On December 11, U.S. Attorney for the Northern District of Texas Leigha Simonton, announced, that Empire Roofing Inc. a Fort Worth, Texas-based commercial roofing contractor, has agreed to pay $9 million to resolve allegations that they violated the False Claims Act through falsely certifying that the eight of their affiliates were eligible to receive loans through the Small Business Administration Payment Protection Program (PPP).
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.
According to the government, each Empire Roofing affiliate “certified that they were a small business with fewer than 500 employees. Under applicable SBA rules, however, applicants were required to include employees of all affiliated companies when determining eligibility. The government contends that the Empire Roofing network of affiliated companies employed more than 500 employees and therefore that none of Empire Roofing’s affiliates were eligible to receive PPP loans or loan forgiveness under the CARES Act.”
This settlement stems from a qui tam whistleblower lawsuit that was filed by the realtor Sidesolve Inc. against Empire Roofing Inc. 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.
In this settlement, the relator Sidesolve Inc. will receive $1 million as part of the settlement.
“PPP loans were intended to help small businesses during the Covid-19 pandemic,” said United States Attorney Leigha Simonton. “Our office invests significant time and resources to hold accountable those who obtained PPP funds for which they were not eligible and will continue to do so going forward.”
“The federal government is strongly committed to identifying and aggressively pursuing any instances of fraud or misconduct within the Paycheck Protection Program,” said SBA General Counsel Therese Meers.
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.
“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”
Further Reading:
National Roofing Company Settles PPP Fraud Allegations for $9 Million
Bipartisan Legislation Unveiled to Strengthen False Claims Act