Complaint — Liberty Law Office v. The Bloom Firm (C.D. Cal.)

Summary

A Complaint for Violation of Federal False Claims Act filed in camera and under seal on August 4, 2021 as Document 1 in United States ex rel. Liberty Law Office, Inc. v. The Bloom Firm, Lisa Bloom and Braden Pollock, No. 2:21-cv-06279-MEMF-PD, in the U.S. District Court for the Central District of California. The relator, a law firm that had a joint venture with The Bloom Firm, alleges that the firm received a PPP loan of $658,245 in May of 2020 representing that it was retaining 240 jobs, and a second PPP loan of $441,172 representing 15 jobs, and that these representations were false. It also alleges that The Bloom Firm was not registered with the State Bar of California as a law corporation before March 1, 2021 and falsely certified compliance with law. The complaint seeks damages and civil penalties under 31 U.S.C. §§ 3729 et seq.

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“Complaint — Liberty Law Office v. The Bloom Firm (C.D. Cal.).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-2-21-cv-06279-dkt-1-c-d-cal-0eea1c5255/, SHA-256 9c17849cd501979b7872c01db06a4409a2d37c88d0114add5ffb8d62389a23ed.

Full text

. ~~ ~~~~ Case 2:21-cv-06279-MEMF-PD Document 1 Filed 08/04/21 Page 1 of 15 Page ID #:1

KINSELLA WEITZMAN ISER KUMP HOLLEY LLP
_.__1 SHAWN HOLLEY(SBN 136811
Q 2 sholley@kwikhlaw.com
PAID
3 KATE MANGELS(SBN 301811) `':
kmangels@kwikhlaw.co
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I...L. 5 Santa Monica, California 90401 ~,~,~ US QiShtCt COuA ~
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OF FEDERAL FALSE CLAIMS
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19 JURY TRIAL DEMANDED
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Complaint for Violation of Federal False Claims Act
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1 Plaintiff-Relator Liberty Law Office, Inc., though its attorneys, on behalf of
2 ~ ~ the United States of America (the "Government" or the "Federal Government"), for
3 ~ ~ its Complaint against defendants The Bloom Firm, Lisa Bloom and Braden Pollock
4 ~ ~("Defendants") alleges based on personal knowledge, relevant documents, and
5 ~ ~ information and belief, as follows:
6 I II. INTRODUCTION
7 1. This is an action to recover damages and civil penalties on behalf of the
8 United States of America arising from false and/or fraudulent records, statements
9 and claims made and caused to be made by Defendant and/or their agents and
aa 10 employees, in violation of the federal False Claims Act, 31 U.S.C. §§ 3729 et seq.
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W m ~ ~ 1 / information.as to average monthly payroll expenses and the number of employees.
18 This action seeks to recover the over one million dollars in PPP loans fraudulently
19 obtained by Defendants.
20 4. As described in more detail below, The Bloom Firm, a law firm touting
21 itself as a victim's rights law firm, and at least two of its officers and/or employees
22 made false and fraudulent statements to the federal government through its two
23 applications for PPP loans. In May of 2020, The Bloom Firm received a PPP loan of
24 $658,245, based on its representation to the federal government and to its lender that
25, it was retaining 240 jobs. Again in February of2021, The Bloom Firm received a
26 PPP loan of$441,172, representing at that time that it was retaining 15 jobs. Based
27 on its knowledge of The Bloom Firm as members of a joint venture agreement,
28 Relator is aware that these representations were false when made.

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1 5. In addition to false statements as to the number ofjobs retained, The
2 Bloom Firm misused the PPP funds it received and falsely certified, by and through
its authorized representative, on the PPP application that it was in compliance will
4 ~ ~ federal, state and local laws.
5 6. The FCA prohibits, inter alias (1)knowingly presenting, or causing to
6 be presented, a false or fraudulent claim for payment or approval; and (2)knowingly
7 ~ making or using, or causing to be made or used, a false or fraudulent record or
8 statement material to a false or fraudulent claim. 31 U.S.C. §§3279(a)(1)(A),(B).
9 Any person who violates the FCA is liable for a civil penalty of up to $11,000 for
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18 60 days (without service on the defendant during that time) to allow the Government
19 time to conduct its own investigation and to determine whether to join the suit.
20 9. The Small Business Administration's Paycheck Protection Program
21 was part of the first COVID-19 relief measure, known as the CARES Act. The
22 CARES Act was designed to provide emergency financial assistance to those
23 suffering the economic effects caused by the COVID-19 pandemic. The program
24 allowed qualifying businesses to receive forgivable or low-interest loans to meet
25 payroll costs and was intended to reduce job losses during an economic emergency.
26 In March 2020, the CARES Act authorized up to $349 billion in forgivable loans
27 available to small businesses. In Apri12020, Congress authorized more than $300
2g billion for additional PPP funding. In December 2020, another $284 billion was

