Whistleblowers helping expose abuse of COVID-19 relief funds
Whistleblowers around the United States are helping to expose illegal misappropriation of federal loans supposed to help millions of Americans suffering economic effects caused by the COVID-19 pandemic.
Congress created the Paycheck Protection Program, or “PPP,” in March 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to provide emergency financial support to those suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses.
But some people are obtaining big loans unlawfully by falsifying applications and submitting fraudulent applications. From the inception of the CARES Act to April 2022, the Justice Department has prosecuted more than 150 defendants in more than 95 criminal cases and has seized over $75 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds.
Much of the plundering of the PPP program is being exposed by whistleblowers who file claims under what’s known as “qui tam” or whistleblower provisions of the False Claims Act.
The number of qui tam cases is increasing, with between 600 to 700 filed most years, Acting Assistant Attorney General Brian M. Boynton noted in a February 2021 speech in Washington, D.C.
“Qui tams will continue to be an essential source of new leads, and the [Justice] Department will continue to rely on whistleblowers to help root out the misuse and abuse of taxpayer funds. Last year alone, qui tam actions were responsible for more than 70 percent of the Department’s recoveries.”
Recent cases show the important role being played by whistleblowers.
In a Florida case, a whistleblower will receive $4,500 for exposing a duct cleaning company that obtained more than one Paycheck Protection Program loan in 2020. The company agreed to pay $30,000 in damages and civil penalties. It also repaid the duplicative PPP funds in full to its lender, relieving the U.S. Small Business Administration of liability to the lender for the federal guaranty of approximately $170,000 on the improper loan, according to the Justice Department.
In another Florida case, a former employee at a jet charter company blew the whistle on the company’s owner for misappropriating Paycheck Protection Program loan proceeds for his personal expenses, according to the Justice Department. The company’s owner received a PPP loan for nearly $1.2 million, and then diverted nearly $99,000 to pay non-company related expenses. The whistleblower, who filed a claim under the False Claims Act, will receive $57,411.
In New Jersey, a whistleblower filed a complaint against a construction company for allegedly taking a $255,0000 loan from the Paycheck Protection Program to which the company was not entitled. The company settled the charges in February 2022, according to the Justice Department. the Company repaid the PPP loan balance in full.
And in Virginia, a whistleblower filed a complaint against a company that obtained more than one PPP loan in 2020. Zen Solutions Inc. agreed in February 2022 to pay approximately $31,000 in damages and civil penalties and repay the duplicative $181,000 PPP loan in full to its lender, according to the Justice Department.
Scott Williams, CEO of Ethic Alliance, notes that these examples illustrate why whistleblowers who know of pandemic relief fraud should contact Ethic Alliance.
“This is potentially a watershed moment for whistleblowers. We’re only in year two of this. The scope of fraud around these programs is perhaps the largest in world history, with President Biden announcing the creation of a fraud ‘czar’ for the first time in US history. The country took extraordinary steps to protect the people and the economy with these programs, and it has never needed its citizens to step up more. Ethic Alliance can help whistleblowers report pandemic fraud anonymously, receive protection from retaliation and be financially rewarded simply for exercising their civic duty,” said Williams.
Ethic Alliance is a for-profit corporation and law firm whose purpose is to empower, educate and protect whistleblowers, ensuring they receive the protection they need and the rewards they are entitled to under US law (the US government will typically reward whistleblowers 10%-30% of the amount recovered or sanctioned under various whistleblower laws), generating profits for investors while reducing corruption, fraud, theft, lying and cheating in our society.
Ethic Alliance protects whistleblowers through a secure, encrypted reporting and messaging platform, attaching the strong legal protection of attorney-client privilege from the moment a report is filed with us, and access to a network of specialty attorneys that have made careers protecting and supporting whistleblowers, and working with the US government to win whistleblower lawsuits.
Contact Ethic Alliance at info@ethicalliance.com
Related links: https://www.justice.gov/opa/pr/covid-19-task-force-nets-florida-duct-cleaning-company-settles-false-claims-act-allegations ; https://www.justice.gov/usao-nj/pr/atlantic-county-company-and-its-owner-admit-taking-improper-paycheck-protection-program ; https://www.justice.gov/opa/pr/owner-jet-charter-company-settles-false-claims-act-allegations-regarding-misappropriation ; https://www.justice.gov/opa/pr/northern-virginia-company-settles-false-claims-act-allegations-improper-paycheck-protection
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