When COVID-19 struck in 2020, the government quickly put together massive aid programs to help struggling businesses along with the people who lost their jobs.
But other kinds of enterprises with names like the Traveling Vice Lords and the Wild 100s — criminal street gangs in Chicago and across the country — soon figured out how to take advantage of that safety net. They defrauded those programs of millions of dollars that they used to buy guns and drugs, according to the Justice Department and court records.
Incarcerated crooks were in on the act, too: The government estimates that, across the country, at least one-quarter of a billion dollars in fraudulent unemployment insurance benefits went to inmates in federal prisons.
It was no secret how to cheat the system. Tennessee rapper Nuke Bizzle got six years in prison after admitting he pocketed more than $700,000 in bogus COVID unemployment insurance benefits. He glorified the scams in a YouTube music video that got almost 290,000 views.
“You gotta sell cocaine, I just file a claim,” the 34-year-old rapper, whose real name is Fontrell Baines, brags on the video.
In Chicago, the price of illegal guns soared during the pandemic, but gangs were able to pay for them with fraudulent COVID relief proceeds, according to federal agents. In Milwaukee, a gang member even used ill-gotten coronavirus relief benefits to pay for a man to be killed, authorities say.
“We’ve repeatedly seen a connection between violent crime, violent criminal street gangs and the COVID fraud space throughout the country,” says Michael C. Galdo, director of COVID-19 fraud enforcement for the Justice Department.
“I don’t think anyone’s ever seen anything like this in terms of the fraud,” he says. “Word got around pretty quickly that these programs were vulnerable.”
Online chat channels explained how to steal coronavirus benefits, but they were hosted outside the United States, so the government couldn’t take them down, Galdo says.
In June, the inspector general for the Small Business Administration, which oversaw Paycheck Protection Program loans and Economic Injury Disaster loans, estimated that at least 17% of the $1.2 trillion handed out by those programs was obtained through fraud.
The Justice Department says more than 3,000 people nationwide have been charged with COVID benefits fraud.
Government watchdogs say a key reason the cheating was possible was that applicants weren’t required to give detailed documentation of their work histories and business records.
People from all walks of life got in on the illegal money grab — including cops and teachers in Chicago.
There’s also growing evidence that street criminals scammed PPP loans and other pandemic relief aid at staggering levels.
“It’s safe to make that leap between PPP funds going into gangs and funding their narcotics trafficking activity — and, to some extent, also gun purchases,” says Jeffrey Strauss, a Chicago supervisory special agent with U.S. Homeland Security Investigations.
Strauss leads a team that works with the Chicago Police Department, IRS and other agencies to investigate drug-dealing gangs. His team used wiretaps to listen to gang members’ phone conversations.
“It became pretty apparent just by the nature of the communications on those wires that these guys were working together to obtain either PPP loans” or other benefits like unemployment insurance, he says.
“It was very general talk: ‘Hey, did you get that money yet? Or: ‘Did you file that paperwork yet?’ ” Strauss says. “But nothing down in the weeds as to how to do it. My guess is that they would get together — they’re out on the street all day — and they would say this is how you do it. This is what goes on line 21. This is what goes on line 36. And they taught each other how to do it.”
Gang members applied for loans for made-up businesses, including barber shops, janitorial services and landscaping companies, Strauss says.
They used their PPP money, loans that in most cases didn’t need to be repaid, to buy guns from other gang members and sometimes employed straw purchasers — people who can legally buy firearms at gun stores — to get firearms for them in Illinois and out of state.
Strauss says the price of illegally sold Glock handguns — a high-quality weapon of choice for Chicago gang members — went up during the pandemic. He says “street Glocks” rose in price from about $700 to more than $1,000 — and even more when equipped with an extended magazine and an illegal device known as a switch that converts it into a machine gun.
Strauss says the rise in prices on the street probably was due to a scarcity of guns during the pandemic and that PPP loans gave gang members the cash to still buy Glocks even at the inflated prices.
“That money somehow contributed to the rest of the violence in the city with drug-trafficking and the gun trade and all that stuff,” he says.
Guns weren’t the only things Chicago gang members were after. They also were using PPP money to buy expensive muscle cars and other toys, Strauss says.
To get an idea of how prevalent such fraud was among street criminals, the Chicago Sun-Times examined 15 federal gun and drug cases in Chicago since the pandemic began in early 2020.
The names of many of the defendants matched the names and addresses of people listed in applications for PPP loans, according to an SBA database. Many of the loans were for about $20,000. Some of those names were linked to multiple loans.
The loans were forgivable, meaning they often didn’t need to be repaid. To get the maximum loan of about $20,000, applicants who said they were in business on their own — operating a single proprietorship — needed to show their business made at least $100,000 the previous year.
‘O Block’ and PPP
One member of the O Block gang on the South Side boasted that it was easy to get a PPP loan, according to federal authorities.
Kenneth Roberson, 30, is among six reputed O Block members and associates scheduled to go on trial Tuesday on charges related to the Aug. 4, 2020, fatal shooting of Carlton Weekly, who performed as the rapper FBG Duck. Weekly was killed outside a luxury Dolce & Gabbana store on the Gold Coast.
According to an FBI affidavit, an inmate in the Cook County Jail called Roberson’s phone on June 19, 2020, a few months before Weekly was shot. On the 11-minute call, Roberson and the inmate discussed PPP loan fraud, according to the sworn statement, which says Roberson explained that a person applying for a PPP loan didn’t need a federal employee identification number but could just use a Social Security number.