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1 II authorized.
2 10. In order to qualify, a small business was required to submit a PPP loan
3 application, which required the business to make certain affirmative certifications in
4 order to be eligible to obtain the loan. The business is required to supply
5 information as to (a)average monthly payroll expenses; and (b)number of
6 employees
7 1 1. Unfortunately, despite the clear intention of the CARES,it has become
8 apparent that numerous individuals applied and qualified for PPP funds on
9 fraudulent grounds, thereby taking advantage of the COVID-19 economic crisis for
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18 13. Plaintiff-Relator Liberty Law Office, Inc. is a California law
19 corporation duly registered with the State Bar of California and entitled to practice
20 law in the state. It is the law firm of Micha Star Liberty, a licensed California
21 attorney.
22 14. Defendant The Bloom Firm is a California professional corporation
23 ~ incorporated and doing business in California. The Bloom Firm's articles of
24 incorporation were filed with the California Secretary of State on January 8, 2010.
25 Prior to March 1, 2021, The Bloom Firm was not registered with the State Bar of
26 California as a law corporation.
27 15. Defendant Lisa Bloom is an individual and at all relevant times was a
28 resident of Los Angeles County, California. Lisa Bloom is a licensed California

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1 attorney and is CEO of The Bloom Firm.
2 16. Defendant Braden Pollock is an individual and at all relevant times was
3 I ~ a resident ofLos Angeles County, California. He is described on The Bloom Firm's
4 website as the firm's business manager.
5 III. JURISDICTION AND VENUE
6 17. This Court has jurisdiction over the subject matter of this action
7 pursuant to 28 U.S.C. § 1331 (Federal Question) and 31 U.S.0 §3732(a)(False
8 Claims Act), the latter of which specifically confers jurisdiction on the Court for
9 action brought pursuant to 31 U.S.C. §§ 3279 and 3730.
aa 10 18. To Relator's knowledge, there has been no statutorily relevant public
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w ~~ ~ 1 / A. Background on Bloom Firm And Previous Wrongful Activity
~ 18 20. The Bloom Firm is a law firm with its main office located in Calabasas,
19 California, largely representing victims of abuse. Relator is also a law firm with
20 offices in California representing victims of abuse.
21 21. In August 2019, The Bloom Firm and Relator entered into a written
22 Joint Venture Agreement because they had long done the same kind of legal work.
23 The Agreement provided that in exchange for The Bloom Firm paying for costs,
24 fees, and expenses associated with running the Joint Venture and litigating cases,
25 The Bloom Firm would be entitled to a percentage of attorneys' fees received on the
26 Joint Venture Cases. Through this Joint Venture, Relator worked closely with The
27 Bloom Finn and gained unique insight into The Bloom Firm's structure. Relator
28 was well-acquainted with and worked closely with all of The Bloom Firm's

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1 employees. The Joint Venture existed from August 2019 through March 2020, when
2 ~ ~ it was dissolved by The Bloom Firm for financial reasons. Relator remains in
3 ~ contact with several employees and former employees of The Bloom Firm.
4 22. Since the Joint Venture was dissolved, The Bloom Firm and Relator
5 entered into confidential arbitration proceedings to resolve disputes as to the amount
6 of fees owed under the Joint Venture Agreement (the "Arbitration"). The Arbitration
7 was held from May 3, 2021 to May 14, 2021.
8 23. While conducting discovery related to that arbitration, Relator
9 discovered that The Bloom Firm was not registered as a law corporation with the
aa 10 California State Bar. On February 10, 2021, Relator filed suit in California State
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19 During this entire time, The Bloom Firm was rendering legal services or otherwise
20 engaged in the practice of law in California.
21 26. In order to render professional legal services in California, a
22 professional corporation must have a currently effective certificate of registration
23 ~ issued by the State Bar of California. Section 13404 of the California Corporations
24 Code, part of California's Professional Corporation Act, unequivocally provides:
25 "[NJo professional corporation shall render professional services in this state
26 without a currently effective certificate of registration issued by the governmental
27 agency regulating the profession in which such corporation is or proposes to be
28 engaged, pursuant to the applicable provisions of the Business and Professions

