Host Jonathan Porter welcomes Boston-based litigator Bob Peabody to the show to discuss the Department of Justice’s use of the False Claims Act to pursue civil actions in connection with CARES Act fraud. Programs established by the U.S. government to assist individuals and businesses impacted by the Covid pandemic have been the locus of a breathtaking volume of fraud, with some estimates reaching to over $200 billion in fraudulent disbursements.
During the early days of the pandemic, the government See more +
Host Jonathan Porter welcomes Boston-based litigator Bob Peabody to the show to discuss the Department of Justice’s use of the False Claims Act to pursue civil actions in connection with CARES Act fraud. Programs established by the U.S. government to assist individuals and businesses impacted by the Covid pandemic have been the locus of a breathtaking volume of fraud, with some estimates reaching to over $200 billion in fraudulent disbursements.
During the early days of the pandemic, the government prioritized access to funds over program design and rigor, which quickly injected over $2 trillion of much needed money into the economy but also introduced the perfect conditions for fraudsters to submit phony applications. As the pandemic subsided, the Department of Justice has ramped up efforts to identify fraud and recover funds—and one its most important tools has been the False Claims Act.
Jonathan and Bob explore why a civil remedy is being applied to cases where there is blatantly criminal behavior and how whistleblowers and data miners play an important role in bringing Covid fraud to light. The conversation also discusses conduct that is less blatantly criminal or not criminal at all and how FCA works in these instances, including the concept of “reckless disregard” and how it serves as a means for prosecutors to work around the FCA’s scienter requirement.
Jonathan and Bob also address how FCA liability can emerge due to conduct unrelated to the loan application process per se. They recount an instance where allegations of Medicaid fraud—a matter that led to a settlement—boomeranged into a massive FCA claim due to the representations made by the lender while drawing down Covid relief funds that were initially forgiven by the government.
Finally, the conversation addresses financial institutions’ exposure to FCA liability under the theory that they should have exercised greater diligence in making loans. Recent cases highlight how DOJ is pursuing not just borrowers, but lenders as well, especially via qui tam litigation against both the institution and executives, demonstrating that the book is still open on Covid-related fraud enforcement. See less -
