PPP Fraud Investigations Are On The Rise

For most borrowers, the Paycheck Protection Program (PPP) was a vital resource to survive the economic uncertainty of a pandemic and a way to keep their employees paid. The PPP and other COVID-19 relief programs distributed over $2 trillion in federal funds. Some estimates claim that 15% of PPP loans were fraudulent.

Many of these allegations come from whistleblowers, usually employees who report PPP fraud to the federal government. Under federal law, whistleblowers who report fraud can receive a percentage of any damages that the government recovers from the investigation.

Defending against a whistleblower’s PPP loan fraud allegations will require an experienced defense attorney who knows how to strategically represent you in qui tam lawsuits. If you are facing these allegations, you have a chance at avoiding civil enforcement or criminal charges. Attorney Candice Fields has been practicing law in the Sacramento area for over 25 years. She can help you aggressively defend your rights when facing these allegations.

PPP Loan Fraud: An Overview

The federal government has been aggressively investigating PPP loan fraud allegations. These investigations pose a significant risk to organizations across all industries, especially when the claim is unfounded. PPP fraud can occur in many different ways. Often, businesses are accused of reporting false revenue, misusing loans and claiming ghost employees.

Some examples of PPP fraud are:

• Lying on PPP loan applications
• Falsifying business or tax records
• Using the loan for an unauthorized purpose
• Receiving PPP funds from more than one lender

PPP loan fraud is currently one of the most common crimes the federal government investigates. With whistleblowers eligible for possible rewards for reporting fraud, it can be easy to get caught up in an investigation.

Criminal charges resulting from PPP fraud investigations include bank fraud, false statements and wire fraud. Penalties can include prison time and significant fines.

PPP Borrowers Beware: Whistleblowers And The False Claims Act

The False Claims Act (FCA) was enacted during the Civil War in response to concerns that suppliers of goods to the Union Army defrauded the government. Since then, the FCA has been amended dozens of times and is still highly relevant today. Violations of the FCA include fraud in programs such as the PPP.

Under the FCA, a private person may file a lawsuit for violations on behalf of the government, called a qui tam action. There are various reasons that someone may bring a qui tam action against you, including to secure a financial award and to obtain whistleblower status, which protects them from termination and retaliation.

If you are facing a PPP fraud investigation, it is vital that you abide by anti-retaliation laws. These statutory provisions prohibit employers from retaliating against someone who reported alleged fraud. Retaliation includes behaviors such as verbal abuse, harassment, increased scrutiny and termination. If retaliation is alleged, you could face another lawsuit from the whistleblower to recover damages.

Protect Your Business

If you are facing allegations of PPP fraud, you need experienced legal counsel to defend your rights and guide you through the process. Contact Candice Fields Law, PC to learn more about the next steps in a PPP fraud investigation case. Call now at 916-414-8050 or reach out online to schedule a consultation.