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1 ~ ~ Code"(emphasis added).
2 27. Section 6160 of the California Business and Professions Code provides
3 that the "governmental agency" regulating the profession oflaw is the State Bar of
4 California. It further provides: "A law corporation is a corporation which is
5 registered with the State Bar of California and has a currently effective certificate of
6 registration from the State Bar[.]" Indeed, only "such law corporation is entitled to
7 practice law" and only "[s]ubject to all applicable statutes, rules and regulations."
8 Furthermore, Rule 3.150 of the Rules of the State Bar explicitly provides: "To
9 practice law in California, a corporation must be certified by the California
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~ 18 B. The CARES Act and PPP
19 29. The CARES Act is a federal law enacted in or around March 2020 and
20 designed to provide emergency financial assistance to the millions of Americans
21 who are suffering the economic effects caused by the COVID-19 pandemic.
22 30. One source of relief was the authorization offorgivable loans to small
23 businesses for job retention and certain other expenses. The forgivable loans were
24 designed to save jobs and keep businesses afloat during the COVID-19 pandemic. In
25 March 2020, the CARES Act authorized up to $349 billion in forgivable loans. In or
26 around Apri12020, Congress authorized over $300 billion in additional PPP
27 funding. In or around December 2020, an additional $284 billion was authorized.
28 31. In order to obtain a PPP loan, a qualifying business must submit a PPP
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1 ~~ loan application, which is signed by an authorized representative ofthe business.
2 The PPP loan application requires the business (through its authorized
3 ~ representative) to acknowledge the program rules and make certain affirmative
4 ~ I certifications in order to be eligible to obtain the PPP loan. The application requires
5 the borrower to certify that: (1)it was in operation on February 15, 2020 and had
6 employees to whom it paid salaries and payroll taxes;(2)it needs the loan "to
7 support ongoing operations" due to uncertainty of current economic conditions;(3)
8 it will use the funds to retain workers and maintain payroll, or make mortgage
9 interest, lease, and utility payments, and that not more than 25% of the forgiven
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19 representative) must state, among other things, its:(a)average monthly payroll
20 expenses; and (b)number of employees.. These figures are used to calculate the
21 amount of money the small business is eligible to receive under the PPP. In addition,
22 businesses applying for a PPP loan must provide documentation showing their
23 payroll expenses.
24 33. A PPP loan application must be processed by a participating financial
25 institution (the lender). If a PPP loan application is approved, the participating
26 financial institution funds the PPP loan using its own monies, which are 100%
27 guaranteed by the United States Small Business Association("SBA"). Data from the
28 application, including information about the borrower, the total amount of the loan,

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1 and the listed number of employees, is transmitted by the lender to the SBA in the
2 ~ ~ course of processing the loan.
3 34. PPP loan proceeds must be used by the business on certain permissible
4 expenses—payroll costs, interest on mortgages, rent, and utilities. The PPP allows
5 ~ the interest and principal on the PPP loan to be entirely forgiven if the business
6 spends the loan proceeds on these expense items within a designated period of time
7 and uses a certain percentage of the PPP loan proceeds on payroll expenses.
8 C. False Claims by the Bloom Firm
9 35. Through discovery, hearing and proceedings in the Arbitration and
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18 reported that $512,153.was allocated to payroll and $146,092 was allocated to
19 Health Care costs. Pursuant to the Federal website on PPP loans, The Bloom Firm's
20 2019 payroll expenses are estimated to be at least $3.16 million.
21 38. Again on February 6, 2021, The Bloom Firm received a PPP loan of
22 $441,172, representing at that time that it was retaining 15 jobs. This loan is
23 identified as Loan #4757198404. The Bloom Firm represented this entire amount
24 would be spent on payroll.
25 39. In submitting these applications, The Bloom Firm, or its authorized
26 representative, certified that "[t]he Applicant is not engaged in any activity that is
27 illegal under federal, state or local law." The Bloom Firm further certified in good
28 faith that "[t]he funds will be used to retain workers and maintain payroll; or make

