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California Law Firm and Senior Managers Settle False Claims Act Allegations Regarding Misuse of Paycheck Protection Program Loan Funds
The Bloom Firm, a California law firm, and Lisa Bloom and Braden Pollock, members of the firm’s senior management, have agreed to pay a total of $274,000 to settle allegations that they violated the False Claims Act by knowingly providing false information in support of a Paycheck Protection Program (PPP) loan forgiveness application submitted by The Bloom Firm.
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide emergency financial support to the millions of Americans suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses. In December 2020, Congress approved funding for a “second draw” of PPP loan funds, which became available to borrowers beginning in January 2021. An entity’s first PPP loan is often referred to as a “first draw” PPP loan. When applying for forgiveness of any PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their applications, including that they spent the PPP loan funds on eligible expenses, such as payroll.
The United States alleged that, at the direction and with the assistance of Bloom and Pollock, The Bloom Firm sought and obtained forgiveness of the firm’s first draw PPP loan by falsely certifying that the firm used the PPP loan funds for eligible payroll expenses. The United States contended that The Bloom Firm used a portion of its PPP loan to pay several employees who were ineligible to receive PPP funds or did not work for the firm during the covered period of the loan. As a part of the settlement announced today, The Bloom Firm will pay $204,200.34, and Bloom and Pollock will each pay $35,384.49.
“PPP loans were intended to provide critical relief to small businesses,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to pursuing those who misused this taxpayer funded program.”
“Attorneys have a duty to follow the law to the letter – especially when it comes to government programs aiding individuals and businesses impacted by COVID-19,” said U.S. Attorney Martin Estrada for the Central District of California. “This settlement reaffirms my office’s commitment to affirm and uphold the integrity of pandemic-assistance programs.”
The settlement resolved claims brought under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit was filed by Liberty Law Office Inc. and is captioned U.S. ex rel. Liberty Law Office Inc. v. The Bloom Firm et al., Dkt. No. 21-cv-06279 (C.D. Cal.). Liberty Law Firm Inc. will receive a total of approximately $44,000 in connection with the settlement.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California, with assistance from the Small Business Administration (SBA)’s Office of General Counsel and the SBA Office of the Inspector General.
Trial Attorney F. Elias Boujaoude of the Civil Division and Assistant U.S. Attorney Aaron Kollitz for the Central District of California handled the matter.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.
Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Also read
The PPP, established under the CARES Act in March 2020, was designed to provide emergency financial relief to businesses affected by the COVID-19 pandemic.
On August 15, 2024, a California-based law firm, along with senior managers, agreed to a settlement totaling $274,000 to resolve allegations of False Claims Act violations related to the misuse of Paycheck Protection Program (PPP) loan funds.
Background on the Case
The PPP, established under the CARES Act in March 2020, was designed to provide emergency financial relief to businesses affected by the COVID-19 pandemic. The program offered forgivable loans to help businesses maintain their workforce and cover other essential expenses. However, businesses were required to certify that the loan funds were used for eligible expenses, primarily payroll, in their application for PPP loan forgiveness.
The allegations against the law firm and its senior management stem from claims that they falsified information in their PPP loan forgiveness application. According to the United States Department of Justice, Bloom and Pollock directed the firm to falsely certify that the PPP funds were used for eligible payroll expenses. The DOJ contends that the firm used a portion of the loan for employees who were either ineligible or did not work during the covered period.
Settlement Details
As part of the settlement, the law firm will pay $204,200.34, while the senior managers involved will each pay $35,384.49. This resolution follows a qui tam lawsuit filed by Liberty Law Office Inc. under the False Claims Act, which allows private individuals to file lawsuits on behalf of the government and share in the recovery. Liberty Law Office Inc. will receive approximately $44,000 from the settlement.
Principal Deputy Assistant Attorney General Brian M. Boynton emphasized the DOJ’s commitment to tackling misuse of taxpayer-funded programs, stating, “PPP loans were intended to provide critical relief to small businesses.” U.S. Attorney Martin Estrada echoed this sentiment, reinforcing the expectation that attorneys must adhere to legal standards, especially in the context of pandemic relief programs.
Coordinated Efforts and Ongoing Oversight
The settlement resulted from a collaborative effort between the DOJ’s Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California, with additional support from the Small Business Administration’s Office of General Counsel and the SBA Office of the Inspector General.
This case underscores the ongoing vigilance of the COVID-19 Fraud Enforcement Task Force, established by the Attorney General on May 17, 2021. The Task Force aims to combat and prevent pandemic-related fraud through enhanced coordination and resource allocation.
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