Fraud Friday – A California Homeowners Association Agrees to PPP False Claims Act Settlement
December 8, 2023
Delaney Sexton
Contributing Editor
Fraud Friday – A California Homeowners Association Agrees to PPP False Claims Act Settlement
A nonprofit homeowners group has recently agreed to pay almost $500,000 in fees and penalties for applying for a PPP loan despite being ineligible. The Rancho Sante Fe Association applied for $1.5 million even though the association is set up as a 501 (c)(4) organization. Their PPP loan application was approved a week later, and the loan was forgiven towards the end of 2020.
They have stated that the loan proceeds were used correctly to pay salaries and other expenses. At first, the Board President, Courtney LeBeau, disputed the finding and continued to assert that the HOA was eligible for relief. After speaking with lawyers and determining the cost of litigation, the association’s position changed, and the board agreed to the settlement. In a letter sent to its 1,800 members, the association acknowledged that they misrepresented the status of the association to qualify for the loan.
When applying for the PPP loan, the association declared that they did so with advice from lawyers and a banker about the association’s eligibility. They said that were directed to select “C-Corp” on the form and that following this guidance was an error.
This agreement closed a civil investigation that the Department of Justice opened earlier this year. Even before that, the Rancho Sante Fe Association was identified in a federal lawsuit filed under the False Claims Act. Wade Riner, a realtor, served as the whistleblower and will be receiving 15% of the repayment, or $244,494. According to the San Diego Union-Tribune, Wade Riner has filed dozens of False Claims Act claims against 501(c)(4) entities around the nation.
Further research uncovered a second example of Wade Riner filing a complaint against another association. On August 15, 2022, Wade Riner filed a Qui Tam False Claims Act complaint against Beaver Run Homeowners Association.