Coyne Public Relations of New Jersey allegedly applied for and obtained a forgivable PPP loan despite its ineligibility.
Coyne Public Relations, a New Jersey public-relations firm, has paid $2.24 million to the federal government to resolve a whistleblower case alleging that it knowingly applied for and received a forgivable loan under the Paycheck Protection Program despite its ineligibility.
The whistleblower, which alerted the government to the fraud by filing a qui tam lawsuit under the False Claims Act, received a whistleblower award from the settlement of $203,000.
According to U.S. Department of Justice, Coyne was ineligible for a second-round PPP loan because it qualified as a “foreign agent” required to register under the Foreign Agents Registration Act, known as FARA.
PPP loan fraud
Part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the PPP program provided eligible forgivable loans to eligible businesses to cover payroll and other expenses during the Covid-19 pandemic. As of May 31, 2021, the U.S. Small Business Administration processed 11.8 million PPP loans totaling $799.8 billion, according to an SBA Inspector General report.
The swift release of funds under the PPP program created ample opportunities for fraud. The SBA Inspector General has identified more than 70,000 potentially fraudulent loans totaling over $4.6 billion as of August 2020.
According to the whistleblower’s complaint, Coyne received two PPP loans, including a second-round loan of $2 million in February 2021 which was later forgiven.
However, the U.S. Small Business Administration had tightened program rules for the second round of PPP loans, with FARA registrants and required registrants no longer eligible. Coyne was a required FARA registrant because its clients included government-affiliated tourism agencies in South African, the Cayman Islands, and Hong Kong. It nevertheless allegedly falsely certified that it was not a required FARA registrant on its Second Draw Borrower Application Form 2483-SD.
The False Claims Act
The government’s most effective legal tool for combating fraud, the False Claims Act prohibits parties from knowingly making or causing false claims for payment to the United States or its agencies. Whistleblowers—also known as qui tam relators—can initiate cases on the government’s behalf and receive 15-30% of the proceeds as a reward.
Combating Covid-19 pandemic relief fraud is a priority of the Justice Department, which has indicated that it will aggressively pursue fraud related to PPP loans and seek significant penalties for violations. Individuals with evidence of fraud should promptly confer with a whistleblower attorney about their rights under the False Claims Act and the possibility of filing a qui tam lawsuit.
If you know of parties knowingly overcharging, underpaying, or otherwise defrauding the federal government or its agencies, it is vital to speak with an experienced whistleblower attorney. Call whistleblower attorney Mark A. Strauss, who has more than 20 years of experience handling complex litigation, for a free and confidential consultation.
All communications are protected by attorney-client privilege.