Through the heat of the summer, our firm continues to roll out False Claims Act settlements against companies alleged to have defrauded the Paycheck Protection Program.
Six Additional PPP Settlements for Our Client Blockquote
Our client Blockquote settled six more cases based on our theory of foreign affiliates causing PPP loan applicants to be ineligible for funding. The Northern District of Texas scored a hat trick: one settlement for $3.9 million (credit to Assistant U.S. Attorney Najib Gazi), one for more than $3.5 million (credit to Assistant U.S. Attorneys Brian Stoltz and Javan Porter), and the last a $1.7 million settlement (credit again to Assistant U.S. Attorneys Brian Stoltz and Javan Porter).
We also settled one case for about $2.25 million in the Eastern District of Missouri (credit to Assistant U.S. Attorney Suzanne Moore), one case for $1.8 million in the District of South Carolina (credit to Assistant U.S. Attorney Austin McCullough), and one case for $950K in the Northern District of California (credit to Assistant U.S. Attorneys (former) Audrey Pak and (current) Savith Iyengar and our co-counsel Leah Judge).
Four Recent PPP Settlements for Our Client Sidesolve
Our client Sidesolve had four recent PPP settlements as well. It had a domestic affiliation settlement in the Northern District of Mississippi, handled by Assistant U.S. Attorney Harland Webster, for $2.75 million. It had a settlement with an alleged marijuana related business for just over $1 million in the Western District of Washington (credit to Assistant U.S. Attorney Matt Waldrop).
It reached another PPP settlement for approximately $2.5 million. Lastly, it had another “think tank” settlement in the District of Columbia (yet another credit to Assistant U.S. Attorney Sean Tepe), this time for $243K based on the applicant’s ability to pay a settlement.
Administrative Repayment in Another Think Tank Case
One of Sidesolve’s think tank cases and the resulting investigation resulted in another think tank repaying its loan of about $250K as an administrative remedy. While this does not normally result in a release of False Claims Act liability, the government determined that the quick repayment was sufficient for the government to have been made whole. Since these are non-profit think tanks and not giant corporate entities, our client tended to agree.
ClearWater Metrics Reaches $2.9 Million PPP Settlement
Another client, ClearWater Metrics, had its first PPP settlement, for $2.9 million, another settlement based on application of the foreign affiliation rules. The time from filing to settlement was under 100 days! Congratulations to ClearWater Metrics, and thanks to Assistant U.S. Attorney in New Jersey David Simunovich for his quick work in this matter.
Quick Cooperation Can Affect PPP Settlement Multipliers
One noticeable trend in the settlements above is that when defendants are accepting responsibility and settling quickly, the “multiplier,” i.e., the penalty on top of the loan amount, is usually much less. Of course, if the defendant had a good reason for applying, that is worth raising as well, as that can result in an even smaller settlement than just cooperating with the government. But in the cases where defendants are pushing back without a legitimate basis, drawing out the investigation and causing the government to expend resources, we have found they usually result in a higher multiplier, such as 1.6 to 2 times the original loan amount.
PPP Fraud Investigations Are Expected to Continue
Our firm has now recovered nearly $64 million in PPP settlements, with many more cases still under investigation and with settlements being negotiated every day.
Around $757 billion in PPP loans was forgiven, of which the SBA estimated $36-$64 billion in fraud, and so we expect these cases will continue on for some time. The Government extended the usual six-year statute of limitations to ten years to give it time to pursue the hundreds of cases currently and yet to be filed by our firm and others against PPP fraudsters.
Data Mining has become a hot topic in the news and relator’s bar
In related news, the media and our community of whistleblower lawyers have taken note of our work with data miners. Attorney Jason Marcus was quoted a number of times in an article on the Dow Jones Risk Journal about whistleblowers using data to find new False Claims Act cases. His key takeaway: the DOJ wants good data miners finding difficult cases, and it doesn’t want to be flooded with speculative cases or cases without any evidence of scienter (knowledge or intent).
Jason is also chairing this year’s annual member conference hosted by the Anti-Fraud Coalition and moderating a panel at the conference on data mining. In addition to discussing his experiences representing third-party data miners, the False Claims Act attorney panelists are going to discuss how they have used public data to build on cases being brought by insider relators.
Partner Julie Bracker also had a speaking engagement approaching. Tune in to her recording on myLawCLE to see her Federal Bar Association panel entitled Cybersecurity False Claims Act Enforcement Against Defense Contractors and Their Private Equity Sponsors.