On September 13, 2022, the Department of Justice (“DOJ”) announced its first settlement with a Paycheck Protection Program (“PPP”) lender pursuant to the False Claims Act (“FCA”). The agreement resolves allegations that Prosperity Bank (“Prosperity” or the “Bank”), a regional bank throughout Texas and Oklahoma, improperly processed a PPP loan and secured a processing fee to which it was not entitled. Prosperity agreed to settle the claims for $18,000, and the DOJ took positive note of the Bank’s cooperation with the investigation.
Under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), small businesses could apply for PPP loans for economic relief. As an incentive, lenders received a small, fixed fee ranging from 1% to 5% of the loan amount from the Small Business Administration (“SBA”).
Prosperity was a PPP lender and, according to the DOJ, fraudulently approved a $213,000 PPP loan to Woodlands Pain Institute PLLC (“Woodlands Pain”) despite knowing that the sole owner, Dr. Emad Bishai, was facing criminal charges in Montgomery County, Texas for prescribing opioids. Dr. Bishai lied on his loan application, checking the “no” box to indicate that, at the time of applying, he was not subject to an indictment, criminal information, arraignment or other criminal proceeding. Had Dr. Bishai answered the question honestly, he would have been ineligible for the loan. Despite being aware of this disinformation, Prosperity approved the loan in May 2020 and benefited from a 5% processing fee of $10,670.
In addition to the opioid charges, the DOJ accused Dr. Bishai of fraudulently billing Medicare and Tricare in 2017 and 2019 for invasive surgical procedures he never performed. In November 2021, Dr. Bishai entered into a $520,000 settlement to resolve the claims of fraudulent medical billing and his fraudulent submission of the PPP application. Dr. Bishai also repaid the PPP loan in full in 2022, as well as a $1,000 fee for misdemeanor violation of the Texas Medical Malpractice Act. Finally, Dr. Bishai and Woodlands Pain agreed not to participate in any federal healthcare programs for 7 years.
This matter is being handled by Assistant U.S. Attorney Brad Gray with the assistance of the SBA’s Office of Litigation in the Southern District of Texas.
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