September 16, 2022
Fraud Friday – The First False Claims Act Settlement from a PPP Lender
“The settlement announced today is believed to be the nation’s first settlement with a PPP lender pursuant to the False Claims Act. The settlement amount also reflects Prosperity Bank’s efforts to cooperate with the government’s investigation and provide relevant facts along with its implementation of additional compliance measures,” reads a Department of Justice press release from the Southern District of Texas.
According to the Department of Justice, Prosperity Bank recently agreed to pay $18,673.50 to settle allegations that the bank improperly processed a PPP loan on behalf of a borrower that was ineligible.
At the start of the pandemic, the bank approved a PPP loan for Dr. Emad Bishai totaling $213,400. Dr. Bishai was the sole owner of his company, Woodlands Pain Institute LLC. When applying for a PPP loan, he checked the “No” box when answering whether he was subject to an indictment, criminal information, arraignment, or any other means of formal criminal charges. Dr. Bishai had criminal charges regarding his practice of prescribing opioid medications at the time of his application.
Furthermore, it is alleged that Prosperity Bank employees were aware of Bishai’s criminal charges that made him ineligible for PPP loans. Despite this, the bank processed the PPP applications and disbursed the loan. In turn, the bank received a 5% processing fee worth $10,670 for the fraudulent loan.
In November 2021, Dr. Bishai entered a settlement of over $500,000 to resolve his liability for the fraudulent medical billing and submission of the PPP loan applications. In addition, he repaid the full PPP loan amount.
DOJ Press Release