Badger-State firm allegedly failed to disclose that it qualified as a foreign agent which meant it was ineligible to participate in the Paycheck Protection Program
Milwaukee advertising firm Birdsall Voss & Associates, known as BVK, has paid $2.25 million to settle allegations that it violated the False Claims Act by fraudulently obtaining federal COVID-19 relief funds from the U.S. Small Business Administration under the Paycheck Protection Program, the Department of Justice has announced.
The DOJ alleged that BVK knowingly failed to disclose on its PPP loan application that it was required to register with the federal government as a Foreign Agent under the Foreign Agents Registration Act (FARA), which rendered it ineligible to receive a loan under the PPP “second-draw” program.
The alleged fraud was exposed by a qui tam whistleblower which will receive a portion of the settlement as a whistleblower award.
False certification of eligibility
Congress created the PPP loan program as part of a $2.2 trillion stimulus package of emergency financial assistance to Americans suffering economic effects of the COVID-19 pandemic. The program allows qualifying businesses to obtain forgivable loans from the SBA. Under a December 2020 amendment to the CARES Act, however, organizations subject to registration requirements under FARA were excluded from eligibility to receive so-called “second draw” PPP loans.
In its False Claims Act complaint, the qui tam whistleblower alleged that BVK was required to register as a foreign agent under FARA because one of its public-relations clients was a foreign government—the Dominican Republic Ministry of Tourism. Yet on its PPP loan application BVK knowingly certified that it was not subject to FARA registration, the whistleblower alleged. BVK thereby allegedly obtained a second-draw PPP loan from the SBA of $2 million despite its ineligibility.
Pandemic fraud and the False Claims Act
Fighting COVID-19 related fraud schemes is a high priority of the DOJ, which, in May 2021, established a COVID-19 Fraud Enforcement Task Force and, in September 2022, announced the creation of three Strike Force teams to investigate and prosecute pandemic related fraud.
The False Claims Act imposes significant liabilities on individuals and entities that knowingly defraud the federal government or its agencies. Under the statute, private parties known as qui tam relators or whistleblowers have the right to sue violators on behalf of the United States and share in any recovery. Generally, qui tam relators are entitled to whistleblower awards of 15-30% of the lawsuit’s proceeds.
If you know of a business enterprise that has committed or is committing COVID-19 relief fraud or that is otherwise defrauding the federal government or its agencies, it is important to speak with an experienced whistleblower attorney. Reach out to COVID-19 relief fraud whistleblower attorney Mark A. Strauss for a free consultation.