United States Attorneys’ Offices recently announced a number of False Claims Act (FCA) settlements arising out of the Paycheck Protection Program (PPP). These settlements reveal several trends that PPP loan recipients should be aware of.
First, the settlements were driven by qui tam suits filed by serial relator, GNGH2. We have previously reported on settlements obtained by GNGH2 as well as other serial relators, such as Relator LLC. These relators have relied on PPP data published by the Small Business Administration (SBA) and other publicly available data to craft allegations that borrowers have violated the FCA by seeking PPP loans for which they were ineligible.
Second, the Department of Justice (DOJ) elected to intervene in these cases. While we previously reported how the U.S. District Court for the Eastern District of California’s dismissal of a Relator LLC qui tam complaint for failure to overcome the FCA’s public disclosure bar was a welcome development for PPP borrowers, such a defense is unavailable when DOJ has intervened.
Third, each case concerned the failure to qualify as a small business against the relevant size standard due to affiliation. The SBA’s concept of affiliation is not only complex in its own right but was a new and foreign concept to many companies that participated in the PPP. Audits, enforcement, and qui tam suits reliant on theories of affiliation were originally few and far between, but there has been an exponential increase in cases with...
As an elected Oxnard City Council member and graduate of the Oxnard Union High School District (Rio Mesa High Class of 1968), I’ve had the privilege to serve our residents since 2013. Much of my se...