The U.S. Department of Justice (DOJ) continues to treat Paycheck Protection Program (PPP) loan fraud as an enforcement priority. As we have noted in prior updates covering both criminal and civil enforcement, the pace of new cases has not slowed. Below is an overview of significant PPP-related civil enforcement actions from late 2025 through July 2026. In the coming days, we will post a second blog with an update on criminal enforcement.
Fashion House Settlement (January 2026)
In January 2026, the U.S. subsidiary of a Switzerland-based luxury fashion house agreed to pay $1,823,100 to resolve FCA allegations arising from its application for a Second-Draw PPP loan. The government contended that the company falsely certified that it (together with its affiliates) employed no more than 300 employees and did not satisfy the “per-location” exception. Notably, the company received credit under DOJ’s cooperation guidelines (Justice Manual § 4-4.112) for timely and proactively admitting the covered conduct and initiating settlement discussions. The case arose from a qui tam action.
Home Builders Settlement (January 2026)
In January 2026, four companies and their three owners in Texas agreed to pay $2.65 million to resolve FCA allegations that they allegedly falsely reported payroll costs, misrepresented the number of employees they employed, and falsified the purpose of their PPP loans. The government also alleged that the defendants submitted false information to justify loan forgiveness. The settlement arose from a whistleblower lawsuit filed by a local realtor in October 2021, a reminder that qui tam relators need not be company insiders.
Fashion Company Settlement (February 2026)
In February 2026, the U.S. Attorney’s Office for the Southern District of New York announced that a fashion company agreed to pay $3.2 million to resolve FCA allegations. The company admitted that it was ineligible for a Second-Draw PPP loan because it (together with its domestic and foreign affiliates) employed more than 300 employees—exceeding the program’s size eligibility threshold. The company had received a $2 million Second-Draw loan in January 2021 and subsequently obtained full forgiveness. The government joined a private whistleblower lawsuit that had been filed under seal. Like several other recent settlements, this case underscores a focus on affiliate employee-count misrepresentations in Second-Draw applications.
Multi-Defendant Settlement (May 2026)
In May 2026, the U.S. Attorney’s Office for the District of South Carolina announced settlements totaling more than $7.9 million with five companies as part of a coordinated PPP Fraud Enforcement Initiative. The government alleged that each company violated the FCA by misrepresenting its employee count on PPP loan applications. To be eligible for PPP loans, businesses were required to certify on their loan applications that they met certain size standards based on, for example, the number of employees they and their affiliated entities collectively employed. In determining the number of employees, businesses generally were required to count all employees of U.S. and foreign affiliates. In these cases, the targeted companies allegedly certified headcounts within the eligibility limits while failing to include employees of their foreign parent companies and global subsidiaries. Individual settlement amounts ranged from roughly $993,000 to $2.175 million, and each company had previously obtained full forgiveness of its PPP loan. Three of the five settlements arose from qui tam actions filed by private relators, underscoring the continuing role of whistleblower suits in driving civil PPP enforcement.
Manufacturers Settlement (May 2026)
In May 2026, two Kentucky-based manufacturers agreed to pay $2.5 million to resolve allegations that they allegedly falsely certified their employee count to obtain Second-Draw PPP loans. The government alleged that the companies, together with their foreign affiliates, had more than 300 employees, making them ineligible. The companies fully cooperated with investigators. This case was initiated by a private relator.
Cable and Systems Company (July 2026)
On July 16, 2026, the U.S. Attorney’s Office for the Eastern District of North Carolina announced that a cable and systems manufacturer agreed to pay $4 million to resolve allegations that it knowingly misrepresented its employee and affiliated personnel count in connection with PPP loans and forgiveness claims totaling over $2 million. This settlement also arose from a whistleblower lawsuit. The company denied the allegations, and there has been no determination of liability. The FCA’s treble-damages and penalties provisions may help explain the settlement amount relative to the underlying loan.
Labor Unions and Employee Benefit Plan (July 2026)
In July 2026, the U.S. Attorney’s Office for the Southern District of New York announced that four labor unions together with an employee benefit plan serving members of those unions agreed to pay $3,850,000 to resolve FCA allegations that they had falsely certified their eligibility for PPP loans. All five defendants are organized as tax-exempt non-profit entities under Section 501(c)(5) of the Internal Revenue Code. In April 2020, Section 501(c)(5) organizations were categorically excluded from PPP eligibility. Only Section 501(c)(3) and 501(c)(19) non-profit organizations qualified. In April of 2020, each defendant submitted a PPP loan application through an authorized representative, collectively receiving $3,316,966 in loan proceeds and, later, loan forgiveness. As part of the settlement, the defendants accepted responsibility for certifying eligibility despite prior knowledge that only 501(c)(3) and 501(c)(19) organizations were eligible, and knowledge by April 2020 that labor unions were ineligible for PPP loans. This settlement resolved a qui tam action that a private whistleblower filed and that the government joined. This case reinforces that categorical eligibility exclusions remain an active area of civil PPP enforcement and that actual or constructive knowledge of ineligibility at the time of application significantly heightens FCA exposure.
Key Takeaways
Based on these cases, several PPP enforcement practices have continued from previous years, but new trends have also emerged. Here are some key takeaways:
- Foreign affiliate headcount is a primary target in FCA PPP cases.
- Whistleblowers remain a significant enforcement driver.
- Categorical eligibility exclusions are also being enforced, independent of size standards.
- Proactive cooperation can reduce FCA exposure.