How can whistleblowers expose fraudulent PPP borrowing?

by | Jun 25, 2021 | Whistleblower

The Paycheck Protection Program (PPP) allowed certain small businesses and nonprofits to receive loans to stay afloat in the past year. The majority of PPP loans went to deserving organizations that badly needed some financial help. Unfortunately, some unscrupulous business owners, executives and other parties made false claims regarding their financial need, allowing them to receive a PPP loan when they did not need it.

The False Claims Act and fraud

When applying for a PPP loan, applicants had to complete a document called the Borrower Application Form. It included a section in which the applicant had to certify that their enterprise needed funding from a PPP loan to continue operations. Recipients who misled the government about these certifications may face accusations of fraud due to the False Claims Act.

Under the False Claims Act, any individual or business entity that makes false claims to the government may be held liable for damages and other penalties. The consequences of PPP loan fraud are already in effect for borrowers. In January of this year, the Department of Justice announced its first settlement with a business and its CEO regarding a fraudulent PPP loan.

Qui tams: An option for whistleblowers

This has put many employees, business partners and even family members in the tough position of wondering what to do after discovering PPP fraud. It is common to feel alone, overwhelmed and incredibly conflicted when considering whether to blow the whistle on a false claim. Will the company suffer? What will happen to the wrongdoers? What are the legal options for whistleblowers?

One option is a Qui Tam lawsuit. This allows employees and other individuals to report suspected false claims. If the government recovers the funds that were stolen, the person or people who filed the Qui Tam can receive a portion of these funds. This covers the whistleblower’s legal funds and provides an incentive to report PPP fraud and other violations of the False Claims Act.