The False Claims Act is Important Now More Than Ever – Are FinTechs to Blame?
With the unprecedented wave of government spending to combat the effects of the pandemic (see $1.9 trillion spending bill passed earlier this year), we project that a record amount of fraudulent claims for pandemic-relief money have been and will be submitted, making qui tam suits under the False Claims Act brought by whistleblowers through a whistleblower law firm more critical than ever. Congress worked very quickly to put the money in the hands of businesses and individuals suffering from the pandemic – and unscrupulous opportunists ripped off the taxpayers at a record pace as well. And as of this writing, Congress is contemplating multi-trillion dollar budget and infrastructure packages on top of the monies already spent, which will surely encourage even more fraud.
One relief program plagued by fraud is the Paycheck Protection Program (PPP), which allows companies to apply for subsidized loans to keep people employed during the pandemic. A recent paper from the McComb School of Business at UT-Austin revealed that roughly 15% of the $800 billion in loans might have been fraudulently obtained (15% of PPP Loans Could Be Fraudulent, Study Shows – The New York Times (nytimes.com). That’s roughly $120 billion in PPP loan fraud. The study pins the blame on financial technology firms, known as “FinTechs,” who provide loans via digital platforms, supplanting the traditional lending process and the relationships banks had with their loan customers. According to the study, these FinTechs were responsible for authorizing about 30% of all PPP loans, and over half of those that researchers flagged as potentially fraudulent.
This is one example of the lack of oversight at the root of much PPP fraud. In addition to FinTech firms, even lender banks performed little to no due diligence to verify that the loans complied with Congress’s requirements for keeping Americans working. A simple cross-check of applicants’ self-reported payroll information with the actual payroll data in the government’s possession could have caught much of this fraud, but lenders neglected to do this – and taxpayers must now deal with the consequences.
The good news is that we all have the power to hold these fraudsters to account through the False Claims Act (“FCA”). The FCA allows individuals to blow the whistle on fraud against the government and in turn collect up to 30% of the government’s recovery. With $120 billion in PPP loan fraud, a bit of math shows that hundreds of billions of dollars are available to whistleblowers who help the government.
So how do you blow the whistle on PPP loan fraud? Well, unlike other types of litigation, you cannot file an FCA qui tam lawsuit by yourself – so, first, you need to hire a qualified whistleblower law firm. The law firm you hire should have a dedicated whistleblower practice with a track record of success. The whistleblower law firm of Brown, LLC, led by a former FBI Special Agent, has a team of lawyers dedicated to whistleblower litigation. The firm has obtained settlements and judgments in excess of a quarter of a billion dollars. Brown, LLC offers free, confidential consultations – even on weekends and after hours – and we don’t charge a fee unless we win your case. So if you’re thinking of blowing the whistle, call (877) 561-0000 to learn your rights and how to potentially help the taxpayers, while gaining a piece of the recovery as a whistleblower award.