Four HOAs and Country Clubs Paid $5.8 Million to Settle PPP False Claims Act Allegations – Fraud Friday

June 14, 2024

Delaney Sexton
Contributing Editor

Four HOAs and Country Clubs Paid $5.8 Million to Settle PPP False Claims Act Allegations – Fraud Friday

One individual, Wade Riner, filed several lawsuits under the False Claims Act in August 2022. One lawsuit alone alleged that dozens of Colorado condominiums, homeowners associations, and country clubs knowingly applied for PPP loans despite their ineligibility as nonprofit organizations. In April, the lawsuit against the Colorado clubs and associations was withdrawn, but California groups were not so lucky.

Two private country clubs and two homeowners associations in California agreed to pay more than $5.8 million to resolve allegations that they violated the False Claims Act when applying for PPP loans they were not eligible for.

The first homeowners association paid more than $2 million to settle allegations. Rancho Sante Fe Association applied for and received a $1.5 million PPP loan. As a 501(c)(4), they either knew or should have known they were not eligible for the program. This caused SBA to forgive the loan and pay the lender fees and interest to the bank that processed the loan.

Another homeowners association agreed to pay $2.3 million to settle the allegations. Pine Mountain Lake Association applied for and received a $687,500 loan. The association then applied for a second PPP loan of $950,000. These loans were forgiven, and the SBA paid fees to the lender and interest to the bank that processed the loans.

A private country club and 501(c)(7) nonprofit organization paid over $700,000 to resolve False Claims Act allegations. Glendora Country Club applied for and received a PPP loan of $471,685. The alleged false claims caused SBA to forgive the loan, pay lender fees, and pay interest to the bank that processed the loan.

The last 501(c)(7) was a private, single membership golf club. The Palms Golf Club paid just over $690,000 to settle the allegations. They applied for and received a $327,035 PPP loan. Afterward, SBA forgave the loan and paid lender fees and interest to the bank.

Wade Riner will receive $700,000 from these four settlements.

Sources:
U.S. Attorney’s Office Press Release
Aspen Daily News Article