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Business Litigation

Qui Tam/Misuse of PPP Funds

Theft and misuse of Paycheck Protection Program (PPP) funds have cost taxpayers, businesses and workers an estimated $80 billion. If you suspect your employer has fraudulently obtained or misappropriated PPP funds, the whistleblower attorneys at The Lanier Law Firm can provide legal representation and protect your interests.

What is the Paycheck
Protection Program?

The CARES Act of 2020 instituted several direct assistance programs to help Americans cope with the pandemic. The Paycheck Protection Program specifically targeted small businesses for the purpose of helping them stay afloat and pay their employees.

Loan proceeds were forgivable if the business verified funds were used for payroll, utilities, rent payments, lease payments and mortgage interest.

Small businesses received approximately $800 billion beginning April 3, 2020, until funding was depleted on May 31, 2021.

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Widespread Fraud

The PPP program was vulnerable to fraud due to the lack of verification processes when applicants applied for loans. This was meant to emphasize speed. PPP loans often amounted to millions, making this program appealing to fraudsters, who employed a range of fraudulent tactics to procure loans:

  • Inflated the number of employees
  • Created phony businesses
  • Committed identity theft

Fraudsters used PPP funds for personal gain and often on luxury purchases such as travel, jewelry, clothing, expensive hotels and luxury cars.

Unlike most government programs where all eligible applicants receive benefits, PPP loans were only available until the funds were depleted. Therefore, these fraudulent activities prevented deserving businesses and employees from receiving funds during their time of greatest need.

The U.S. Government’s Response

The Justice Department created a task force in May 2021 to prosecute criminals and prevent further fraud.
As of early January 2022, more than 150 defendants have been prosecuted for PPP fraud, and the Justice Department has recovered more than $75 million in losses. The White House is advocating for heightened resources and enhanced penalties for those who fraudulently obtain COVID relief funds.

What is the False Claims Act?

The False Claims Act imposes treble damages plus a penalty that is linked to inflation.

The Act allows private individuals to file a lawsuit on behalf of the government when they have evidence that a company or individual has fraudulently obtained government funding. Such a lawsuit is termed a qui tam lawsuit.

An individual who files a claim on behalf of the government is a relator. The government has the right to intervene or allow the individual to pursue the case unaided. If the case is successful, the government awards the plaintiff a percentage of the amount recovered:

  • Ten to 25 percent if the government intervened
  • 25 to 30 percent if the case is tried without government  intervention

The Justice Department recovered more than $3.9 billion in 2021 alone from qui tam lawsuits, This demonstrates the important role whistleblowers play in the government’s long standing fight against fraud.

Can my employer fire me for blowing the whistle?

The False Claims Act provides the following civil penalties against any employer who retaliates against an employee who files a qui tam action:

  • Inflated the number of employees
  • Created phony businesses
  • Committed identity theft
Retaliation includes but is not limited to the following:
  • Termination of employment
  • Demotion
  • Suspension
  • Threats
  • Harassment

What should I do if I suspect my employer has
misused PPP funds?

It is critical that you avoid discussing your concerns with others. The Justice Department only compensates one person for filing a qui tam lawsuit per case, usually the first person. If you tell someone else, that person could file ahead of you, and you will not be entitled to compensation.

Before you file a case, you must have evidence that will stand up to scrutiny in a court of law. Evidence can include the following:

  • Interoffice memos
  • Accounting records
  • Videos
  • Witnesses
  • Financial statements
  • Photos
  • Recordings

Before you take action or speak to anyone, contact an experienced whistleblower/qui tam attorney.

How long do I have to file a qui tam case?

The statute of limitations for PPP fraud cases is five years in some cases and 10 years in others, depending on how the loan was originated. A bill has recently been introduced in Congress to extend the statute of limitations to 10 years for all PPP fraud cases.

How can a qui tam attorney help me with my case?

When you realize your employer is guilty of wrongdoing, you are placed in a precarious situation. You could face culpability if you fail to act, but you may fear doing so could harm your position with the company. Many employers are undeterred by laws against retaliating. One study found that 74 percent of whistleblowers were fired.

Our experienced business attorneys offer a confidential free case review where we can review your evidence and help you weigh your legal options.

Why should I choose The Lanier Law Firm?

The Lanier Law Firm has been holding businesses accountable for more than 30 years, and we have won billions on behalf of our clients. Our attorneys have received prestigious recognition by our peers for our achievements as a result of our strong advocacy for our clients:

  • Most Feared Plaintiffs’ Firm by Law360
  • 500 Leading Lawyer in America by Lawdragon
  • Top 100 Trial Lawyers in America by Benchmark Litigation
  • Elite Trial Lawyers Award by The National Law Journal
  • Super Lawyers by Thomson Reuters

Our whistleblower attorneys will provide a thorough forensic analysis of your employer’s activities to ensure we build a strong case for your qui tam lawsuit.

We will work vigorously on your behalf to prevent and fight retaliation by your employer. In some cases, we can help you remain anonymous for much of the process to protect your reputation and prevent retaliation. In the event your employer does retaliate, we are well-prepared to hold them accountable.

With offices located in Houston, New York and Los Angeles, we accept qui tam cases throughout the United States. Contact us today to schedule a free consultation.

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By submitting this form, you agree to our terms & conditions. Please read full disclaimer here.