On June 12, the Department of Justice announced that multiple nonprofit organizations paid $5,809,021 to settle False Claims Act accusations. The government alleges that these organizations knowingly submitted false claims and secured Paycheck Protection Program loans for which they were ineligible.
The Paycheck Protection Program (PPP) was established by Congress in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The program aimed to provide emergency loans to small businesses that were struggling due to the COVID-19 pandemic. Only small businesses were eligible for PPP loans, which depended on several factors such as the number of employees, amount of revenues, and net worth of the applicant, along with any other corporate affiliates that share common operational control.
The nonprofit organizations include the Rancho Santa Fe Association, Pine Mountain Lake Association, Glendora Country Club, and The Palms Golf Club. The government alleges that these private country clubs knew or should have known that they were ineligible to receive PPP loans as 501(c)(7) nonprofit organizations and that the homeowners associations knew or should have known it was ineligible as a 501(c)(4) nonprofit organization. Each organization paid a specified amount to settle allegations of knowingly violating the False Claims Act.
“Providing false information to obtain PPP loans and forgiveness is wrong,” said SBA OIG’s Western Region Special Agent in Charge Weston King. “Today’s settlement sends a strong message that attempts to wrongfully obtain loan fundand forgiveness will not go unnoticed, and violators will be identified. I want to thank the Department of Justice and our law enforcement partners for their support and dedication to pursuing justice in this case.”
The settlement stems from a qui tam whistleblower suit filed by Wade Riner. Mr. Riner will receive an approximate total share of $700,000.
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.
On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.
National Whistleblower Center (NWC) has issued an Action Alert calling on Congress to pass the bill.
Join NWC in Taking Action:
Demand that Congress strengthen the False Claims Act
Further Reading:
Bipartisan Legislation Unveiled to Strengthen False Claims Act