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Trucking Company gets Caught in PPP Fraud

A local trucking company got caught falsifying documents to receive a second Paycheck Protection Program (PPP) loan. They have been ordered to pay a $1,000,000.00 fine plus restitution for the almost 300k loan. The owners also face up to 5 years in prison. It’s bad news for them. People have been asking questions wondering what exactly they did, how they were caught, and if they should be concerned. Let’s address those questions.

What did they do?

From what I understand, they applied for a second PPP loan claiming that they had a revenue reduction of 25% needed to qualify. They falsified and submitted payroll tax returns as part of the forgiveness application and signed it. In September 2021 The Company sought forgiveness of its second-draw PPP loan. They falsely certified that its second-draw PPP loan proceeds were used to pay eligible business expenses, when in fact that money was held in reserve.  But how did the feds figure it out?

How they got caught:

From the things I’ve heard and read, a former employee knew of the fraud and made claims brought under the whistleblower provisions of the False Claims Act. Under these provisions, a private party can file an action on behalf of the United States and receive compensation. Once the federal government got wind of it, it wasn’t long before an investigation began. 

What's the lesson in this?

If you didn’t get a PPP loan under false documents then you have no need to be worried. You might think of this as an episode of “Law and Order: PPP”, but, there is a significant lesson in this for all trucking companies:

Trucking company owners get caught when a disgruntled former employee tells on them!

In this case, it was regarding a fraudulent PPP loan, but it happens all the time. Has your company ever had a DOT audit pop up shortly after a disgruntled driver quits? Possibly…

So with that in mind, take this as an opportunity to reflect on your company’s operations. Are you driving around in a real gray area, or just doing something flat-out illegal? For instance, are you paying 1099 and you should be paying W-2? 

The government is cracking down on employee misclassification and increasing whistleblower compensation. Don’t put yourself, and your trucking company in jeopardy.

Written by Mike Ritzema

With over 20 years of experience in entrepreneurship, management, business planning, financial analysis, software engineering, operations, and decision analysis, Mike has the breadth and depth of experience needed to quickly understand entrepreneurs’ businesses and craft the most suitable solutions.

 

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