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Spotting and reporting CARES Act fraud

| Mar 31, 2021 | Whistleblowing |

The COVID-19 pandemic has created a need for previously unprecedented government aid and assistance. Among the U.S. government’s response to the crisis is the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Over the past year, this Act has introduced major federal spending initiatives to attempt to stabilize the economy and assist small businesses, entire industries, healthcare workers and hospitals, educational programs and more.

However, with this level of spending and relief comes the potential for fraud. When fraud schemes target the government, whistleblowers may be able to report such fraud through the False Claims Act.

What is the CARES Act?

The CARES Act, enacted in March of 2020, introduced $2 trillion in federal government spending programs. This Act was followed up by other government initiatives throughout the past year, meant to help businesses and individuals alike.

Some of the CARES Act’s major spending programs include:

  • Assistance for small businesses. Through the Paycheck Protection Program (PPP) backed by the Small Business Administration (SBA), small businesses receive loans in exchange for retaining their employees rather than laying them off.
  • Assistance for struggling industries. The Coronavirus Economic Stabilization Act of 2020 (CESA) provides $500 billion in funds to businesses in the national security and aviation sectors, as well as other businesses. Other aid has also been distributed to the agriculture and healthcare industries, as well as educational programs and more.
  • Assistance for state, local and tribal governments. The $150 billion Coronavirus Relief Fund provides relief for governments for expenses that meet specific guidelines, including necessary expenditures caused by the public health emergency.

The potential for fraud

Unfortunately, this level of government spending introduces opportunities for businesses and professionals to take advantage of programs aimed to provide relief. Fraudulent activity could include:

  • Small businesses submitting false information in applications to qualify for loans or other forms of assistance
  • Businesses or local governments using CARES Act funds for purposes other than what is specifically outlined
  • Businesses falsely claiming to use funds or loans for approved purposes
  • Kickback schemes, price gouging, price fixing or other anti-competitive or fraudulent conduct

This list is not exhaustive, and whistleblowers may observe other forms of potentially fraudulent actions.

Bringing a claim under the False Claims Act

In such an unprecedented year, the potential for fraud schemes continues to grow. Employees are often in the best position to both recognize and report fraud. If you have witnessed fraud in your workplace, whether you work for a business of any size, local government, pharmacy, healthcare provider or more, you may be able to bring a claim under the False Claims Act.

Whistleblowers may be able to recover compensation for reporting fraud and are protected against employer retaliation. Such claims can be complex. An attorney experienced in whistleblower law and the False Claims Act can provide legal guidance from the start.