After the 2008 subprime mortgage crisis, the Department of Justice settled False Claims Act claims against the country’s largest mortgage lenders for billions of dollars. When Congress approved the Paycheck Protection Program in response to the Covid-19 pandemic, many predicted another wave of big-dollar FCA settlements.
But guidance from the Small Business Administration subsequently cast doubt on the likelihood of such suits, explicitly permitting PPP lenders to rely on borrowers’ certifications.
Against that backdrop, the DOJ’s recent announcement of its “first-ever” FCA settlement with a PPP lender for $18,673 might not seem like important news. But don’t let the dollar amount fool you. The Prosperity Bank settlement shows DOJ’s view that, notwithstanding SBA’s guidance, PPP lenders can face FCA liability for borrower fraud, at least in some circumstances.
The borrower in Prosperity Bank falsely certified eligibility for a PPP loan. But DOJ still pursued Prosperity Bank, alleging it knew of the falsity. That approach should place other PPP lenders on alert.
DOJ could take—and historically has taken—an expansive view of when lenders “know” of borrower fraud, relying on the FCA’s definition of “knowing” to include...
Kolkata: Kolkata Police has been grappling with a fresh challenge since the past week — controlling fake news. While it initially started with fake circulars, beginning with "restrictions" on cert...