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July 28, 2020Washington, DC, United StatesCovid-19, Intellectual Property Rights and Commercial Fraud

ICE HSI warns public to remain vigilant about COVID fraud

Over 500 criminal investigations opened in last 100 days, nearly 900 shipments of PPE, test kits, pills, purported treatments seized at ports of entry since April

WASHINGTON – U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) highlights the first 100 days of Operation Stolen Promise with more than 500 criminal investigations, over 900 seized shipments and more than $7 million in illicit proceeds seized. HSI issues a reminder to consumers to stay vigilant about COVID fraud – not only about counterfeit and other illicit products being marketed and sold to U.S. consumers but also the emerging threat of CARES Act loan and stimulus program fraud.

“Although there are no approved treatments for COVID-19, that isn’t stopping fraudsters from illegally trying to sell these products and other counterfeit or prohibited medical supplies and testing kits to U.S. consumers,” said HSI Acting Executive Associate Director Alyssa Erichs. “And now, in addition, we are seeing an uptick in CARES Act fraud – which has doubled since June. We are encouraging everyone to be extra cautious, especially when going online, and know the red flags, to prevent being a victim of fraud.”

HSI launched Operation Stolen Promise in April 2020 to protect the Homeland from the increasing and evolving threat posed by COVID-19-related fraud and criminal activity. The initiative combines HSI’s expertise in global trade, financial fraud, international operations, cyber-crime, and criminal analysis to investigate financial fraud schemes, the importation of prohibited pharmaceuticals and medical supplies, websites defrauding consumers, and any other illicit criminal activities associated with the virus that compromises legitimate trade or financial systems or endangers the public.

Since then, HSI special agents have initiated 570 criminal investigations, and arrested 53 individuals, including: a Canadian man for attempting to smuggle non-approved COVID-19 test kits, made in China, into the United States; a Georgia woman for illegally importing and selling an unregistered pesticide as part of an online scheme claiming, without any legal basis, that the illegal pesticide would protect persons from coronavirus; a Washington State doctor who fraudulently sought over $3 million in Paycheck Protection Program (PPP) loans; and a New York City licensed pharmacist who violated the Defense Production Act by hoarding and price gouging scarce N95 masks.

Together with U.S. Customs and Border Protection, HSI has seized 911 shipments, primarily of counterfeit of substandard medical equipment and supplies, test kits, pharmaceuticals, and purported COVID-19 treatments.

HSI special agents have also seized over $7 million in illicit proceeds, including over $2.2 million in CARES Act fraud seizures, and recorded over $17.9 million in disrupted transactions and recovered funds.

Cyber criminals immediately pivoted to COVID-related fraud at the beginning of the pandemic, first setting up websites offering counterfeit personal protective equipment or defrauding customers who paid for but never received products they ordered. Some later evolved to fraud schemes offering assistance for stimulus refund checks which were intended on stealing victims’ personal identifiable information, and others offered small business loans and PPP loans in order to defraud victims or conduct phishing attacks to steal personal identifiable information. 

HSI’s Cyber Crimes Center (C3) has also uncovered cyber criminals creating fraudulent fund-raising websites to conduct phishing attacks on victims or dupe them into giving a charitable donation through the spoof website. The latest trend by cyber criminals involves offering preorders for vaccines or medicines that cure the COVID-19 virus.

During the first 100 days of Operation Stolen Promise, C3 has analyzed nearly 51,000 domains and initiated 83 cyber related investigations.

“Operation Stolen Promise has yielded significant results, both statistically and in terms of the impact the initiative has had on protecting the health and safety of the American public,” said Erichs.  When it comes to fraud, a key part of preventing crime starts with educating the public, which is why HSI has created a public awareness campaign to relay critical information to the public related to COVID-19 fraud and criminal activity.”

HSI is posting information on how to recognize potential COVID-related fraud on its Operation Stolen Promise webpage, and how to report suspect fraud to the authorities.