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Two weeks ago, the Department of Justice (“DOJ”) announced two significant enforcement actions and shut down NetWalker and Emotet, powerful tools that had been used by alleged criminal networks engaging in widespread ransomware extortion schemes.

It was only a matter of time. On January 12, 2021, the Department of Justice (“DOJ”) announced that it had reached its first civil settlement regarding allegations of fraud related to the Paycheck Protection Program (“PPP”).

In 2019, the Federal Bureau of Investigation (“FBI”) estimated that business email compromises, often carried out via email scams that trick businesses into making wire payments, have caused an estimated $1.7 billion in losses for businesses that fell victim to these schemes, which amounts to the highest out-of-pocket losses incurred from any class of cybercrime.^[1]

The U.S. Department of Justice has made clear that it is pursuing civil enforcement actions and criminal prosecution of fraudsters exploiting the COVID-19 pandemic.

The Department of Justice (“DOJ”) has made clear that it is pursuing civil enforcement actions and criminal prosecution of individuals and entities exploiting the COVID-19 pandemic for their own gain, as seen in the U.S. Attorney General directing all U.S. Attorneys to prioritize these investigations and prosecutions.

On Friday, July 17, 2020, Special Inspector General for Pandemic Recovery (SIGPR) Brian D. Miller and U.S. Attorney for the Eastern District of Virginia (EDVA) G. Zachary Terwilliger announced a formal partnership to pursue civil and criminal investigations of financial misconduct and fraud related to the CARES Act of 2020.

On July 9, 2020, the U.S. Supreme Court announced that it would review the Federal Trade Commission’s authority to seek restitution in federal court for consumers who have been harmed by fraud and other misconduct in the marketplace.

The SEC’s authority to seek disgorgement has been a spotlight issue for the last several years, and on June 22, 2020, the Supreme Court delivered a highly anticipated ruling that will have a mixed impact.

The global coronavirus pandemic has brought confusion and uncertainty to just about every aspect of life, but one thing remains constant: following a dramatic drop in stock price, an issuer’s public statements will be scrutinized, and securities litigation may follow.

In early June, federal agencies brought some of the first enforcement actions against COVID-19 securities fraudsters, involving over $100 million in fraudulent claims and profits, making good on their promise to investigate and prosecute those seeking to fraudulently capitalize on the COVID-19 crisis.

The U.S. Department of Justice (DOJ) has a track record of aggressively pursuing those suspected of fraudulently exploiting federal relief programs meant to combat crises,¹ and early signs indicate that DOJ will continue this practice with the current COVID-19 pandemic.

Scrutiny into Paycheck Protection Program Loans Intensifies — Attracts SEC Attention