Florida Businessman Settles PPP COVID Fraud Case with $20M Consent Judgment

Florida businessman Patrick Walsh agreed to a consent judgement of over $20 million to resolve allegations of COVID fraud and violating the False Claims Act, a federal law imposing liability on people and companies who defraud the government. Walsh, along with 10 companies he owned or controlled, was accused of knowingly submitting false information to support Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) loan applications. The 10 companies involved include American Blimp Company LLC; Walsh Family Land Corp.; Airsign Inc.; Airsign Airship Group LLC; Airsign Group LLC; Airsign Airships Latin America LLC; Airsign Airships Asia Pacific LLC; Airsign Airships Repair Station LLC; Aero Capital LLC; and Eagle Ridge Management Group LLC doing business as Shiloh Oil Company.

Background on PPP and EIDL Programs

The PPP and EIDL programs were created under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act in March 2020 to provide essential financial support to small businesses impacted by the COVID-19 pandemic. Administered by the Small Business Administration (“SBA”), the PPP was designed to offer low-interest, forgivable loans to qualifying small businesses to help cover necessary operating costs, such as payroll, rent, mortgage interest, and utilities.

The EIDL program, which was also administered by the SBA, provided low-interest loans to businesses affected by disasters, including the COVID-19 pandemic, to assist them in continuing operations. To qualify for either program, businesses were required to submit loan applications that included accurate details about its workforce and certify that the loan funds would be used for eligible business expenses.

Admissions and Misuse of Funds

In this particular case, as a part of the civil settlement, Walsh admitted he knowingly submitted false claims regarding his companies’ employee rosters and payrolls in his PPP and EIDL loan applications. A number of the businesses for which Walsh sought loans were not operational, and Walsh even submitted additional EIDL loan applications in his wife’s name. In sum, Walsh fraudulently secured approximately $7.8 million in federal loans on behalf of his corporate entities. Walsh then used these loans for a variety of personal purposes, including investing the funds in a private island, Texas-based oil ventures, and personal debts.

When he defaulted on the PPP loans, the SBA honored its guarantee obligations, making payments to lenders in full and covering additional costs such as interest and processing fees. Under the terms of the consent judgment, Walsh and his companies agreed to the entry of judgments against them totaling $20,074,458.70.

Criminal Charges and Prison Sentence

In January 2023, Walsh pleaded guilty to one count of wire fraud and one count of money laundering, both of which were related to his involvement in these fraudulent loan activities. As a result, he was sentenced to 66 months in federal prison, where he is currently serving his sentence. In addition to his prison sentence, Walsh was ordered by the court to pay $7.8 million. The court also entered a forfeiture order in the same amount.

DOJ and SBA Statements

Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division said that the “PPP and EIDL loans were intended to help small businesses during the pandemic.” The Justice Department “is committed to holding accountable those who undermined the purpose of these programs by knowingly obtaining and retaining loan proceeds for which they were not eligible.”

Acting United States Attorney Michelle Spaven for the Northern District of Florida added that this “civil resolution and the previously imposed 66-month period of incarceration should serve as a significant deterrent to others like the defendant who would attempt to steal millions of dollars from the American people and exploit Federal relief programs.” Spaven emphasized that “[t]he Northern District of Florida is committed to protecting government programs from fraud, and…will hold those accountable who steal from the American taxpayers.”

“This settlement is a victory over bad actors seeking to exploit taxpayer-funded programs,” said Wendell Davis, General Counsel for the U.S. Small Business Administration. The “SBA is committed to vigorously protecting the hard-earned money of the American people and ensuring that those who fraudulently obtain those funds are held accountable.”

Whistleblower Complaint and Qui Tam Lawsuit

This settlement stems from a qui tam False Claims Act complaint filed in 2020 by Andrew Hersh. Hersh performed information technology services for Walsh. The qui tam provisions of the False Claims Act allow private individuals to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The case is captioned United States ex rel. Andrew Hersh v. Patrick Walsh et al., No. 1:20‑cv‑231 (N.D. Fla.).

What is PPP COVID Fraud?

PPP fraud occurs when individuals or businesses abuse the PPP loan program through submitting false information on loan applications or when attempting to certify loan forgiveness. Other methods of committing PPP fraud apart from false statements include “loan stacking” or applying for PPP loan money from multiple lenders or using PPP loans for improper, unapproved purposes. This type of fraud can result in criminal charges. Whistleblowers play a pivotal role in uncovering PPP fraud.

Contact Miller Shah LLP

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