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Zoe Allen

Finance professional with extensive experience in Anti-Money Laundering (AML)

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November 21, 2023

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Blog / Ineffective Due Diligence: How a Florida Lawmaker Defrauded COVID-19 Relief Fund

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Ineffective Due Diligence: How a Florida Lawmaker Defrauded COVID-19 Relief Fund

Former Florida state representative Joe Harding, has reportedly been sentenced to four months in federal prison after pleading guilty to wire fraud, money laundering, and making false statements in a COVID-19 relief loan fraud case. The sentencing delivered by US District Judge Allen Winsor, also imposed two years of probation. Prosecutors revealed that Harding fraudulently obtained a $150,000 federal COVID-19 relief loan under the names of defunct companies. He redirected these funds to pay off his credit card debt and personal accounts. This sentencing serves as a significant deterrent to others who may attempt to exploit emergency financial assistance meant for small businesses during a pandemic. Despite commendable work for his community, Harding’s deliberate criminal actions as an elected state representative constituted a betrayal of public trust.

Joe Harding - Former Florida State Representative

Caption: Joe Harding

Harding, elected to Florida’s House of Representatives in 2020, resigned in December 2022 after a federal grand jury indictment was unsealed.

The sentencing serves as a strong message that those who defraud government programs intended to aid people in distressing situations will face consequences. IRS Criminal Investigation Special Agent in Charge Brian J. Payne emphasized the egregious betrayal of public trust by stealing from COVID relief funds meant to help the constituents who elected him. Greed and public service should never align, and this case demonstrates the commitment to holding wrongdoers accountable. Joe Harding is scheduled to begin his four-month sentence on January 29, 2024, marking a significant development in a case that has garnered national attention.

Rep. Joe Harding and Florida state lawmakers recite the Pledge of Allegiance at a special session on COVID-19 vaccine mandates, Nov. 15, 2021, in Tallahassee, FL.

What Could Have Been Done?

Joseph Harding’s ability to defraud and steal from COVID Relief Funds can be understood in the context of several factors that contributed to his successful deception. These factors include lack of thorough review of the documentation presented by applicants that enabled Harding’s fraudulent scheme. Verifying the authenticity and accuracy of materials like financial records and business details through extensive cross-referencing could have detected inconsistencies and prevented improper disbursal of funds. More rigorous analysis of documents rather than taking them at face value was clearly needed.

Additionally, better verification of claimed business activities through site visits, stakeholder interviews, and cross-checking tax records could have exposed Harding’s deception about his firms’ operational status. Discovering discrepancies between tax filings and application claims should have triggered deeper scrutiny into actual operations. This emphasizes the need for multifaceted confirmation of applicant assertions.

Finally, inadequate screening for risks associated with politically exposed persons (PEPs) like Harding also contributed to overlooking red flags. Designating and escalating PEPs for higher-level due diligence through forensic financial reviews and background checks could have uncovered Harding’s misuse of status. Moreover, real-time data exchange between agencies could have flagged suspicious activity faster. But information silos hindered identifying duplicitous applications for relief across programs. Overall, the fraud exposed how lack of diligence, coordination and adapting to emerging threats created systemic weaknesses. More training, collaboration and continuous monitoring is, therefore, imperative.

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