On March 12, the U.S. Attorney for the Eastern District of Michigan that the owners and operators of The Detroit Club agreed to pay $357,669 to resolve allegations that they violated the False Claims Act through Paycheck Protection Program (PPP) loan fraud.
A whistleblower brought forward the allegations in a qui tam lawsuit and is set to receive $71,533.96 from the settlement.
According to the DOJ, the owners and operators of The Detroit Club, “a hotel, social club, and restaurant in Downtown Detroit,” applied for two PPP loans and later “certified that all their PPP loan proceeds were spent on eligible expenses and, as a result, both loans were fully forgiven.”
However, the government “contends that Defendants did not spend all their PPP funds on expenses that were eligible for forgiveness” and “obtained forgiveness of $167,040 for building lease expenses that were not eligible for forgiveness under the applicable rules.”
“The False Claims Act is an important tool to deter and hold accountable those who defraud the government,” said Acting U.S. Attorney Julie A. Beck for the Eastern District of Michigan. “Entities who took advantage of the COVID-19 pandemic to commit fraud against the government will be vigorously investigated by our office.”
The False Claims Act’s qui tam provisions enable private citizens and private parties to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery.
During FY 2024, settlements and judgments under the False Claims Act exceeded $2.9 billion and over $2.4 billion of the recoveries stemmed from qui tam whistleblower lawsuits. Furthermore, according to the government, a record 979 qui tam lawsuits were filed in FY 2024.
However, in September 2024, a district judge in Florida ruled that the False Claims Act’s qui tam provisions were unconstitutional. The U.S. federal government is urging the U.S. Court of Appeals for the Eleventh Circuit to reverse that decision, stating in a brief that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.”
National Whistleblower Center has issued an Action Alert allowing whistleblower supporters to write the members of Congress urging them to protect and strengthen and protect the False Claims Act.
The claims asserted in this case are allegations only, and there has been no determination of liability.
Join NWC in Taking Action:
Strengthen the False Claims Act and Protect it From Attack
Further Reading:
THE DETROIT CLUB OWNERS AND OPERATORS SETTLE FALSE CLAIMS ACT ALLEGATIONS FOR $357,669
