Statute Prohibiting Major Fraud Against the United States Expanded to Include TARP Programs. 18 U.S.C. § 1031 no longer focuses principally on contractor procurement fraud. FERA expanded it specifically to include schemes involving TARP or the Government’s purchases of troubled assets.

[1]United States v. Litvak, 30 F. Supp. 3d 143 (D. Conn. 2014).[2] 18 U.S.C. § 1031. Because the parties agreed that materiality is an element of Section 1031, and that the requirement was coextensive with Section 1001’s materiality element—Litvak was charged with four counts of violating section 1001—the court assumed as much in its analysis.

If criminal enforcement were pursued for intentional violations of the Terms and Conditions of the Relief Fund payment, the government could potentially also rely on other criminal statutes focused on fraud against the government. For example, 18 U.S.C. § 1031 imposes criminal liability for major fraud against the federal government in connection with $1 million or more of federal assistance (a 10-year crime with a 7-year statute of limitations). Others include 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1343 (wire fraud); and 18 U.S.C. § 371 (conspiracy).

Importantly, the FAQs do not carry the force and effect of law independent of the statute and regulations on which they are based.[2] Per 18 U.S.C. § 1031, fraud against the U.S., including obtaining money from the government under false or fraudulent circumstances, is punishable by fine, imprisonment of up to ten years, or both.[3] Per 18 U.S.C. § 1001, false statements may be punished by fines, imprisonment for no more than five years, or both.

Importantly, the FAQs do not carry the force and effect of law independent of the statute and regulations on which they are based. Per 18 U.S.C. § 1031, fraud against the U.S., including obtaining money from the government under false or fraudulent circumstances, is punishable by fine, imprisonment of up to ten years, or both. Per 18 U.S.C. § 1001, false statements may be punished by fines, imprisonment for no more than five years, or both.

Penalties can include hefty fines and jail time for individuals.23 And as with government contracts, false statements in connection with reimbursement from federal funds can be treated as criminal fraud with substantial criminal penalties (18 U.S.C. § 1001 (false statements); 18 U.S.C. § 287 (false claims); 18 U.S.C. § 1031 (major fraud allegations)) and subject the entity to fines and treble damages under the False Claims Act (31 U.S.C. §§ 3729-3733).ConclusionThe expanded use of DPA authority to mobilize and accelerate the immunization effort has the potential to disrupt existing business plans and commitments to meet the national emergency.