Florida Companies Settle False Claims Act Allegations Related to PPP Loans

Two Florida companies have agreed to settle allegations with the Department of Justice that they knowingly provided false information on a Paycheck Protection Program (PPP) loan forgiveness application. The companies agreed to pay over $271,000 in damages and penalties under the False Claims Act and over $53,000 in civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

Congress created the PPP at the beginning of the COVID-19 pandemic to provide emergency financial support to small businesses struggling to pay employees and other business expenses. Companies were eligible to seek forgiveness of the loans if they certified that the funds were spent on qualifying expenses, such as payroll.

The DOJ alleged that one of the companies falsely certified that its PPP loan was used to pay its employees. The company claimed to have paid wages to its employees, when in fact, some of those employees were actually employees of a separate Florida company.

The settlement resolves a qui tam action brought under the whistleblower provision of the False Claims Act. The whistleblower will receive approximately $46,000 in connection with the settlement. The DOJ’s COVID-19 Fraud Enforcement Task Force coordinated the government’s effort to obtain the result.