New Year, New PPP Settlement: Borrowers Settle, While Lender Does Not

On January 9, 2023, the United States Department of Justice (DOJ) announced a settlement with four California agricultural companies and their owner (the Seasholtz Defendants), who agreed to pay $600,000 in damages and penalties to settle allegations that they violated the FCA and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Although we do not know the exact details of the settlement or the precise covered conduct, DOJ's press release states that the Seasholtz Defendants improperly inflated the employee headcount on their Paycheck Protection Program (PPP) applications by impermissibly including non-employee contract workers who were actually employed by other, unrelated entities. As a result, DOJ claims that the Seasholtz Defendants improperly obtained nearly $1.8 million in excess PPP funds (out of $3.5 million in total), that were intended to provide critical relief to small businesses suffering during the COVID-19 pandemic. Even though