You would be prosecuted if the bank found out.

Also you wouldn’t be prosecuted for theft because you don’t have the proper criminal intent, nor would any agency bring criminal action against you so ignore that previous advice.

In the event that investigation fails to verify occupancy, the participant will be turned over to the Office of Inspector General for further investigation and possible prosecution.

If she does anything to destroy the apartment, I will go prosecute and go to small claims court out of sheer principal.

COVID fraud cases are hot and actively pursued and prosecuted. 

He gave the kids clothes to the parents to show he was making an effort to resolve the issue kindly, he told the tenants that he wouldnt report the pills and bag of pot he found if they resolved it in a civil manner, and he gave a rent-to- own company their couch back so the tenants wouldnt get prosecuted.

On the other hand, if you're strict with the lease and the rent, you'll avoid a lot of the scumbags and you'll lessen the chance of being sued/prosecuted for discrimination.

As @Ron S. already mentioned, collusion happens and does get prosecuted.  

Involvement by Tenant(s) in any manner with illegal substances or violent activities which would constitute as, at least, a misdemeanor if prosecuted, will constitute a default under this lease.""

A four unit property can be purchased if the veteran occupies at least one unit, the other three can be leased out.If it is not intended to be occupied by the veteran beware of prosecution for fraud.