The U.S. Department of Justice has announced that two companies have agreed to pay a combined settlement of over $2.3 million to resolve allegations of Paycheck Protection Program (PPP) loan fraud during the COVID-19 crisis.
The qui tam or whistleblower lawsuits were brought separately against California-based Mobile Programming LLC and New York-based A-1 Technology. The companies obtained PPP loans from the U.S. Small Business Administration (SBA) but were ineligible.
The PPP was established in March of 2020 under the Coronavirus Aid, Relief, and Economic Security Act (CARES) which was administered by the SBA. It was an emergency loan program intended to enable businesses to continue paying employees during the COVID-19 shutdowns which forced temporary closures. A second round of loans became available in early 2021 with the requirement that businesses certify they had no more than 300 total employees.
Mobile Programing received over $1.3 million for the Second Draw Loan while A-1 Technology received $184 thousand. Both companies each had more than 300 employees in their domestic and foreign affiliates workforce.
The settlement is the result of claims in a qui tam or whistleblower lawsuit under the False Claims Act. Due to protections in the Act, whistleblowers may remain anonymous and are protected from retaliation even if they are employed by the companies being reported for fraud or wrongdoing.
Prohibited retaliation actions may include termination of employment, demotion, reduction in hours, pay or benefits, harassment, threats, hostile work environment, or other negative changes related to employment.
Under the False Claims Act, whistleblowers may receive 15 to 30% of payout, depending on the specifics of the evidence including whether or not the wrongdoing would have been discoverable by an outsider and whether the report is the first made regarding the topic.
Whistleblowers in the A-1 Holdings and Mobile Programing Qui Tam lawsuits may be eligible to receive a range of a combined $300 to $600 thousand.
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