As we enter the dog days of summer, we have two more False Claims Act settlements to announce involving PPP loans, totaling nearly $4.5 million. One is with an automotive parts manufacturer, and the other is with a chain of roofing companies.

$1.8 Million PPP Settlement Against Company with a Large Corporate Parent

First, in the Northern District of Mississippi, our client Blockquote Inc. successfully brought an action alleging a violation of the “foreign affiliation” rules. The defendant was owned by a foreign conglomerate that employed thousands of people. Although the Mississippi factory employed fewer than 300 employees, which was the limit for Second Draw eligibility, it should have included the parent company’s employees.

Blockquote has previously found success with this theory, including the two settlements from our previous PPP blog. It has now recovered more than $7.7 million in PPP funds.

This investigation was led and resolved by Assistant United States Attorney Harland Webster. The defendant settled its claim for more than $1.8 million in payments.

$2.65 Million PPP Settlement Against Roofing Company with Multiple Affiliated Entities

Second, a new data miner called K3 Analytics, LLC filed a False Claims Act lawsuit in the Eastern District of North Carolina against a roofing company. This time, the defendant as alleged to have violated the “domestic affiliation” rules, meaning that it should have added up all the employees from all of its different affiliates when determining its eligibility. Collectively, they exceeded the 500 employee limit for First Draw loans, but one of the entities had applied for and received a loan of almost $2.4 million.

If this sounds familiar, it should. This was the basis for our firm’s first PPP settlement back in December of 2023. In that case, our client Sidesolve alleged that various entities making up a commercial roofing company had each obtained a PPP loan, when collectively they were ineligible.

K3 Analytics saw that settlement and not only did it go back to the well with a domestic affiliation case, it did so against another roofing company. Although first draw cases can be particularly difficult because there were multiple ways to become eligible, we saw a number of similarities between the two cases.

This investigation was led and resolved by Assistant United States Attorney Andrew Kasper. We filed our case in August 2024, and it was settled in April 2025, one of the fastest PPP investigations we have seen. The defendant settled its claim for more than $2.65 million in payments.

What’s the Outlook for PPP Cases?

More than five years after the Paycheck Protection Program started, we are still getting calls daily from people wanting to bring cases. Some are insiders, but most are not. They see these announcements and realize there is an opportunity.

While there are still tens of millions of dollars in PPP fraud yet to be discovered, there are difficulties with filing cases based on tried and true theories. The primary difficulty is that under the False Claims Act’s first to file rule, only the first relator to bring a case is entitled to a recovery. We have had many instances where we prepared a case only to find that one or more other data miners had already filed the same case. And there have been many occasions where our cases have been mid-investigation and others have tried to file after us. That makes it difficult—but not impossible, as K3 Analytics has shown—to file cases using theories that everyone already knows about.

Conversely, we have clients who are bringing cases under novel theories, and while those are unlikely to be barred by earlier filers, we also do not know how the Government will respond to them. They may be more legally uncertain, they may require more effort, or they may result in only partial damages.

The Small Business Administration and the Department of Justice have faced extreme cuts as of late. The SBA is in the process of reducing its workforce by 43%. Thousands of employees voluntarily left the DOJ as part of its downsizing efforts, including many of the AUSAs we have been working with on these cases.

PPP and other CARES Act fund fraud enforcement remains a priority for both agencies, but with reduced resources and hundreds of new PPP cases being filed each year, in addition to the usual caseload of healthcare and procurement cases, and the new caseload of tariff and immigration cases, each office has to carefully consider which cases and theories it wants to pursue.

Now, more than ever, it is important to have False Claims Act counsel with PPP experience representing you. We know what the Government is looking for, what it is less interested in, and how to pitch new theories. If you have a potential PPP case, please contact us for a free evaluation.