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Pandemic Fraud Spotlights

1. Chained Ownership Claims: Unified Care allegedly certified smaller employee numbers by omitting details of a larger shared ownership. This points to a common tactic in PPP fraud schemes—artificially splitting corporate structures to meet PPP size requirements.
2. Whistleblower-Driven Enforcement: The FCA’s qui tam provision empowers insiders to expose wrongdoing. Here, the whistleblower’s detailed knowledge triggered a substantial federal investigation, leading to millions in recovered funds.
3. Penalties and Paybacks: Beyond returning misappropriated PPP loans, FCA violations can lead to criminal charges, significant fines, reputational damage, and heightened scrutiny from federal and state regulators.

By Samuel A. Lopez – USA Herald

[TORRANCE, CALIFORNIA] - For nearly five years since the COVID-19 crisis began, the Department of Justice (DOJ) has been vigorously pursuing businesses accused of abusing the Paycheck Protection Program (PPP).

In the latest chapter of this far-reaching crackdown, Torrance, California-based Unified Care Services LLC (Unified Care) and its affiliates, on Friday, have agreed to pay $18 million to settle allegations that they violated the False Claims Act (FCA) by misrepresenting key information in PPP loan applications and loan forgiveness requests. This settlement is a stark reminder that federal authorities remain unrelenting in their mission to recoup fraudulently obtained pandemic relief funds, ensuring that only truly eligible small businesses benefited from the emergency aid programs established under the CARES Act.

Administrated by the Small Business Administration (SBA), the PPP was intended to support legitimate small businesses struggling to keep employees on their payroll and pay other necessary expenses during the pandemic. The unified chain of nursing facilities allegedly manipulated their size eligibility by failing to disclose ownership ties, effectively masking the overall number of employees operating under a single ownership structure.

According to court documents, Unified Care and its affiliates—among them Casa Montana LLC, Geri-Care Inc., and others—falsely certified they each had fewer than 500 employees. Prosecutors allege these certifications hid the fact that they were all part of a larger corporate network under the same operational control. By camouflaging this information, Unified Care and affiliates successfully secured PPP loans intended for smaller, financially vulnerable businesses.

In a whistleblower lawsuit United States ex rel. Ashwani Chawla v. Unified Care Services et al., CV 21-5935-GW (C.D. Cal.), the federal government intervened, leading to a settlement under which Unified Care will pay $18 million back to the U.S. Treasury. Out of the settlement sum, the whistleblower will receive $2.07 million for exposing the alleged violations.

A key driver of this settlement is the False Claims Act, commonly referred to as the FCA. Originally passed in 1863 to combat rampant defense-contracting fraud during the Civil War, the FCA remains a potent enforcement tool in modern times. It allows private individuals (known as “relators” or whistleblowers) to bring lawsuits on behalf of the government. When the government recovers funds—often in the form of settlements—the whistleblower is rewarded a percentage of that recovery.

Principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJ’s Civil Division, summarized the government’s stance by stating, “When ineligible businesses improperly obtained loans, they harmed both the taxpayers who funded the program and the eligible businesses who were denied relief.”

Unified Care Services LLC and affiliated entities reportedly operate multiple skilled nursing facilities across California. Their facilities, which employ hundreds of health care workers, were ineligible under PPP size limits if counted as a single conglomerate. However, Unified Care allegedly broke them into pieces on paper, each certifying eligibility independently. Prosecutors assert this was a deliberate scheme to game the system—a tactic the DOJ has pledged to pursue relentlessly.

“My office will continue to pursue those who knowingly cheat taxpayers by violating PPP and other pandemic-related programs,”
— U.S. Attorney Martin Estrada for the Central District of California

The settlement underscores the DOJ’s commitment, as Mandy Riedel, Director of COVID-19 Fraud Enforcement at the Justice Department, put it: “This resolution demonstrates the department’s commitment to ensuring that those who improperly obtain federally guaranteed PPP loans are held accountable and funds repaid to the American taxpayer.”

Entering 2025, the DOJ continues its unwavering campaign to hold accountable those who misrepresented their financial profiles to tap into COVID-19 relief funds. From the initial disbursement of PPP loans in 2020, federal investigations quickly uncovered cases of egregious fraud—some involving sham companies, others overreporting expenses or even inflating employee rosters. While many businesses genuinely needed the assistance, officials have discovered enough high-profile abuses to justify persistent, robust enforcement.

For instance, U.S. Attorney Martin Estrada highlights the “worst public health crisis this nation had seen in one century,” underscoring that relief programs were a lifeline for many.

However, unscrupulous actors siphoned funds that should have gone to small businesses on the brink of collapse. This narrative has propelled the establishment of the COVID-19 Fraud Enforcement Task Force, which unites multiple agencies to track, investigate, and litigate pandemic-related financial crimes.

Legal professionals across the country applaud the DOJ’s firm stance. Weston King, Special Agent in Charge at the SBA Office of Inspector General (Western Region), stated, “Through partnerships with federal agencies, we continue to identify fraud schemes and protect relief funds from misuse.”

For whistleblowers, this case illustrates the substantial rewards for coming forward with credible allegations. For potential violators, it’s a warning shot: No matter how long it has been since relief funds were disbursed, the DOJ shows no sign of letting up.

The case of Unified Care cements the notion that, with billions of dollars at stake, the federal government is prepared to use every tool at its disposal—including the False Claims Act, cooperation among multiple agencies, and rigorous investigative methods.

 “Our office will continue its work to preserve the integrity of those programs and hold violators accountable” Estrada stated.

Unified Care’s $18 million settlement is a testament to the DOJ’s promise: if you break the rules, you will be pursued—and you will pay. As the five-year mark of the COVID-19 crisis approaches, this case stands as a sobering lesson for businesses across America: transparency, compliance, and truthfulness are non-negotiable when dealing with federal relief programs.