San Diego Nonprofits Settle for $5.8 Million Over Fraudulent Pandemic Loan Claims 

Several nonprofit organizations have agreed to pay over $5.8 million in a settlement for allegations of obtaining Paycheck Protection Program (PPP) loans, the DOJ reported. The U.S. Attorney’s Office for the Southern District of California announced these settlements on June 12, 2024. 

The allegations revolve around violations of the False Claims Act. According to the government, the nonprofits in question, including two private country clubs and two homeowner associations, knowingly submitted false claims to secure PPP loans despite being ineligible under the CARES Act. The PPP, established in March 2020, aimed to provide financial support to small businesses affected by the COVID-19 pandemic. However, specific types of entities, including those organized under section 501(c), were not eligible for these loans. 

The entities involved include: 

1. Rancho Santa Fe Association: A 501(c)(4) homeowners association in San Diego County, settled for $2,037,451.44. 

1. Pine Mountain Lake Association: Another 501(c)(4) homeowners association near Yosemite National Park, settled for $2,372,440.98. 

1. Glendora Country Club: A 501(c)(7) private country club in San Gabriel Valley, settled for $708,843.42. 

1. The Palms Golf Club: A 501(c)(7) private golf club in La Quinta, California, settled for $690,285.76. 

U.S. Attorney Tara McGrath expresses the importance of the PPP in supporting struggling small businesses during the pandemic and condemns the fraudulent actions of these nonprofits. “These agreements hold accountable those who deceitfully diverted public funds from the deserving hands of struggling small businesses,” McGrath stated. 

Weston King, Special Agent in Charge of the SBA Office of Inspector General’s Western Region, reinforced this stance, stating that the settlements send a strong message against providing false information to obtain loan forgiveness.  

Going after PPP fraud has been a high priority for the government with this settlement just the latest in a string of DOJ settlements concerning violations of the program.  If you have any information relating to possible PPP fraud, other types of COVID-19 Fraud, or healthcare fraud more broadly and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to contact us for a free and confidential consultation.