Settlement Reached in First-of-its-Kind PPP FCA Case

The U.S. Attorney’s Office for the Southern District of Florida recently reached a settlement in a False Claims Act qui tam action, originally brought by a whistleblower, alleging the submission of a false certification in support of a PPP loan application.   

Under the CARES Act, eligible small businesses could apply for an SBA-guaranteed PPP loan to assist businesses to pay expenses during the pandemic.  In applying for a loan, the small business or representative were required to acknowledge its compliance with Program rules and make affirmative certifications regarding its compliance with these rules, including certifying that the company would not receive more than one PPP loan prior to December 31, 2020.

According to the Complaint-in-Intervention filed by the United States earlier this year, a South Florida-based LLC and its owner, (the Defendants), initially applied for a PPP loan on May 20, 2020 and subsequently applied for a second loan on May 21, 2020.  In their second loan application, the Defendants submitted a certification that they would not receive more than one loan prior to December 31, 2020, despite having applied for two loans in as many days.  Defendants received a loan in response to their May 20 application on May 22, 2020.  Defendant’s later submitted a promissory note securing the second loan on June 12, 2020.

Despite the false certification being discovered, Defendant’s refused numerous requests made to return the amount of the second PPP loan. Once the United States filed and served its Complaint in Intervention in the case, Defendants returned $208,332 in repayment of the second loan secured through the false certification.  Defendants also agreed to make ten payments through June 2023, totaling $21,583.31, in civil penalties.  

The settlement, while resolving the matter, makes no determinations regarding liability.