Is the Age of COVID the Age of the Whistleblower? Part 1

May 15, 2020
Coronavirus and Whistleblower

Many people, businesses, and communities have been adversely impacted by COVID and our hearts, thoughts, and prayers go out to every one of them. The government has stepped in and offered a great deal of money, some with conditions on it and some with questionable oversight. The Department of Justice has already stepped in and arrested individuals who were allegedly engaged in some COVID-related scams including price gouging, touting of fake cures, and offering products that it did not have. These were allegedly outright fraud, but in order to catch some of the more subtle frauds, the system relies on whistleblowers. 


The government’s money is not from the government.  It is from the taxpayers.  Nothing is free.  If anyone watched the 2016 Marvel movie Dr. Strange, at the end of the movie Dr. Strange parts ways with his ally in the movie, Mordo, who is upset with Strange’s use of the time stone and his perceived abuse of the rules of the time-space continuum, confronting him with the fact that, “ The bill always comes due.” Money does not appear from nowhere, there’s no actual magic to it. Someone ultimately pays for it, and in fact at the end of the day the stimulus, business loans, and grants will be borne by the taxpayer.  Taxes will rise and/or services will have to be cut to balance budgets or else the system will collapse. 

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As if the system isn’t strained enough there’s one force that inextricably weakens the system even further, and that is people’s love of money and their greed, which inevitably leads to fraud, especially when they perceive there’s “free money” for them. One of the most interesting programs created was the Payroll Protection Program (“PPP”). It is a fascinating program conceptually put together since many businesses had to shut or interrupt and is meant to keep businesses afloat so they don’t have to do layoffs and/or furloughs. It attempts to address the challenges small businesses are encountering by offering a low interest loan (1% over 2 years) that is forgiven to the extent that the money is used for 75% payroll and for rent and other essentials to stay in business.  A noble intention, but where this is nobility the flip side is ambivalence and to some extent ironically malevolence. The malevolence will manifest when businesses reap the money without furnishing it to its desired purpose, that is to the employees, yet falsely claim to the government that it was purposed and utilized in that manner. The ambivalence will air with entitlement where small businesses thinking the bill will become due will secrete the money for their own purposes, rather than its professed purpose.

Whether by malevolence or ambivalence, fraud strains the system and there must be accountability. Inherently in the PPP, it cautions the beneficiaries that utilization of the program will subject the beneficiary to criminal penalties if the funds are not used properly.  In addition to the criminal penalties, misuse of the funds may also give rise to Payroll Protection Program whistleblower litigation under the False Claims Act (“FCA”).  Under the FCA, if an individual blows the whistle on an entity defrauding the federal government, then they may be entitled to up to 30% of what the government recovers and the government may be entitled to up to triple damages.  With the PPP going up to $10 million dollars, that may result in a $30 million penalty and potentially up to a $9 million dollar whistleblower award for holding the company accountable.  When the defendant/company is informed of the fine then the bill will really come due and the taxpayers will hopefully replenish the coffers through the FCA whistleblower awards. 

If you know of this or any other defrauding of the federal government, you need to speak up to keep the system working and speak with a whistleblower law firm as soon as possible.  We encourage you to call the whistleblower lawyers at Brown, LLC at (877) 561-0000 for a free, confidential consultation and speak with some of the best whistleblower lawyers in the country.