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PPP fraud

First PPP Fraud Whistleblower Case Settles with the DOJ

Last week, the US Department of Justice announced its first civil settlement of False Claims Act allegations against a PPP borrower. We are likely to see more PPP fraud cases under the new administration, particularly because new funds are being made available to distressed businesses as part of the new administration's stimulus package. It is a good time for whistleblowers to speak up and contact a False Claims Act and whistleblower rights attorney with information regarding PPP fraud. 

SlideBelts Inc. Settles False Claims Act Allegations of PPP Fraud

Last year, like many other small businesses, SlideBelts Inc., an internet retailer that sells belts without buckles, received interest-free funds through the PPP program administered by the SBA. The DOJ alleged that SlideBelts violated the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) by misrepresenting information on its PPP loan applications. Because the case was resolved before it was publicly filed, few details are available about the alleged misrepresentations. 

SlideBelts agreed to resolve the allegations by paying damages and penalties in $100,000. (The company had already repaid its PPP loan.) The False Claims Act allows the government to recover treble damages (three times the actual damages) for false claims presented to the government, in addition to monetary penalties. FIRREA also allows the government to impose civil penalties for criminal violations that affect federally-insured financial institutions. 

Growing Indications that the Government is Cracking Down on PPP Fraud

Across the country, small-time scammers and big-time criminals are being charged or investigated for PPP fraud. For example, in Nevada, a man was arrested on charges relating to using $500,000 of PPP and EIDL money to buy a house. In Florida, a man was charged with using PPP money to buy a Lamborghini. In Minnesota, a man was charged with transferring PPP money from his business account to personal accounts and using the money to buy motorcycles and golf equipment. A group of Florida residents have been charged with a $24 million kickback scheme involving PPP loans. 

But PPP fraud is not limited to straight-up criminals and small-time scammers. Some of the nation's largest companies accepted hundreds of millions of dollars in PPP funds. Were their applications above board? Why should small businesses be charged, while large companies walk free? This is exactly the reason why the PPP program was supposed to help small businesses--because big business has access to credit and other resources to help themselves. 

Growing Indications that the Government is Cracking Down on PPP Fraud

The government will almost certainly be investigating additional PPP loan schemes and frauds over the coming years. If you have information about a PPP loan scheme or frauds, it is essential that you speak with an experienced and knowledgeable attorney as soon as possible. Time is of the essence in whistleblower cases; once someone else has blown the whistle, or once information is public, you may forfeit your right to any whistleblower award. 

Talk to our experienced whistleblower attorneys today. As employment attorneys, we understand your rights at work, and can navigate how to protect you. As former defense-side lawyers who were hired to defend these kinds of enforcement actions, we also know the ins and outs of securities and regulatory laws and can help you and the government prove the fraud.

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