What is the Paycheck Protection Program?
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program or PPP was established as a $350-billion loan program to provide American businesses with eight weeks of cash-flow in the form of loans backed by the Small Business Administration (SBA) during the COVID-19 pandemic. Later, the program was expanded to add an additional $310-billion of funding. If a business adheres to the loan guidelines, they will be able to have 100% of the loan forgiven.
How Does an Organization Obtain a PPP Loan?
With the Paycheck Protection Program, banks process the PPP loans, for which they receive a processing fee based on the loan amount, ranging from 1-5%.
What are PPP Loan Whistleblowers?
A whistleblower is a person who has knowledge of or works for an organization engaged in PPP loan fraud and exposes this fraud. By protecting the transparency of government programs like the PPP loan program, whistleblowers assist government agencies in ensuring that government assistance goes to those who deserve it, rather than organizations that obtained the funds through fraud. Where there is fraud found in COVID PPP loans, whistleblowers are eligible for up to 30% of any recovery, under the False Claims Act. The False Claims Act also protects whistleblowers from employer retaliation, which can include preventing or correcting job loss, receiving double back-pay for job loss, and compensation for attorney’s fees or emotional distress.
What Constitutes Fraud under the False Claims Act?
In the context of a COVID PPP loan, this can mean a fraudulent claim for payment, or false information submitted in the organization’s PPP loan application or loan forgiveness application. Some examples of misrepresentations that may qualify as PPP fraud are:
- Misrepresentations of payroll numbers
- Making false claims about needing a PPP loan
- Submitting false applications or applications containing false information to the SBA
- Misrepresenting ownership of an organization
- Understating or overstating the number of employees
- Improperly seeking loan forgiveness
- Using PPP loan funds for unauthorized purposes, such as stock buybacks
- Falsely stating that funds will be paid to employees, rent, mortgage, or utility bills
Mr. Klores has decades of extensive experience handling complex, high profile, high stakes cases. He is also a successful businessman who understands how businesses operate and how to recognize fraud. If you know of a fraudulent practice in obtaining PPP or SBA loans, click below or email Mr. Klores at email@example.com.