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During the pandemic, the federal government distributed a massive $4.2 trillion to local governments, businesses and people. Some of those funds were stolen, and one estimate puts the amount in the hundreds of billions of dollars.
Now, the government is trying to reclaim at least some of those stolen funds and prosecute the thieves.
In August 2023, the U.S. Department of Justice announced it had charged over 3,000 defendants across the country with offenses related to COVID-19 fraud and seized over $1.4 billion in relief funds.
In Wisconsin, federal prosecutors have charged nearly 40 people with crimes related to COVID-19 fraud.
The exact amount of stolen relief funds nationwide is unclear, but a 2023 analysis conducted by the Associated Press estimated nearly $300 billion was illegally obtained from COVID-19 relief funding.
Most, according to the Associated Press, came from temporary programs established by the Coronavirus, Aid, Relief and Economic Security Act, also known as the CARES Act, a $2.2 trillion economic stimulus bill launched in 2020 during the Trump administration. Those programs were intended to aid small businesses and unemployed workers affected by the economic fallout of the pandemic.
“People have to come to grips with what happened, its scope and scale and how sophisticated [COVID-19 fraud] was to the point where it drew bad players and actors from overseas,” said Seto Bagdoyan, a director of the Government Accountability Office’s Forensic Audits and Investigative Service team. “The very sophisticated fraudsters were committing frauds across states, countries and programs too, so many of these schemes will take years to unravel and make their way through the judicial process.”
Fraud cases in Wisconsin
Below is a list of people who have been prosecuted for pandemic relief fraud by the United States Attorney’s Office of the Western and Eastern Districts of Wisconsin.
Both U.S. Attorney’s Offices in Wisconsin told The Badger Project they will continue to work on prosecuting people for defrauding COVID-19 relief funds.
Ahmad Kanan of Madison
Ahmad Kanan was sentenced to 42 months in federal prison and ordered to pay $147,060 in restitution for CARES Act fraud and access device fraud, according to the U.S. Attorney’s Office of the Western District of Wisconsin. Kanan applied for two business loans using a false spelling of his name and indicated that he was not under indictment when, in fact, he had been charged with access device fraud in an unrelated case. Kanan pleaded guilty in both cases in 2020.
Olivia Spellman of Janesville
Olivia Spellman was indicted on seven counts of mail fraud for a scheme to collect unemployment benefits, according to the U.S. Attorney’s Office for the Western District of Wisconsin. She used the names of other individuals to obtain $506,097 from ten states. Spellman pleaded guilty to one count on Oct. 11, 2023, and was sentenced to 16 months in prison. She was ordered to pay $506,097 in restitution.
Sharon Johnson of Madison
Sharon Johnson was charged with two counts of wire fraud and one count of money laundering related to applications for PPP and EIDL, according to the U.S. Attorney’s Office. Johnson received $109,773 as a result of the fraudulent applications in which she provided false information regarding a company incorporated by her in 2018, according to a press release from the U.S. Attorney’s Office of the Western District of Wisconsin. She pleaded guilty to one count of wire fraud and one count of money laundering. In June, she was sentenced to three months in prison and was ordered to pay $109,733 in restitution.
Eric Upchurch of Madison
Eric Upchurch was charged with five counts of wire fraud and one count of money laundering in July 2023, according to the U.S. Attorney’s Office. Upchurch obtained over $400,000 as a result of the wire fraud in which he provided false information and concealed some material facts for PPP loan applications, the U.S. Attorney’s Office alleges. A trial is scheduled for June.
Stephen Smith of Milwaukee
Stephen Smith received over $600,000 in small business loans through applications to an insured financial institution on behalf of three different companies, according to the U.S. Attorney’s Office of the Western District of Wisconsin. Providing false and misleading statements about the companies’ respective payroll expenses, Smith directed his co-conspirators to send him portions of the funds. Smith pleaded guilty to bank fraud in 2021 and was sentenced to three years in prison. He was also ordered to pay $397,500 in restitution.
Thomas Smith of Pewaukee
Thomas Smith admitted fraudulently receiving over $1.2 million in business loans through applications to an insured financial institution on behalf of eight different companies, according to the U.S. Attorney’s Office of the Western District of Wisconsin. Smith made numerous false and misleading statements about the companies’ payroll expenses and directed his co-conspirators to send him portions of the funds. Smith pleaded guilty to one count of bank fraud in 2021 and was sentenced to 57 months in prison. He was ordered to pay $960,000 in restitution.
Nikki Brown of Milwaukee
Nikki Brown was sentenced to 33 months in federal prison for stealing nearly $500,000 in unemployment benefits, according to the U.S. Attorney’s Office of the Western District of Wisconsin. Brown recruited third parties to file fraudulent unemployment claims in six states and convinced people to give her their personal information to file fraudulent unemployment claims. Brown pleaded guilty to one count of wire fraud.
Milwaukee street gang the Wild 100s
Members of a Milwaukee street gang known as the Wild 100s, 30 in total, were charged for their role in a scheme involving millions in fraudulently obtained pandemic unemployment insurance benefits. The funds were used to solicit murder for hire and to purchase firearms, controlled substances, jewelry and vacations, according to a press release from the U.S. Attorney’s Office of Eastern District of Wisconsin. Two members, Ronnell Bowman and Ronnie Jackson, are accused of arranging and executing a murder for pay in 2021.
The charges against the following 27 defendants have been revealed as the indictment is unsealed, while the charges against three additional defendants remained sealed pending their arrests.
Unemployment Insurance fraud
The Government Accountability Office estimates that as much as $135 billion of the total amount of unemployment benefits paid – about 15 percent – was illegally claimed. The unprecedented demand for benefits and the need to quickly implement new programs increased the risk of improper payments, including those due to fraud, according to the Government Accountability Office.
“At the peak of the pandemic, with people losing their jobs, the Department of Labor and the state workforce agencies that channeled the unemployment insurance benefit were trying to get money out as quickly as possible, and that was done almost exclusively by removing to relaxing the controls they had in place,” Bagdoyan said. “If you remove controls, there’s an inverse relationship to risk.”
Wisconsin reported incurring $39.3 million in fraudulent UI pandemic benefit overpayments and has recovered 11% of the amount, or $4.3 million, according to Bagdoyan.
To report the theft of COVID-19 funds, call the National Center for Disaster Fraud at 866-720-5721 or email [email protected].
The Badger Project is a nonpartisan, citizen-supported journalism nonprofit in Wisconsin.
