Feds: COVID-19 fraudsters stole billions

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YANKEETOWN, Fla. — A freshwater spring bubbles amid the mangroves, cabbage palms and red cedars on Sweetheart Island, a two-acre uninhabited patch of paradise about a mile off the coast of this little Gulf Coast town.

Pelicans divebomb nearby into the cool waters of Florida’s Withlacoochee Bay and the open view westward holds the promise of dazzling sunsets.

It may have seemed like an ideal getaway for Florida businessman Patrick Parker Walsh. Instead, he’s serving 5½ years in federal prison for stealing nearly $8 million in federal COVID-19 relief funds that he used, in part, to buy Sweetheart Island.

While Walsh’s private island ranks among the more unusual purchases by pandemic fraudsters, his crime was not unique. He is one of thousands of thieves who perpetrated the greatest grift in U.S. history. They potentially plundered more than $280 billion in federal COVID-19 aid; another $123 billion was wasted or misspent.

The loss represents close to 10% of the $4.3 trillion the U.S. government has disbursed to mitigate the economic devastation wrought by the COVID-19 pandemic, according to an analysis by The Associated Press.

Hundreds of pandemic fraud cases present a picture of thieves and scam artists who spent lavishly on houses, luxury watches and diamond jewelry, Lamborghinis and other expensive cars. The stolen aid also paid for long nights at strip clubs, gambling sprees in Las Vegas and bucket-list vacations.

Their crimes were relatively simple: Stealing the money was as easy as lying on an application.

The thieves came from all walks of life and all corners of the globe. There was a Tennessee rapper who bragged about the ease of stealing more than $700,000 in pandemic unemployment insurance on YouTube. A former pizzeria owner and host of a cryptocurrency-themed radio show bought an alpaca farm in Vermont with pilfered aid. And an ex-Nigerian government official who grabbed about half a million dollars in COVID-19 relief benefits was wearing a $10,000 watch and $35,000 gold chain when he was arrested.

Nearly 3,200 defendants have been charged with COVID-19 relief fraud, according to the U.S. Justice Department. About $1.4 billion in stolen pandemic aid has been seized.

Investigators won’t catch every crook. The scale and scope of the fraud are too large. Pandemic cases often depend on digital evidence, which is perishable, and the financial trail can go cold over time, said Bob Westbrooks, former executive director of the federal Pandemic Response Accountability Committee.

Top Justice Department officials are undeterred by the enormity of the task. They’ve created special “strike forces” to hunt down COVID-19 aid thieves and vowed not to give up the chase.

“We’ll stay at it for as long as it takes,” U.S. Deputy Attorney General Lisa Monaco said in August.

Bold moves

Konstantinos Zarkadas, a New York doctor deeply in debt, joined the rogues’ gallery of COVID-19 fraudsters by falsifying at least 11 separate applications for pandemic aid that netted him almost $3.8 million, according to prosecutors. He bought Rolex and Cartier wristwatches valued at $140,000 for himself and family members and made a hefty down payment on a yacht, according to court records.

His most brazen move was to send $80,000 of the looted cash back to the government to settle a federal lawsuit.

The stolen funds financed the high-rolling lifestyle of Lee E. Price III, a Houston resident with prior felony convictions for forgery and robbery. He swindled nearly $1.7 million by submitting bogus aid applications on behalf of businesses that existed only on paper, according to court records.

Price wasted little time blowing $14,000 on a Rolex and more than $233,000 for a flashy white Lamborghini Urus. He also spent thousands of dollars at the Casanova, a Houston strip club. Price was sentenced to more than nine years in prison.

Vinath Oudomsine of Georgia also created a fake company that he claimed made $235,000 a year and had 10 employees.

Oudomsine spent nearly $58,000 on a 1999 Charizard Pokémon card. While not as valuable as rare baseball cards, Pokémon merchandise can command big money as collectors have driven up prices for collectibles issued by the popular franchise.

At Oudomsine’s sentencing last year, U.S. District Judge Dudley H. Bowen called Oudomsine’s theft “an $85,000 insult” to a country reeling from the pandemic.

“I feel foolish every time I say it: Pokémon card,” Bowen said before sending Oudomsine to prison for three years.

Trouble staying afloat

Patrick Walsh’s bid to save his aerial advertising businesses started out legitimately but quickly escalated into sizeable fraud.

Walsh operated a small fleet of cigar-shaped blimps that flew corporate logos over crowded venues. In June 2017, one of his blimps crashed and burned on live television at the men’s U.S. Open golf tournament, one of the world’s premier sporting events.

In the wake of the crash, Walsh’s clients began to bail, his attorneys wrote in court filings. To stay afloat, he obtained high-interest loans that also allowed him to expand his businesses. By 2019, his companies had sales of $16 million and had expanded into Latin America and Asian markets.

Then the pandemic hit. “COVID-19 did not slow down business, it killed it,” Walsh’s attorneys wrote. He panicked.

Between March 2020 and January 2021 Walsh submitted more than 30 fraudulent applications for emergency pandemic aid and received $7.8 million, according to the Justice Department.

Walsh’s attorneys said in a court filing that he wasn’t motivated by avarice, but desperation. Walsh was under enormous pressure to rescue his businesses and to support his large family, they wrote. He has 11 children.

U.S. District Judge Allen C. Winsor didn’t buy the argument.

This was not “a single moment of weakness,” Winsor said in sentencing Walsh in January.