Fraud in Focus: How Whistleblowers Safeguarded Small Business Relief
13 August 2024. Southern California’s West Coast Dental Administrative Services LLC and its former owners have paid $6.3 million to resolve False Claims Act allegations related to improper Paycheck Protection Program (PPP) loans. This case underscores the critical role that PPP whistleblowers play in safeguarding the integrity of federal relief programs. The whistleblower or relator in the qui tam lawsuit reporting this fraudulent conduct was a corporate entity formed by two attorneys, aptly named Relator LLC. The whistleblowers will receive $507,000 or approximately 8% of the settlement.
Details of the False Claims Act Settlement
The Southern California dental practices operator, along with its former owners—Drs. Soleyman Cohen-Sedgh, Farid Pakravan, and Farhad Manavi—they have settled allegations by paying $6.3 million for violating the False Claims Act. Dr. Farhad Manavi’s real estate investment company paid $35,149.82 to settle its potential liability under the same act. According to the allegations, West Coast Dental and its six affiliated dental practices falsely certified they employed fewer than 300 employees and did not acknowledge their common ownership. The real estate investment company was similarly ineligible for the PPP loan it received because as a “passive business operated for investment purposes,” it did not meet PPP eligibility criteria.
The Qui Tam Case
Two California attorneys formed a limited liability company called Relator LLC to blow the whistle. Qui tam False Claims Act whistleblowers can earn a portion of the government’s recovery. In this case, the corporate relator will receive just over half a millon dollars.
Importance of Paycheck Protection Program Whistleblowers
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, PPP loans were specifically developed to support small businesses struggling during the COVID-19 pandemic. Fraudulent claims undermine the program’s purpose and deplete resources meant for genuine small businesses, to paraphrase the U.S. Attorney for the Central District of California. Whistleblowers, or “relators,” who expose these fraudulent activities are essential in maintaining the integrity of such programs. As the Special Agent in Charge for Small Business Administration’s Office of Inspector General’s Western Region noted, “This settlement sends a signal to wrongdoers that evidence of improper conduct will be brought to light”—often by courageous whistleblowers.
If you would like to report COVID-19 pandemic fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.