As the Eastern Washington COVID-19 Fraud Strike Force approaches its third year of cracking down on thefts and illicit use of Economic Injury Disaster Loans and Paycheck Protection Program funds, there’s no slowdown in sight, says Spokane-based U.S. Attorney Vanessa Waldref.

The Journal last featured the strike force in its print edition in October 2022. At that time, the law enforcement coalition had obtained indictments for 10 suspects involving about $3.5 million in fraud in its first eight months of operation.

As of last week, strike force investigations had resulted in 37 indictments and over 21 convictions involving more than $30 million in fraud, with an additional $4 million recovered through civil judgements.

Deputy Criminal Chief and Assistant U.S. Attorney Dan Fruchter says pending cases potentially encompass a significantly greater amount than fraud uncovered so far.

The strike force work has resulted in forfeiture of ill-gotten recreational vehicles, real estate, bank accounts, exotic automobiles, “and lots of cash,” Fruchter says.

Waldref says representatives of 15 federal agencies, including the FBI, the Small Business Administration, and the Treasury Department, meet regularly to ensure continued efficiency of the strike force.

That collaborative success has caught the attention of officials in the U.S. Department of Justice.

“It’s exciting for it to be a nationally recognized model,” Waldref says. “Because we started pushing hard, Justice allocated us an additional attorney.”

Fruchter says current cases are in all stages of activity, from initial investigations to pending sentencings.

As of last week, sentencing for a suspect in the strike force’s largest criminal case so far was set for today, Dec. 5, in U.S. District Court, in Spokane.

In that case, Arkansas businessman Tyler K. Andrews, 37, also known as Tyler Penix, pleaded guilty in September 2023 to fraudulently obtaining more than $16.5 million as part of a conspiracy involving COVID-relief loans obtained by dozens of fake businesses.

Waldref says the strike force unraveled the wide-ranging conspiracy by following the threads from accomplices based in the Inland Northwest.

Fruchter explains, “It started with small cases here and was tied to a national fraud scheme in which Andrews initiated fraudulent claims for COVID-relief funds in exchange for kickbacks of some of the funds.”

Sentencing recommendations for the crimes were under seal pending today’s scheduled sentencing. However, Fruchter says, “We’ll be seeking substantially more than 10 years of incarceration.”

In other recent strike force activity, Antonio F. Crawford, 55, of Mead, was sentenced last month to 45 months in federal prison for stealing over $750,000 in PPP and EIDL COVID-relief funds.

Also in November, Taylor J. Kendall, 26, of Spokane, and Michael T. Allen, 26, of Gainesville, Georgia, were charged with a dozen counts of fraud as part of a scheme in which they’re accused of stealing more than $300,000 in EIDL and PPP funding. Both are former U.S. Air Force Airmen, and Kendall was stationed at Fairchild Air Force Base during the timeframe of the indictments. Three other former Airmen involved in the scheme entered into criminal diversion agreements.

Among prominent indictments, Spokane dermatologist Dr. William Philip Werschler and his businesses were accused in October of using $1.5 million in COVID-19 relief funds to purchase sports cars, buy real estate, and pay off personal debt. Through his attorney, Ronald Van Wert, Werschler denied the allegations and blamed the indictment on misinformation provided by a disgruntled former bookkeeper. 

Fruchter says defendants in the fraud cases run the gamut from those never having committed an offense to career criminals, Fruchter says.

“We’ve also seen violent criminals turn to this because of the pot of money available,” he adds.

The government sometimes doesn’t seek criminal convictions in cases in which funding was recovered and in which the defendant was otherwise entitled to relief, but used funds for inappropriate expenses or personal enrichment, Fruchter says.

As previously reported in the Journal, more than $786 million in Paycheck Protection Program funding was distributed to 6,755 businesses in Spokane County through the U.S. Small Business Administration.

COVID-relief funds, however, were exhausted before all eligible businesses could receive them. Fruchter contends that money stolen by fraudsters could have kept afloat some legitimate businesses that succumbed to pandemic-related economic hardships.

“Individuals stole money during a time of crisis,” he says. “We have businesses that did everything right and through no fault of their own were put in jeopardy.”

All strike force convictions so far have involved guilty pleas, but Fruchter expects to bring significant cases to trial within the next six months.

“We don’t know whether they’ll plead until it happens,” he says. “At some point, we’ll have trials.”

In addition to EIDL and PPP fraud, the strike force also is investigating reports of COVID-related fraud involving landlord and renter violations and unemployment insurance programs. Fruchter says the strike force also is working on higher-complexity cases involving more defendants and more dollars.

He notes that Congress has extended the statute of limitations for such COVID-relief fraud to 10 years upon the receipt of funding, from the previous limit of five years.

“We’re expecting continued expansion in case types and scope,” he says. “There’s more than enough cases to keep doing COVID fraud (prosecutions) for a very long time.”