Louisiana Resident Sentenced to 10 Years for $1.1M Fraudulent Loan Support Scheme

On May 2, 2023, the Department of Justice (DOJ) sentenced defendant Michael Ansezell Tolliver to ten years in prison for his connection to a COVID-19 fraud scheme that resulted in him obtaining over $1.1 million in Paycheck Protection Program (PPP) loans. According to court documents, Tolliver submitted nine government support loan applications for several companies he owned, falsely claiming some businesses had over 100 employees.

In February 2023, the inspector general for the US Department of Labor, Larry D. Turner, estimated over $190 billion of the $872.5 billion in federal unemployment insurance (UI) benefits paid out during the pandemic “could have been improper payments, with a significant portion attributable to fraud.”

“Based on our audit and investigative work, the improper payment rate for pandemic UI programs was likely higher than 21.52 percent,” said Turner.

Fraudulent Loan Applications

Investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), the defendant  took advantage of two government support schemes, seeking more than $7.6 million in PPP and Economic Injury Disaster Loan (EIDL) Program loans. By providing falsified information about his companies – Tolliver Oil & Gas Corporation of Louisiana Inc. and Tolliver Petroleum Corporation of Louisiana – the defendant obtained over $1 million. The money was then laundered through a series of transfers to personal bank accounts. Multiple luxury goods were also purchased with the funds, including five vehicles and four designer watches that were later seized by law enforcement along with $128,500. 

In addition to his ten-year sentence, the defendant was ordered to pay $1,114,724 in restitution.

CARES Act Fraud

In March 2023, the IRS released fraud statistics ahead of the third anniversary of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. After investigating 975 tax and money laundering cases, the agency said alleged COVID fraud totaled $3.2 billion. 

Of the 975 cases, 458 individuals have been prosecuted for their alleged COVID-related crimes, and at least 236 individuals have been sentenced to an average of 37 months in prison. The Fraud Section of the DOJ has also seized over $78 million in cash proceeds derived from fraudulently obtained PPP funds, alongside numerous real estate properties and luxury items.

Key Takeaways

When filing suspicious activity reports (SARs) related to the potential misuse of COVID-19 government programs, compliance staff can review the key terms and filing instructions provided by the Financial Crimes Enforcement Network (FinCEN). When referencing potential PPP fraud, the term FIN-2021-NTC1 should be included in field two.

FinCEN also reminds firms that information sharing is critical to identifying, reporting, and preventing evolving loan fraud schemes. Financial institutions sharing information under section 314(b) of the USA PATRIOT Act can share information relating to transactions suspected of involving the proceeds of one or more specified unlawful activities (SUAs), including fraud against individuals or the government. Compliance teams looking to enhance their information exchange procedures should consider the resources provided by the Financial Action Task Force (FATF), some of which include:

• Guidance on Private Sector Information Sharing
• Information about Opportunities and Challenges of New Technologies for AML/CFT
• Guidance related to Stocktake on Data Pooling, Collaborative Analytics, and Data Protection