According to the affidavit, Roberson told the inmate, “I’m telling them I’m doing agriculture... my business under my name… They can’t do s— about it.”
Roberson didn’t own an agriculture business and wasn’t employed, the affidavit says.
Also charged in the FBG Duck case are Charles “C Murda” Liggins, 30, Marcus Smart, 24, Tacarlos Offerd, 32, Ralph Turpin, 34, and Christopher Thomas, 24. Their gang, O Block, is a faction of the Black Disciples based in the Parkway Gardens apartments at 63rd and Dr. Martin Luther King Jr. Drive, authorities say.
On applications for PPP loans, some of those men used numbers for phones that later would be considered evidence in Weekly’s killing, the FBI says.
According to the FBI affidavit, Roberson applied for a loan on June 10, 2020, Offerd on June 24, 2020, Smart on July 2, 2020, and Liggins on June 30, 2020. Turpin’s name and address were on an application for a loan approved on Aug. 7, 2020, according to SBA records.
All were charged with violent racketeering activity. None is charged with PPP fraud.
Steve Greenberg, a lawyer for Roberson, wouldn’t discuss his client’s case. But Greenberg says the PPP program “was the modern-day version of the mortgage craze that gave way to the financial crisis. Anyone could get easy money. And the more the banks gave away, the more they got paid. It was designed to invite fraud.”
Feds: Wisconsin gang used aid to pay for hit
In Milwaukee, the Wild 100s gang scammed millions of dollars from unemployment insurance, which is a joint state and federal program, according to an indictment filed in April against about 30 people.
Members of the gang got fraudulent unemployment payments from California and other states, which they used to buy jewelry, machine guns, drugs and vacations, according to the indictment. The gang also used the fraudulent benefits to solicit a murder, the government says.
Ronnell Bowman, 29, and Ronnie Jackson, 23, are accused of conspiring to have a man killed who is identified only as N.B. Other records show Nassar Buford, 20, was fatally shot on April 5, 2021 in Milwaukee.
U.S. District Judge William Duffin ordered Bowman detained until trial after prosecutors said he was the leader of the Wild 100s and caused millions of dollars in losses by teaching others how to defraud the government of COVID relief benefits, court records show.
According to prosecutors, Bowman posted an online message soliciting the killing of a rival gang member’s mother or sister, but the rival’s innocent friend was killed instead. Jackson was paid $10,000 for carrying out the shooting, according to prosecutors.
Bowman’s lawyer told the judge that prosecutors don’t have any direct evidence about the murder-for-hire accusation except for information from a confidential source, according to a summary of the detention hearing.
One defendant, Michael Anderson, 26, pleaded guilty this past week to mail fraud and illegal possession of a Glock handgun and agreed to pay the government about $117,000 for unemployment benefits he stole.
Stealing PPP money, supplying guns to Chicago gangs
Brandon Miller, a soldier serving with the Army at Fort Campbell, which straddles the border of Kentucky and Tennessee, is facing charges of supplying a coalition of South Side gangs with guns, one that was used in a mass shooting.
Miller, who’s from Chicago, also was charged last year in a separate case of orchestrating a ring that stole PPP money.
Miller, 24, got a woman to gave up her personal information so he could arrange for her to get a fraudulent PPP loan, according to the indictment. It says he gave a small cut of the loan proceeds to the woman, who falsely claimed she owned a “new multifamily housing construction” business, and that a larger share went to a fellow soldier who helped recruit her.
Miller and his Army associate also stole personal information to get PPP loans, according to the indictment, filed in Nashville, Tennessee.
Different strategies for prosecuting
In Maryland, U.S. Attorney Erek Barron told WBAL-TV in Baltimore last month that his office has found that about 60% of violent criminals have committed some type of COVID fraud. Barron says his office investigates every suspect of a violent crime to see whether they also were involved in scamming coronavirus benefits. Barron attributed a drop in killings in Baltimore to his office’s aggressively prosecuting COVID fraud.
In Chicago, the feds haven’t included specific COVID-19 fraud charges in most cases that involve violence, guns or drugs. But authorities here say fraud allegations can be used during sentencing to seek an enhancement in prison time. That happened with Tyjuan Lighthall, who was sentenced in 2022 to five years in prison.
Lighthall was originally charged with illegal possession of a handgun in 2019 in Evanston. While free on bond, he bilked the government out of $20,833 from a fraudulent PPP loan, officials said. He claimed he was a “promoter of performing arts and sports” on his loan application, according to SBA records.
Lighthall, 26, pleaded guilty to being a felon in possession of a gun and admitted to coronavirus benefit fraud “for the purposes of computing his sentence,” court records show.
“Each U.S. attorney’s office has their own practices,” says Galdo, the Justice Department official. “Judges have different expectations across the country. It may be a different practice in another district that it’s charged as a separate offense as part of the same indictment. You can get to the same result in different ways in different districts.”
Galdo says people should be outraged that so many criminals engaged in COVID fraud.
“They’re in a life of crime,” he says. “They are repeat offenders who are committing crimes on a regular basis. And now we’re essentially giving them public money to fund what they’re going to do. Anytime we have that connection, that should be particularly troubling to people.”
