What Counts as Loan or Grant Fraud?

• Inflated payroll on a PPP application to get a larger loan.
• Ineligible borrowers: businesses that exceeded the size limits, were affiliated with larger companies, were not in operation on the required date, or whose owners were barred.
• Duplicate applications through related entities for the same employees.
• False forgiveness applications: certifying that the money was spent on payroll and permitted costs when it was not, or that headcount was maintained when it was not.
• False necessity certifications by businesses that had ample liquidity.
• EIDL fraud: false revenue and loss figures and spending the advance on personal expenses.
• SBA 7(a) and 504 loan fraud: false financial statements, false use of proceeds and undisclosed ownership.
• Federal grant fraud: false progress reports, undisclosed conflicts, and charging unallowable costs to research or program grants.

How a False Claims Act Case Works

The False Claims Act lets a private person, called a relator, file a lawsuit in the government’s name against anyone who knowingly submits a false claim for federal money or knowingly avoids an obligation to pay the government. The complaint is filed under seal in federal court and served on the Department of Justice, not on the defendant. The government investigates while the seal is in place, which usually takes a year or more, and then decides whether to take over the case. If the government joins, the relator generally receives 15 to 25 percent of what is recovered. If the government declines and the relator goes forward alone, the share is 25 to 30 percent. A defendant that loses pays three times the government’s damages plus a civil penalty for each false claim, which the government adjusts for inflation each year and which now runs from more than $14,000 to more than $28,000 per claim. The person who files first with the information controls the case; a later relator with the same facts is barred.

Who Brings These Cases?

Bookkeepers and accountants, payroll staff, office managers, business partners and former partners, lenders’ employees who saw the applications, and competitors. Many of these cases are small by False Claims Act standards; the government has pursued them anyway, and the relator’s share applies to every dollar recovered.

What Our Firm Does

• Review the applications, the certifications and what you know, and tell you whether it supports a case.
• Prepare the complaint and the disclosure to the Department of Justice and the SBA’s inspector general.
• File under seal and work with the government through its investigation.
• Litigate if the government declines.
• Protect you from retaliation and pursue your relator’s share.

Before You Report

• Do not confront the people involved or announce what you intend to do.
• Do not use a work computer, work phone or work email to contact a lawyer.
• Do not take documents you do not already have a right to see. Ask us first what you may keep.
• Write down what you know: who, what, when and how you know it.
• Do not wait. The first person to report is in the strongest position, and a later report with the same information may receive nothing.

Frequently Asked Questions

The loan was forgiven years ago. Is it too late?

Usually not. A False Claims Act case may be filed up to six years after the false claim, or three years after the government knew or should have known, with a ten-year outside limit. Forgiveness applications filed in 2021 and 2022 are well within that window.

The business is small. Will the government bother?

The government has recovered money from PPP borrowers of every size, and the False Claims Act allows the relator to proceed if the government declines. We will tell you honestly whether the amount justifies a case.

I helped prepare the application. Can I still report?

Involvement does not bar you from filing, though it can reduce your share, and a person convicted of a crime arising from the conduct cannot recover. Tell us the truth at the start.

Is there a state case too?

Pennsylvania has no general false claims act. New Jersey, New York, Maryland and the District of Columbia do, but PPP and EIDL money is federal, so these cases proceed under the federal act.

What does it cost?

The first conversation is free and confidential. If we take your matter, the fee terms are put in writing before any work begins.

Talk to Us Before You Report

Email msiddons@siddonslaw.com from a personal account with a general description of what you know. Do not send documents. We will reply and tell you what to do next. Attorney Michael A. Siddons represents whistleblowers in Pennsylvania, New Jersey, New York, Maryland and Washington, D.C.