Four Non-Profits Agree to Pay Over $3 Million to Resolve False Claims Act Allegations Involving Paycheck Protection Program Loans

            WASHINGTON – The United States Attorney’s Office for the District of Columbia announced today that it has reached civil settlement agreements with four different non-profit organizations to resolve allegations that the organizations violated the False Claims Act when they applied for and received loans under the Paycheck Protection Program (“PPP”).

            Our Office has entered into settlement agreements with the following organizations to resolve allegations that they falsely certified eligibility for PPP loans.

            League of United Latin American Citizens (the “LULAC”) is a Section 501(c)(4) non-profit organization that bills itself as the largest Hispanic civil rights organization in the United States. In 2020, LULAC applied for and received a first draw PPP loan in the amount of $122,644 and later sought and received forgiveness of that loan. In 2021, LULAC applied for and received a second draw PPP loan in the amount of $41,710 and later sought and received forgiveness of that loan as well. LULAC has agreed to pay $312,272.60 to resolve allegations that it violated the False Claims Act by obtaining two PPP loans for which it was not eligible.

            National Bureau of Asian Research (the “Bureau”) is a Section 501(c)(3) non-profit organization that described its mission as a “research institution” that “helps decision-makers better understand Asia and craft concrete, actionable policy” and referred to itself as “the nation’s Asia policy think tank.” In early 2021, the Bureau applied for a “second draw” PPP loan in the amount of $411,111 and subsequently applied for and received complete forgiveness of that loan. After an analysis of the Bureau’s ability to pay pursuant to a settlement, the Bureau agreed to pay $475,000, plus interest, to resolve allegations that it violated the False Claims Act by obtaining a PPP loan for which it was not eligible.

            National Conference on Public Employee Retirement Systems (“NCPERS”) is a Section 501(c)(4) non-profit trade association working on behalf of public sector retirement systems. In 2020, NCPERS applied for and received a first draw PPP loan in the amount of $143,412 and later sought and received forgiveness of that loan. In 2021, NCPERS applied for and received a second draw PPP loan in the amount of $118,052 and later sought and received forgiveness of that loan as well. NCPERS has agreed to pay $457,562 to resolve allegations that it violated the False Claims Act by obtaining two PPP loans for which it was not eligible.

            Prosperity Now is a Section 501(c)(3) non-profit organization that describes its mission as seeking “policy change at all levels of Government” and engages in public policy research, advocacy, and lobbying. In early 2021, Prosperity Now applied for a “second draw” PPP loan in the amount of $1,532,800 and subsequently applied for and received complete forgiveness of that loan. After an analysis of Prosperity Now’s ability to pay pursuant to a settlement, Prosperity Now agreed to pay $2,081,523.15, plus interest, to resolve allegations that it violated the False Claims Act by obtaining a PPP loan for which it was not eligible.

            The forgoing organizations were allegedly not eligible for the identified PPP loans based on the statutes and regulations governing the loan program. In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) was created to provide emergency financial support to Americans suffering economic hardship due to the COVID-19 pandemic. Through the PPP, the CARES Act authorized billions of dollars in potentially forgivable loans to small businesses and other entities struggling to pay employees and other business expenses during the pandemic, but the Act also contained important limitations on loan eligibility. For example, the CARES Act permitted certain nonprofit organizations to obtain PPP loans, but organizations organized under Section 501(c)(4) of the Internal Revenue Code were never eligible for such loans. Similarly, Congress prohibited from “second draw” PPP loans those entities primarily engaged in political or lobbying activities, including those entities organized for research or for engaging in public policy advocacy or political strategy or publicly referring to themselves as “think tanks.” The non-profit organizations that entered settlement agreements with our Office were alleged to have falsely certified their eligibility for the PPP loans.

            The civil settlements resulted from investigations by Assistant United States Attorney Sean M. Tepe and Auditor Timothy C. Hurley. The United States Attorney further wishes to commend attorneys Caitlin J. Kelly and Kandace Zelaya of the U.S. Small Business Administration Office of the General Counsel for their assistance in the investigations.  

            Tips and complaint regarding potential fraud affecting COVID-19 government relief programs can be reported by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or by submitting a NCDF Web Complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

            The claims resolved by the civil settlements are allegations only, and there has been no determination of liability.