In response to the Coronavirus pandemic, Congress passed and the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which included the creation of the Paycheck Protection Program (PPP), a $349 billion economic stimulus initiative to provide small businesses and non-profit organizations with up to $10 million in small business loans.

While this global health crisis necessitated nationwide stay-at-home orders and the temporary closing of nearly all brick and mortar businesses, the economic impact has been deep, and federal help was – and will continue to be – vital.

In order to be eligible for assistance under the PPP, businesses and non-profits must meet certain criteria and follow program rules. Additionally, employers who use the loans to pay approved payroll and overhead costs are eligible to turn at least part of their loan into a grant.

While the banks and credit unions issuing the loans take on almost no risk – the loans are 100% federally insured – they are responsible for lending only to eligible borrowers, and for guaranteeing compliance with all relevant regulations. For the PPP lending program, banks and credit unions approved by the Small Business Administration will receive both 1% interest and underwriting fees, which may surpass $1 billion.

When there is so much money at play, experts agree that the likelihood of fraud and abuse is high.  They point to the example of the TARP bailout, when some small businesses received assistance through making fraudulent representations to financial institutions, and some lenders issued loans to ineligible borrowers. As exemplified by the 2008 housing crisis, when loans are insured by the federal government, irresponsible lending can cause massive losses for the government when borrowers default.

Congress addressed such concerns in the CARES Act by creating the Pandemic Response Accountability Committee (PRAC), which is responsible for overseeing federal spending related to the Coronavirus pandemic. PRAC is made up of various inspectors general and will conduct audits and investigations into potential fraud and waste.  The effectiveness of PRAC may be undermined by the President’s distrust of inspectors general.  See Mattis Defends Inspector General Fired by Trump from Overseeing Coronavirus Stimulus, Says He Has ‘Integrity of Highest Order’.

That makes whistleblowers all the more critical to public confidence in the fair distribution and administration of the PPP loans. Whistleblowers who witness fraud related to the PPP or any other government spending can blow the whistle under the False Claims Act. The FCA prohibits false or fraudulent claims made to the government, and information provided by a whistleblower is often critical to the U.S. Attorney General’s decision to file an FCA lawsuit. Additionally, whistleblowers can file qui tam lawsuits, which private individuals bring in the name of the government. Under the FCA, whistleblowers are entitled to between 15% and 30% of any settlement or judgment won on behalf of the government.

Finally, and importantly, the FCA has a strong anti-retaliation provision that prohibits an employee from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer” in response to that employee filing a report or trying to stop actions that defraud the government.