President Biden Signs Bills Strengthening Laws Against Fraudsters Misusing Covid Relief Funds

President Biden 2022

Several laws strengthening the fight against government fraud were passed by Congress recently with bipartisan support. (Yes, incredible!) One such bill signed into law by President Biden on August 5, 2022, helps fraud tipsters everywhere, including, perhaps, as will be explained in this blog post, those who turn cheaters in for a cash reward under the False Claims Act. It is called the ‘‘COVID–19 EIDL Fraud Statute of Limitations Act of 2022’’. It extends the statute of limitations for CARES related fraud to a whopping Ten Years! President Biden reportedly stated at the signing ceremony for this law:

[That is was] “essential to extend the statute of limitations for certain pandemic fraud … to 10 years to make sure fraudsters can’t run out the clock.” . . . My message to those cheats out there is this: You can’t hide. We’re going to find you. We’re going to make you pay back what you stole and hold you accountable under the law,” 

See eg. CNN Politics report

You would expect this to be an uncontroversial statement, and in the world of prosecution false claims by people who try to get handouts from the government, it apparently still is. That’s good. Relator’s of any political affiliation, or none at all, should be encouraged by this.

The quote the actual language of the new law:

Section 1110(e) of the CARES Act (15U.S.C. 9009(e)) is amended by adding at the end the following new paragraph:
‘‘(9) STATUTE OF LIMITATIONS.—Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to the use of an advance received under this subsection shall be filed not later than 10 years after the offense was committed.’’.

COVID–19 EIDL Fraud Statute of Limitations Act of 2022

Right now the Statute of Limitations in False Claims Act cases is probably not as generous for most cases. Typically, it is three to six years, depending on the circumstances. It gets complicated, but here is the False Claims Act statutory provision in question:

The statute of limitations is: 6 years from the date of the violation, or 3 years from when facts material to the violation are known or reasonably should have been known to the government, but not more than 10 years from the date of the violation, whichever occurs last.

31 U.S.C. § 3731(b)
Ralph Losey ponders “stitch in time” saying

The language Civil “any … civil enforcement action” should cover False Claims Acts cases, but, as usual, it may take some litigation down the road to convince a judge of that. Although the extension for ten years is extraordinary and should make it harder for crooks to sleep at night, it is better to take action immediately, rather than rely on such extensions. You know the old saying, a stitch in time saves nine, something I recently wrote about in the e-discovery context. Evidence gets old and your case may be harder to prove, as the years goes by. Plus the government tolerance for fraud is not low and enforcement energies and funding are high. So, it’s better to muster your courage, and facts, and report fraud now under the CARES act, rather than postpone for tomorrow. Proactivity in legal matters is usually good advice.

If you wait more than three years expect a statute of limitations defense to be raised. Do not wait longer. Do not wait for ten years, despite what the new law says. And as always, do your own due diligence. Retain a lawyer and obtain their legal advice. No legal advice is ever provided here, not is that ever intended. This web is for general education purposes only. It does not create any kind of attorney client relationship. The general disclaimer at the top of every page in Fraud Is Bad explains all of this and should be read carefully. The same disclaimer applies to all websites of Ralph Losey.

Again, the law can be very complex and depends on the facts, especially when dealing with time limits. If you think you know of fraud on the government, the first thing to do, is to formally retain and consult with your own lawyer today. A legal stitch in time could save your whole case. Otherwise a judge could hold that your case is just made of whole cloth, and just throw it, despite any meritorious facts you may have.

Losey explains the old adage “made out of whole cloth.

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