering Act of 2020 (AMLA 2020) officially became law, following the US Congress’ vote in favour of the National Defense Authorization Act for Fiscal Year 2021 (NDAA). The new AML law has made some sweeping changes to the Bank Secrecy Act and other AML rules, such as the introduction of new beneficial ownership requirements, the addition of virtual currencies in the AML framework, mandatory Suspicious Activity Reporting (SAR) requirements, and expanded civil penalties for the violators of the AMLA.

UAE

The United Arab Emirates has been at the forefront of the battle against money laundering and terrorist financing threats in 2021. In June 2021, the UAE Central Bank mandated the reporting of suspicious activities and the development of robust AML programs to minimize the risks of money laundering and terrorist financing.

Following this move, Dubai set up a specialized court for combating money laundering challenges, while the National Committee for Combatting Money-Laundering and Financing of Terrorism and Illegal Organisations (NAMLCFTC) introduced new regulatory requirements for virtual asset providers in September 2021. Under the new AML framework, all virtual currency providers including cryptocurrencies have been obligated to comply with the FATF’s travel rule.
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