By Richard Lardner | Associated Press
YANKEETOWN, Fla. — A freshwater spring bubbles amid the mangroves, cabbage palms and red cedars on Sweetheart Island, a two-acre uninhabited patch of paradise about a mile off the coast of this little Gulf Coast town.
Pelicans divebomb nearby into the cool waters of Florida’s Withlacoochee Bay and the open view westward holds the promise of dazzling sunsets.
It may have seemed like an ideal getaway for Florida businessman Patrick Parker Walsh. Instead, he’s serving five and half years in federal prison for stealing nearly $8 million in federal COVID-19 relief funds that he used, in part, to buy Sweetheart Island.
While Walsh’s private island ranks among the more unusual purchases by pandemic fraudsters, his crime was not unique. He is one of thousands of thieves who perpetrated the greatest grift in U.S. history. They potentially plundered more than $280 billion in federal COVID-19 aid; another $123 billion was wasted or misspent.
The loss represents close to 10% of the $4.3 trillion the U.S. government has disbursed to mitigate the economic devastation wrought by the COVID-19 pandemic, according to an analysis by The Associated Press.
An AP review of hundreds of pandemic fraud cases presents a picture of thieves and scam artists who spent lavishly on houses, luxury watches and diamond jewelry, Lamborghinis and other expensive cars. The stolen aid also paid for long nights at strip clubs, gambling sprees in Las Vegas and bucket-list vacations.
Their crimes were relatively simple: The government’s goal was to get cash into the hands of struggling people and businesses with minimal hassle, particularly during the early stages of the COVID-19 crisis. Safeguards to weed out the swindlers were dropped. As Walsh’s case and thousands of others have shown, stealing the money was as easy as lying on an application.
The thieves came from all walks of life and all corners of the globe. There was a Tennessee rapper who bragged about the ease of stealing more than $700,000 in pandemic unemployment insurance on YouTube. A former pizzeria owner and host of a cryptocurrency-themed radio show bought an alpaca farm in Vermont with pilfered aid. And an ex-Nigerian government official who grabbed about half a million dollars in COVID-19 relief benefits was wearing a $10,000 watch and $35,000 gold chain when he was arrested.
Nearly 3,200 defendants have been charged with COVID-19 relief fraud, according to the U.S. Justice Department. About $1.4 billion in stolen pandemic aid has been seized.
Investigators won’t catch every crook. The scale and scope of the fraud are too large. Pandemic cases often depend on digital evidence, which is perishable, and the financial trail can go cold over time, said Bob Westbrooks, former executive director of the federal Pandemic Response Accountability Committee.
“The uncomfortable truth is the federal criminal justice system is simply not equipped to fully address the unprecedented volume of pandemic relief fraud cases, large and small, and involving thousands upon thousands of domestic and foreign actors,” Westbrooks said.
Top Justice Department officials are undeterred by the enormity of the task. They’ve created special ” strike forces ” to hunt down COVID-19 aid thieves and vowed not to give up the chase.
“We’ll stay at it for as long as it takes,” U.S. Deputy Attorney General Lisa Monaco said in August.
Konstantinos Zarkadas, a New York doctor deeply in debt, joined the rogues’ gallery of COVID-19 fraudsters by falsifying at least 11 separate applications for pandemic aid that netted him almost $3.8 million, according to prosecutors. He bought Rolex and Cartier wristwatches valued at $140,000 for himself and family members and made a hefty down payment on a yacht, according to court records.
Zarkadas used about $3 million to pay off part of an earlier civil judgment against him for breaching a real estate lease. His most brazen move was to send $80,000 of the looted cash back to the government to settle a federal lawsuit alleging he violated the Controlled Substances Act by dispensing more than 20,000 doses of a weight-loss drug without keeping accurate records, prosecutors said.
The state of New York revoked Zarkadas’ medical license shortly after he was sentenced to more than four years in prison for swiping the pandemic aid.
The stolen funds financed the high-rolling lifestyle of Lee E. Price III, a Houston resident with prior felony convictions for forgery and robbery. He swindled nearly $1.7 million by submitting bogus aid applications on behalf of businesses that existed only on paper, according to court records.
Price wasted little time blowing $14,000 on a Rolex and more than $233,000 for a flashy white Lamborghini Urus, a luxury SUV that can go from zero to 60 mph in three seconds. He also spent thousands of dollars at the Casanova, a Houston stripclub. Price was sentenced to more than nine years in prison.
Vinath Oudomsine of Georgia also created a fake company that he claimed made $235,000 a year and had 10 employees. A few weeks after Oudomsine applied for the pandemic aid, the government rushed him $85,000 to keep his non-existent business afloat.
Oudomsine spent nearly $58,000 on a 1999 Charizard Pokémon card, which depicts a gold dragon-like creature, jaws wide open, poised to attack.
While not as valuable as rare baseball cards — a mint condition Mickey Mantle card sold for $12.6 million last year — Pokémon merchandise can command big money as collectors have driven up prices for collectibles issued by the popular franchise.
At Oudomsine’s sentencing last year, U.S. District Judge Dudley H. Bowen called Oudomsine’s theft “an $85,000 insult” to a country reeling from the pandemic.
“I feel foolish every time I say it: Pokémon card,” Bowen said before sending Oudomsine to prison for three years.
Patrick Walsh’s bid to save his aerial advertising businesses started out legitimately but quickly escalated into sizeable fraud.
Walsh operated a small fleet of cigar-shaped blimps that flew corporate logos over crowded venues. In June 2017, one of his blimps crashed and burned on live television at the men’s U.S. Open golf tournament, one of the world’s premier sporting events.
“I was teeing off and I looked up and saw it on fire, and I felt sick to my stomach,” said professional golfer Jamie Lovemark, according to an Associated Press report. The pilot — the sole passenger — was badly injured but survived, according to a National Transportation Safety Board investigation.
In the wake of the crash, Walsh’s clients began to bail, his attorneys wrote in court filings. To stay afloat, he obtained high-interest loans that also allowed him to expand his businesses. By 2019, his companies had sales of $16 million and had expanded into Latin America and Asian markets.
Then the pandemic hit. “COVID-19 did not slow down business, it killed it,” Walsh’s attorneys wrote. He panicked.
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“His crimes are egregious and the product of greed,” prosecutors wrote in court papers. They cited the purchase of Sweetheart Island, undisclosed “luxury goods,” oil fields in Texas and a downpayment on a home in tony Jackson Hole, Wyoming.
Walsh’s attorneys said in a court filing that he wasn’t motivated by avarice, but desperation. Walsh was under enormous pressure to rescue his businesses and to support his large family, they wrote. He has 11 children.
U.S. District Judge Allen C. Winsor didn’t buy the argument.
This was not “a single moment of weakness,” Winsor said in sentencing Walsh in January to more than five years behind bars.
As part of his plea deal, Walsh agreed to return the $7.8 million he stole and to sell Sweetheart Island, which was among his first purchases with the stolen federal money, according to the court records.
Prosecutors said Walsh used $90,000 of those funds to help finance the $116,000 island purchase. Florida property records show that the island was sold for $200,000 at the end of June.
Walsh’s attorneys said he didn’t buy the island as a “tropical paradise for entertainment” but as a real estate opportunity. They did not explain how the businessman would have transformed the isolated isle into a profit center.
Withlacoochee Bay is scattered with similar small, uninhabited islands. The only hint that anyone had ever tried to develop Sweetheart Island were a few low, timeworn cinder block walls that extend into the water. There was still a “For Sale” sign posted on a weather-beaten and leafless tree that resembled a scarecrow warning people to stay away.
The great COVID-19 grift
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