An employee of NASA’s Jet Propulsion Laboratory (JPL) pled guilty to federal charges Monday alleging that he used COVID relief funds earmarked for the organization to finance an illegal marijuana cultivation operation and pay off personal real estate loans, the US Justice Department announced this week.
Armen Hovanesian, a 32-year-old resident of Glendale, Arizona, made false and fraudulent statements on three loan applications made out to business entities under his control between June and October of 2020.
Hovanesian received a total of $151,900 for loans provided by the Economic Injury Disaster Loan Program (EIDL) – a program administered by the Small Business Administration (SBA) that provided financing to small businesses, renters, and homeowners in regions impacted by the COVID-19 pandemic. Hovanesian assured the EIDL he would use the loan proceeds “solely as working capital to alleviate economic injury caused by disaster,” as per the terms and limitations of the EIDL program.
Hovanesian instead used the funds to pay off personal real-estate debts and start an illegal marijuana growing operation – a crime that carries a statutory maximum sentence of 20 years in federal prison.
COVID funds-related fraud
An Associated Press analysis published in June 2023 found that scammers potentially stole more than $280 billion in COVID-19 relief funding, while another $123 billion was wasted or misspent. Combined, the loss represents 10% of the $4.2 trillion the US government has so far disbursed in COVID relief aid.
“Here was this sort of endless pot of money that anyone could access,” Dan Fruchter, chief of the fraud and white-collar crime unit at the US Attorney’s office in the Eastern District of Washington, told the AP. “Folks kind of fooled themselves into thinking that it was a socially acceptable thing to do, even though it wasn’t legal.”
“Folks kind of fooled themselves into thinking that it was a socially acceptable thing to do, even though it wasn’t legal.”
Dan Fruchter
US Justice Department inspector general Michael Horowitz, who chairs the federal Pandemic Response Accountability Committee, told Congress the scope of COVID-fund fraud was massive – with up to $100 billion in funds misappropriated.
“I’m hesitant to get too far out on how much it is,” Horowitz said. “But clearly, it’s substantial and the final accounting is still at least a couple of years away.”
The US Attorney General established the COVID-19 Fraud Enforcement Task Force on May 17, 2021, to enhance efforts to combat and prevent pandemic-related fraud.