ARTICLE · 02 JUNE 2025

Beware Unfounded False Claims Act Allegations Of Paycheck Protection Program Fraud

Larkin Hoffman Daly & Lindgren

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Most people are not aware of the recent spate of False Claims Act (FCA) actions against nonprofit entities working through the federal courts.

United StatesGovernment, Public Sector

Christopher A. Young

Most people are not aware of the recent spate of False Claims Act (FCA) actions against nonprofit entities working through the federal courts. They involve "qui tam claims" brought by a specific relator on behalf of the United States government alleging fraud in the application for and forgiveness of Paycheck Protection Program (PPP) loans during the COVID-19 pandemic. The claims assert that the applicants fraudulently applied for PPP loans, which were statutorily limited to organizations having fewer than 500 employees, when they were not eligible because they had too many employees.

Lawsuit Against Twin Cities Nonprofits

Our team recently became familiar with this category of cases when a Firm client, a nonprofit educational institution, was listed as one of a handful of Twin Cities nonprofits named as defendants. The relator in the suit was an investigative journalist based in Ann Arbor, Michigan, without any disclosed connection to the Twin Cities nonprofits.

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