Given the volume of funds that were quickly dispersed during the COVID-19 pandemic, there were plenty of new areas for fraud and abuse. The Department of Justice (“DOJ”) initially set its sights on targeting the borrowers of such funds. Now, the DOJ is ramping up enforcement with the first ever False Claims Act (“FCA”) settlement with a lender of Paycheck Protection Programs (“PPP”) funds.
Spurred by the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act authorized the issuance of PPP loans in order to provide relief to small businesses experiencing economic hardship during the pandemic. It was expected that those loans would be forgiven if certain conditions were met. Lenders originating the PPP loans were entitled to receive a fixed fee from the Small Business Administration (“SBA”), ranging from 1% to 5% depending on the size of the loan.
At the onset of the program, Lenders of such PPP loans were concerned with the potential for private lawsuits from would-be borrowers on the basis of bank lending practices, and not with government enforcement. As I have written about before, initially, the government enforcement in this space focused solely on borrowers, who allegedly made false statements in connection with obtaining loans. However, on September 13th of this year, the DOJ revealed an expanded focus, targeting the lenders of PPP loans as well as the borrowers in an FCA settlement. In a press release the U.S. Attorney’s Office for the...
A federal jury has convicted a San Francisco man of conspiracy, wire fraud, and money laundering in connection with a scheme involving fraudulent insurance claims on already-wrecked vehicles, pros...