Max Award for PPP Loan Fraud

June 3, 2022
ppp fraud infographics

When Congress passed the CARES Act in 2020, the Paycheck Protection Program (PPP) provided nearly $800 billion in loans for small businesses across the nation. For many businesses and employees, this money was the only thing keeping them from closing down. For fraudsters, however, this money was a free shopping spree. What’s more, the urgent need to disburse PPP loans quickly meant that there was little oversight in who received the money–but that does not mean these fraudsters have gotten off scot-free.

Since 2020, the Fraud Division of the Department of Justice has recovered over $78 million in fraudulently obtained funds from over 200 defendants in over 130 criminal cases. Part of the recovery has included property and luxury items, among other assets that were acquired with the loan money. The government relies heavily on whistleblowers to report falsely obtained PPP loans, and offers a share of the recovery as incentives for whistleblowers.

If a whistleblower reports PPP loan fraud, they would do so under the qui tam provisions of the False Claims Act. By working with a whistleblower law firm, private individuals with insider knowledge can learn how to report PPP loan fraud on behalf of the government.

But just as not all PPP loan fraud report cases are created equal, neither are the awards granted to their whistleblowers. Once a case is reported, the government has two courses of action: to intervene or not to intervene. If the government decides to intervene, the whistleblower is entitled to anywhere from 15 to 25 percent of the recovery. If the government decides not to intervene, that share increases up to 30%. While doing the right thing by reporting fraud is always the correct choice, the monetary incentives are one more compelling reason to report PPP loan fraud if you have insider information.

As a PPP Loan Fraud whistleblower law firm filing lawsuits under the False Claims Act (“FCA”) to help taxpayers recover funds obtained through PPP loan fraud, we’re often asked:  What’s the maximum award a PPP loan fraud whistleblower can receive?  We’ll answer that question, but first some quick disclaimers: no recovery is ever guaranteed, past results don’t guarantee future successes, and this is just hypothetical math for potential whistleblower recoveries.  The facts of your particular case will impact its value, which is why it’s always best to take advantage of a free, confidential consultation with an experienced whistleblower law firm like Brown, LLC.

Okay, with that said:

In an illustrative scenario, if a company fraudulently obtained the largest possible Paycheck Protection Program (“PPP”) loan of $10 million, a whistleblower (or “relator”) could theoretically receive up to $9 million.

Nine million dollars?! Surely the potential award can’t be that high! Well, ;et’s work it out: if the government declined to intervene in the case, and the whistleblower was able to obtain a settlement for the government including the triple damages available under the FCA, the government’s total recovery would be $30 million. Of course, this is the best-case scenario for the whistleblower (and the worst for the fraudster). The whistleblower’s maximum possible award of 30% would then be $9 million.  A relator’s award of 30% is not common, but even the lowest possible award (15%, if the government did intervene) would still result in a sizable $4.5 million to the whistleblower recovery. These generous rewards are meant to incentivize whistleblowers to come forward with the information they may have. Of course, blowing the whistle is not an easy process. However, with the potential of millions of dollars to be gained, a ppp fraud report is an incredibly worthwhile pursuit even with the inevitable, albeit surmountable, obstacles that it may present.

And one can imagine scenarios in which the PPP whistleblower reward could be even greater than $9 million. First, a company scamming the government for PPP money may have committed other fraud as well for which a relator could also recover. After all, if someone commits fraud once, it is quite likely that they will do so again. Second, if the whistleblower was either demoted and/or fired in retaliation for making complaints about the wrongful conduct, they may be entitled to additional damages for that retaliation. There are strong anti-retaliation laws across the United States that protect individuals when they report misdeeds; speaking with experienced fraud or employment attorneys can help whistleblowers understand if they apply to them or not.

Furthermore, even though the rules say that $10 million was the maximum PPP loan an entity could receive, scammers don’t play by the rules.  As a firm with a mission to protect whistleblowers, we’ve seen fraudsters who illegally took out multiple PPP loans using other companies under the same ownership and management, illegally exceeding the $10 million cap.  So for argument’s sake, let’s say an unscrupulous company disguised its relationships with other companies in order to aggregate $15 million in loans.  They would then potentially be liable for a total of $45 million, and a whistleblower who got a 30% award would end up with a little over $13 million for doing the right thing.

But don’t get blinded by dollar signs.  Although these big numbers are theoretically possible, the government typically doesn’t seek full triple damages.  A 30% share is available only in non-intervened cases. Because the government will probably intervene in cases with blatant fraud and big bucks, the relator’s share for such cases is likely limited to no more than 25%. In summary, there is no surefire way to say how large a case’s reward might be. That being said, it will surely not be an insignificant amount–and the act of doing the right thing by reporting wrongdoing is a great reward in and of itself.

PPP loan fraud can come in many forms. In addition to undisclosed interrelated companies, here are some other types of PPP loan fraud:

  • Creating fictitious businesses
  • Inflating employee head counts
  • Falsifying and inflating payroll numbers
  • Improper allocations of PPP money
  • Furloughing, laying off, or firing employees

Nevertheless, if you are aware of this sort of behavior from a business or individual and have evidence to back up your claims, you should contact a PPP loan fraud law firm for more information on how to report PPP fraud. Not only can an experienced law firm help you navigate legal paperwork, put together documents, and argue your case successfully, it is actually required to file a qui tam lawsuit. Because the case represents the interests of the United States government, you can’t file your complaint pro se, or by yourself–you must have a lawyer to blow the whistle.

There are a couple other important parts to blowing the whistle successfully. First, the evidence in your possession must be original and not available to the public. In other words, you must be providing information that is both new and only obtainable from a true insider. If a whistleblower lacks the evidence to nail a fraudster, the authorities may not be interested in pursuing the case. Talking to an attorney first can help you figure out if your evidence will aid a case or not. Secondly, you must report the wrongdoing to the correct people. If you try reporting wrongdoing in a tech company to their real estate team, or PPP loan fraud to the Board of Education, they may not be able to help you pursue your claim. Finding the right people to report to is yet another reason to consult an experienced PPP loan fraud law firm before pursuing your potential legal claim.

Companies and individuals have committed an astounding amount of PPP loan fraud, through an overwhelming variety of scams. If you see something, say something, and contact the PPP loan fraud fighters at the law firm of Brown, LLC. We can help you file a PPP fraud report and protect your rights. Call (877) 561-0000 for a free, confidential consultation. Even if you are unsure if you have a claim, we are here to answer your questions and help you find a way to see justice served.

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