On March 19, the United States Department of Justice (DOJ) announced a qui tam False Claims settlement of $2,144,144 between Vix Technology (USA) and the United States. Vix is an Australian company, however, its U.S. Operations are headquartered in Tempe, Arizona. The settlement resolved allegations that Vix had too many employees to qualify for a COVID-19 Paycheck Protection Program (PPP) loan of $1,066,900 from the U.S. Small Business Administration (SBA).
According to the agreement, the San Francisco company Blockquote filed a qui tam action on June 24, 2024, alleging that Vix did not qualify for a PPP loan because its workforce exceeded the employee threshold. To be eligible, a business had to have fewer than 300 employees. Since Vix has almost 500 global employees, it allegedly did not qualify for the loan.
Vix Technology designs, supplies, and operates intelligent transportation systems, automated fare collections, and transit analytics. Its offices are across Europe and North America, while its systems have been deployed in over 200 cities and regions worldwide. Blockquote, the whistleblower or “relator” under the False Claims Act (FCA), produces public interest research, news reporting, and investigations.
In this case, as in most cases under the False Claims Act, the relator filed their complaint under the FCA’s qui tam provisions. Under these provisions, private parties may file lawsuits on behalf of the federal government and share in any financial recovery. The most common qui tam cases concern alleged healthcare and defense contracting fraud. In successful suits, whistleblowers who file a qui tam action may receive between 15% and 30% of the total settlement amount, depending on several factors, including whether the government intervenes in the case and the value of the information provided. For Blockquote, they were paid $20,000 by Vix for attorney fees and costs.
Vix did not admit wrongdoing but entered into an agreement with the DOJ to “avoid the uncertainty of litigation.” As mentioned, Vix agreed to pay double damages of $2,144,144 to the United States in the settlement.
SBA General Counsel Wendell Davis commented, “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration, working with the U.S. Attorney’s Office and with private individuals who uncover fraudulent conduct, to recover the product of fraud and penalties as well.”
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.
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Strengthen the False Claims Act and Protect it From Attack
Further Reading:
DOJ and Vix Technology (USA) Inc. resolve allegations of Paycheck Protection Program fraud
