The Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA) provides much-needed funds to help small businesses retain their employees and keep operations going during the period of business interruption caused by the COVID-19 pandemic. In order to be eligible for a PPP loan, employers must show that they need the funds to support ongoing operations and avoid laying off employees or scaling back business. Unfortunately, some companies are distorting the facts in their PPP applications so they can illegally obtain emergency funds, which is considered fraud. If your employer has defrauded the Paycheck Protection Program administered by the SBA and you want to speak up, there are laws in place to protect you and possibly even reward you for reporting the fraudulent activity. Our PPP fraud attorneys have experience protecting the rights of employees who blow the whistle on fraud and we are prepared to aggressively represent you in your case. There is a time limit for filing a claim under the False Claims Act and you will need an attorney to do so, so don’t wait to call our firm.
What is the Paycheck Protection Program?
The Paycheck Protection Program is a loan introduced by the Small Business Administration as part of an effort to help small businesses keep their workforce employed during the coronavirus crisis. The COVID-19 pandemic and the stay-at-home orders and government-mandated shutdowns it triggered created a serious dilemma for many small business owners who suddenly found themselves unable to pay their rent, mortgage, utilities or employees. During this time of ongoing uncertainty, the SBA seeks to encourage small businesses to keep their employees on payroll by offering paycheck protection loans that may be forgiven later. According to the SBA, PPP loans will be fully forgiven if all employees are kept on payroll for eight weeks and the loan is used to cover payroll costs, rent, utilities or interest on mortgages. There are certain other requirements that must be met for loan forgiveness, most notably the requirement that at least 75% of the forgiven amount must have been used for payroll expenses. As of May 26, 2020, there have been 4,435,038 approved PPP loans totaling more than $511 billion, with an average loan size of $115,276.
What is PPP Fraud?
The SBA’s Paycheck Protection Program is intended to help small business owners, independent contractors, sole proprietors and self-employed individuals affected by COVID-19 overcome the challenges created by the coronavirus health crisis. However, some unscrupulous business owners are taking advantage of the program by misusing SBA funds or filing fraudulent claims and crowding out the small businesses the program is actually meant for. The following are some examples of illegal activity that may qualify as PPP fraud:
- Misrepresenting payroll numbers to fraudulently qualify for a PPP loan
- Making false certifications about the need for PPP funds
- Submitting false applications to the SBA
- Misrepresenting ownership of a business
- Understating the number of full-time employees
- Large corporations misappropriating funds
- Improperly seeking loan forgiveness
If you have witnessed your employer defrauding the PPP, he or she may have warned you to stay quiet about the fraud to avoid facing legal action. What you need to know is that you have the right to speak up without fear of retaliation.
Federal Law Prohibits Retaliation Against Whistleblowers
If you are a PPP whistleblower, one of your biggest concerns may be facing retaliation from your employer for objecting to or reporting PPP fraud. Fortunately, there are federal laws in place that prohibit employers from retaliating against employees who blow the whistle on fraud. If you witness PPP fraud and you report your employer, he or she is barred from retaliating against you by firing, demoting or punishing you in any way for your actions. If you get fired for reporting PPP fraud or suffer any other form of unlawful retaliation for being a whistleblower, the law not only says that you can get your job back, it also says that you may receive damages for back-pay, emotional distress and attorney fees.
Financial Incentives for PPP Whistleblowers
The False Claims Act makes it a crime for employers to apply for PPP funds from the SBA under false pretenses or make false claims about the need for funds specifically intended for small businesses in need of financial help. The law also provides a financial incentive for whistleblowers to report PPP fraud and expose wrongdoers by filing a lawsuit on behalf of taxpayers. “Whistleblower” is a term generally used to describe any person who exposes illegal, fraudulent or unethical activity or information from within a private or public organization. Under the “qui tam” provision of the False Claims Act, whistleblowers who report fraud against taxpayer-funded programs like the PPP can collect up to 30% of the funds recovered by the government as a result of the lawsuit. There are similar whistleblower protection laws at the state level in California, too.
Our PPP Fraud Attorneys Can Help You File a Claim
The Paycheck Protection Program is intended to provide much-needed funds for small businesses struggling under the weight of the COVID-19 health crisis. Most large corporations and national chains do not qualify for the loan program, yet some of these companies have deceitfully understated their number of employees or misrepresented their financial need in order to obtain the funds that small businesses desperately need to keep their workers employed during COVID-19. The law considers this PPP fraud. The law also prohibits retaliation against and offers protections for those who report, or blow the whistle on, employers who commit fraud on the SBA. If you have been punished for reporting PPP fraud, protesting your employer’s false loan application to the SBA, or objecting to your company’s misuse of SBA funds, you may have grounds to file a whistleblower retaliation claim under the False Claims Act. Contact our legal team as soon as possible to schedule a free initial consultation with our skilled PPP fraud attorneys.