On September 12, 2022, the Department of Justice (DOJ) announced the first-ever settlement with a Paycheck Protection Program (PPP) lender. The lender, Prosperity Bank, agreed to pay $18,673.50 to resolve allegations it improperly processed a PPP loan on behalf of an ineligible applicant. The announcement coincides with DOJ’s creation of three COVID-19 fraud “Strike Force” teams designed to enhanced DOJ’s efforts to combat and prevent COVID-19 related fraud.
Pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act, lenders who originated PPP loans were entitled to receive a fixed fee from the Small Business Administration (SBA) ranging from 1% to 5% of the loan amount. Prosperity Bank, a regional bank with branches throughout Texas and Oklahoma, was one of those lenders.
In May 2020, Prosperity Bank processed and approved a $213,400 PPP loan for Woodlands Pain Institute PLLC. According to the DOJ press release, at the time Prosperity Bank processed Woodlands Pain’s application, it knew that Woodlands Pain’s sole owner, Dr. Emad Bishai, was facing criminal charges stemming from his practice of prescribing opioid medicines.
In order to be eligible for a PPP loan, applicants were required to answer “No” to the question of whether the applicant (or any individual owning more than 20% equity) was subject to an indictment, criminal information, arraignment or other means by which formal criminal charges are brought in any jurisdiction. When completing the PPP...
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