Under the False Claims Act, you may file a qui tam suit to hold wrongdoers accountable for defrauding taxpayers. If you have evidence of a company submitting a falsified loan application, you may recover a percentage of the proceeds from a whistleblower lawsuit.
As reported by BizJournals.com, the FCA covers applicant misconduct related to business grants or loans funded by the federal government. Discovering data that conflicts with information submitted on a loan application may reveal fraud or deception.
Misconduct could occur when submitting loan applications
Lenders must conduct due diligence on businesses and confirm their owners’ identities. According to Experian, loan fraud increases when banks perform manual reviews instead of verifying information electronically. Some business owners may engage in misconduct to receive lower interest rates.
The Washington Post notes that loan fraud can occur when employers claim more workers than the actual number they employ. If, for example, a fledgling business obtained a loan to buy new equipment by exaggerating its employee count, it could indicate someone submitted falsified documents.
Michigan loan fraud leads to settlement
The Paycheck Protection Program created by Congress in March of 2020 issued nearly 12 million forgivable business loans guaranteed by the government. According to the U.S. Justice Department, two Michigan nonprofits received PPP loans, even though the program’s rules specified their ineligibility.
Banks, however, processed their loans, and the Small Business Administration used taxpayers’ funds to pay their fees. The nonprofits knew – or should have known – that they did not meet the program’s eligibility requirements. Both organizations settled claims alleging they violated the FCA.
You may receive up to 30% of the settlement proceeds when filing a qui tam lawsuit. Falsified accounting records or employee counts may provide evidence showing how an applicant’s deception pushed through an unqualified loan approval.