In a relentless pursuit to bring justice to those who defrauded federal assistance programs during the COVID-19 pandemic, Denver has emerged as the leading force in recovering ill-gotten funds. Matthew Kirsch, the acting U.S. Attorney for the District of Colorado, proudly states that his office has been remarkably successful in forfeitures, with over $1 billion secured through the Department of Justice’s Colorado District alone.
The Economic Injury Disaster Loan program, a crucial source of aid for businesses, saw more than $1 billion wrongfully obtained, and the Colorado District played a pivotal role in identifying fraud through a super-computer that flagged over 58,000 fraudulent applications from multiple states. While Colorado borrowers represented only a fraction of the forfeitures, the district’s efforts have been primarily focused on civil cases in fiscal year 2021.
However, securing criminal convictions and prison sentences has proven to be a more arduous task. Despite charging 30 individuals and obtaining a dozen criminal sentences in Colorado, the total amount stolen by those convicted so far stands at $18 million, with attempted theft amounting to $29 million. Notably, pandemic fraud appears to be driven by opportunism rather than well-organized criminal networks, leaving behind a paper trail that aids in proving fraud.
One such case involved Chandler Simbeck, who was sentenced to prison and ordered to repay $151,000 he fraudulently borrowed from the federal government. Simbeck conspired with Russell Foreman to submit false loan applications to the Small Business Administration (SBA) under the guise of their company, Fusion Group. Fusion Group, however, never conducted any business activities, making their loan application fraudulent.
Another case involved Washington, the owner of an online luxury baby boutique, who obtained nearly $500,000 through fraudulent loans. She misrepresented her company’s financials, using the loan proceeds for personal expenses such as a car, a custom-built home, and elective surgery. Washington also applied for millions more in additional loans and grants, including a $6 million grant for shuttered concert venues.
Amin Suliaman, a former Denver hotelier now residing in Miami, is facing wire fraud charges for obtaining $450,000 in EIDL loans for businesses that were not operational. Suliaman had previously declared bankruptcy, claiming the businesses were closed, resulting in discharged claims of $4.6 million. However, he used these same businesses to secure millions in government support, diverting the funds for personal luxuries.
Joshua and Magdalena Lybolt, residents of Castle Rock, are accused of obtaining fraudulent loans worth nearly $5 million under the names of their businesses. They had previously declared bankruptcy, resulting in discharged claims of $4.6 million, but then used these businesses to obtain government support for personal expenses, including luxury vehicles and properties.
The scale of pandemic fraud is staggering, with estimates suggesting that as much as $280 billion of the $4.6 trillion in pandemic assistance may have been stolen by ineligible recipients. The speed at which funds were disbursed to prevent economic collapse led to vulnerabilities that were exploited by opportunistic individuals.
To combat this widespread fraud, the U.S. Attorney General established the COVID-19 Fraud Enforcement Task Force (CFETF) in May 2021, which includes federal agencies such as the Secret Service, Internal Revenue Service, Federal Bureau of Investigation, and U.S. Postal Inspector. Colorado was appointed one of only five COVID-19 Fraud Enforcement Strike Forces in July 2023, further highlighting the state’s commitment to combating fraud.
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While it is commendable that Denver is actively working to recover funds from those who defrauded federal assistance programs, it is important to consider the potential unintended consequences of such a pursuit. While the intention is to bring justice, there is a risk of disproportionately targeting and penalizing individuals who may have made innocent mistakes or faced genuine hardships during the pandemic.
It is crucial to remember that the COVID-19 pandemic has caused immense economic distress for many individuals and businesses. Some people may have applied for assistance programs