The Justice Department has announced a civil settlement of the first Paycheck Protection Program (PPP) fraud whistleblower case in which the government intervened. This milestone should remind PPP borrowers they should immediately seek the advice of counsel if made aware that they may have received COVID-19 relief funds to which they were not entitled. Taking the proper steps to return the portion of PPP funds that may have been received unlawfully, with guidance from counsel, can significantly decrease a borrower’s criminal and/or civil exposure. The case also highlights the role whistleblowers play in reporting suspected COVID-19 fraud.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, provided emergency financial assistance through the PPP in the form of forgivable loans to businesses to cover payroll and other specified expenses.
To obtain a PPP loan, a business had to sign and submit a PPP loan application online through a lender’s application platform. The PPP loan application required the business to acknowledge the PPP rules and make affirmative certifications in order to be eligible for the PPP loan. Borrowers were required to certify as true and accurate that the applicant had not and would not receive more than one loan under the PPP prior to Dec. 31, 2020.
The False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733, prohibits fraudulent conduct in connection with federal programs, including the...
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