WHEN THE GOVERNMENT’S $5 MILLION MISTAKE LEADS TO A COVID SCAM AND A HOUSE MEMBER’S INDICTMENT. Did you know that a Democratic member of the House is under federal criminal indictment? It didn’t receive a lot of news coverage, but the Justice Department announced last Wednesday that Rep. Sheila Cherfilus-McCormick of Florida and three co-defendants have been charged with stealing federal COVID funds and using the money to enrich themselves, to finance a political campaign, and to buy, among other items, a 3.14-carat diamond ring.
It’s a bizarre story that can be summed up in a simple question: What would you do if you discovered that someone accidentally deposited $5 million into your bank account? Would you point out the mistake and give it back? Or would you keep it, spend it, and hope nobody noticed?
In 2021, Cherfilus-McCormick and her brother, Edwin Cherfilus, ran a Miramar, Florida, company called Trinity Healthcare Services, which was wholly owned by two of their family members who are not named in the indictment. Starting in March 2021, the company became involved in a program through which the Federal Emergency Management Agency, or FEMA, gave grants to state agencies, in this case the Florida Division of Emergency Management, or FDEM, to hire companies to provide COVID-related services.
According to the indictment, Trinity Healthcare Services entered into an agreement with FDEM “to provide nurses, clerical staff, and canvassers for the FDEM/FEMA vaccination sites.” Under the agreement, the indictment says, “Trinity was to be paid by FDEM with federal funds provided by FEMA for work Trinity did pursuant to [the agreement].”
On May 14, 2021, Edwin Cherfilus submitted an invoice to FDEM for payment of $50,578.50 for work done in Jacksonville. On July 1, 2021, FDEM paid the bill, but instead of depositing $50,578.50 into Trinity’s bank account, which the indictment refers to as Bank Account 1, it deposited $5,057,850.00. In what the indictment called “a clerical error,” FDEM moved the decimal point a couple of spaces, added two zeroes, and bingo, the Cherfilus family had $5 million.
That is when, of course, Cherfilus-McCormick and her brother should have gone to FDEM and said, sorry, it looks like you’ve made a big mistake here. But the indictment says they did no such thing.
“Starting upon Trinity’s receipt of that overpayment on July 1, 2021, Sheila Cherfilus-McCormick and Edwin Cherfilus retained the [money] that was mistakenly deposited in Bank Account 1, which they controlled,” the indictment says, “with the intent to keep the stolen funds and convert the funds for their own use and for the benefit of … her election campaign committee, SCM for Congress, and others.”
On the day the $5 million showed up, Sheila Cherfilus-McCormick took a screenshot of Bank Account 1’s activity and texted it to Edwin Cherfilus. Then, it appears the two did nothing for a month. And then, according to the indictment, they did a lot.
On Aug. 11, 2021, the indictment says, the two moved $2,400,936.96 from Bank Account 1 to Bank Account 2, which they controlled under the name SCM Consulting. (The bank for both accounts was located in Maryland.) On the same day, Aug. 11, the two moved $190,894.91 from Bank Account 1 into Bank Account 5, which was also in Maryland and was controlled by Edwin Cherfilus. The next day, Aug. 12, the two moved $1,249,333.68 from Bank Account 1 to Bank Account 9, which was in Florida and was controlled by two family members. On Aug. 16, they moved $830,708.93 from Bank Account 1 to Bank Account 7, which was also at a bank in Florida and which the indictment says was controlled by a friend of Cherfilus’s in Orlando. On Aug. 18, they moved $334,757.78 from Bank Account 1 to Bank Account 8, which was also in Florida and was controlled by a woman named Nadege Leblanc, who worked on the campaign and became Sheila Cherfilus-McCormick’s chief of staff for the district office.
After that, there was still more moving money around. On Aug. 31, 2021, according to the indictment, Cherfilus-McCormick and her brother moved approximately $1 million from Bank Account 2, which they had allegedly used to originally store the money, into Bank Account 6, which was a money market account that the two had opened in Florida. On Sept. 1, they used a cashier’s check for $109,000 to purchase an “approximately 3.14 carat ‘Fancy Vivid Yellow Diamond’ ring” from a jeweler in New York, according to the indictment. On Sept. 3, 2021, the two transferred approximately $800,000 from Bank Account 2 in Maryland to Bank Account 6 in Maryland, which they controlled.
You get the idea. And then, according to the indictment, came the straw donor contributions. The indictment alleges that Sheila Cherfilus-McCormick and Nadege Leblanc conspired to funnel money to friends who would then contribute the maximum allowed to Cherfilus-McCormick’s House campaign. On June 25, 2021, the indictment says, Cherfilus-McCormick used Bank Account 1 to wire $50,000 to a relative, who then gave the money to Leblanc. Leblanc then wrote two checks for $2,900, the maximum allowable under law, each to Cherfilus-McCormick’s campaign committee, SCM for Congress.
The indictment says that Leblanc then contacted friends and family, listed as Straw Donors 1, 2, 3, 4, and 5, and sent each money for the purpose of contributing to SCM for Congress. The campaign committee then falsely reported that the donors contributed their own money. Just to keep the candidate up on things, Leblanc texted Cherfilus-McCormick a picture of two personal checks from Straw Donor 5 for $2,900 each, made out to SCM for Congress.
Of course, these cases all end with one more charge, and that is that the defendants lied to the IRS about the money. The indictment alleges that Cherfilus-McCormick and her accountant falsely represented her own and her organization’s income, business expenses, and charitable contributions on her 2021 tax filings in an effort to cover up all of the crimes outlined in the charges.
So what does it mean? First, it brings back the days in which the federal government was shoveling billions out the door in the name of COVID relief. Would the government, either in Washington or Florida, ever have noticed that it had mistakenly sent $5,057,850.00 when it meant to send $50,578.50? Who knows? And who knows how much of the COVID billions was stolen or wasted in ways the government never knew.
In her defense, Cherfilus-McCormick would certainly point out that she did not bill the government for $5 million. She did not ask for the big check. It arrived as a result of a “clerical error.” But once Cherfilus-McCormick saw the money in Bank Account 1, according to the indictment, she was off to the races using the wrongly-sent cash for her own purposes. But the law is quite clear: It wasn’t her money. That is the theme of this extraordinarily detailed picture of the congresswoman’s alleged crimes.