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1 payments for mortgage interest, rent, utilities, covered operations expenditures,
2 covered property damage costs, covered supplier costs, and covered worker
3 ~ protection expenditures as specified under the Paycheck Protection Program Rules; I
4 understand that if the funds are knowingly used for unauthorized purposes, the
5 federal government may hold me legally liable, such as for charges of fraud."
6 Additionally, The Bloom Firm agreed that it "further certified] that the information
7 provided in this application and the information provided in all supporting
8 documents and forms is true and accurate in all material respects."1
9 40. The certification that the Applicant was not engaged in any activity that
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~ 18 failure to register with the California state bar as of June of 2020. Yet, neither he nor
19 The Bloom Firm took action to register until after Relator brought the Lawsuit.
20 Therefore, the statement on the February 2021 PPP application that Applicant was
21 not engaged in any illegal activity was false when made, and was made with the
22 purpose to fraudulently obtain government funds.
23 41. More troublingly, The Bloom Firth grossly inflated its number of
24 employees and/or average monthly payroll in order to fraudulently increase the size
25
26
'Relator does not have access to The Bloom Firm's applications, but bases
27 these allegations on the application that all applicants to the Paycheck Protection
28 Program were required to complete and certify.

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1 ofthe loan received from the Government.
2 42. The Bloom Firm represented in their May of 2020 application that they
3 had 240 employees. However, when Relator was in a Joint Venture with The Bloom
4 Firm, which ended in March of 2020,just two months prior, Relator was only aware
of a maximum oftwenty-five employees, nowhere near the claimed 240 employees.
~ This is confirmed by Ms. Blooms deposition in the Lawsuit, where she stated that at
the time ofthe Joint Venture, there were as many as seventeen lawyers. Ms. Bloom
testified that as of February 11, 2021, there were ten lawyers working at the firm.
9 Relator is informed and believes that this false representation was made to increase
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18 Pollock testified in his Lawsuit deposition that he owns numerous businesses,
19 including a business called Legal Brand Marketing. Legal Brand Marketing received
20 a $220,642 PPP loan on May 1, 2020 claiming 100 jobs retained. However, during
21 the weeks leading up to the March 2020 dissolution ofthe Joint Venture, Mr.
22 Pollack informed Relator that he was terminating numerous employees because of
23 the financial concerns related to the pandemic. Mr. Pollock testified in his Lawsuit
24 deposition that at least one ofthe employees of The Bloom Firm also worked at
25 these four other.companies but is only employed by The Bloom firm. This Lawsuit
26 testimony indicates that Mr. Pollock may have double counted certain employees for
27 numerous PPP loans.
28 44. Relator is informed and believes that Mr. Pollock temporarily hired
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1 family members and tenants of his residential properties in order to artificially
2 ~ inflate the number of employees at The Bloom Firm. These individuals were never
3 ~ employed by The Bloom Firm. Instead, they entered into an agreement whereby the
4 PPP funds received by The Bloom Firm would be partially paid to these false
5 ~ employees, and some may have been provided health insurance coverage as well.
6 45. Relator is also informed and believes, based on conversations with a
7 former employee, that PPP funds were misused for severance payments. Relator is
8 informed and believes that prior to receiving the first PPP loan, the Bloom Firm
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G fired approximately half of their staff. Rather than hire back terminated staff(as is
aa 10 the purpose of the PPP loan money) The Bloom Firm then offered the fired staff
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~ 18 31 U.S.C. &~ 3729(a)(1)(A) and (a)(1)(B)
19 47. Relator alleges and incorporates by reference the allegations continued
20I in paragraphs 1 to 46 above as though fully set forth herein.
21 1 48. This is a claim for treble damages and penalties under the False Claims
22 Act 31 U.S.C. §§ 3729, et sec ., as amended.
23 49. By virtue ofthe acts described above, Defendants have knowingly
24 presented or caused to be presented, false or fraudulent claims to the United States
25 Government for payment or approval.
26 50. By virtue of the acts described above, Defendants knowingly made or
27 used, or caused to be made or used, false or fraudulent records or statements
28 material to false or fraudulent claims for payment by the Government.

30719-00001/7484171 1 2,
Complaint for Violation of Federal False Claims Act
Case 2:21-cv-06279-MEMF-PD Document 1 Filed 08/04/21 Page 13 of 15 Page ID #:13

1 51. On May 1, 2020, Defendant The Bloom Firm was approved for a PPP
2 loan of $658,245. On February 6, 2021, Defendant The Bloom Firm was approved
3 for a PPP loan of $441,172. Each of these loans were obtained through false
4 ~ statements to the Government as to Defendant The Bloom Firm's number of
5 employees and average monthly payroll expenses.
6 52. The Government, unaware of the falsity of the records, statements and
7 claims made or caused to be made by Defendants, paid the claims that would not be
8 paid but for Defendants' illegal conduct.
9 53. By reason of Defendants' acts, the United States has been damaged,
aa 10 and continues to be damaged, in a substantial amount to be determined at trial in
a
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iJ PRAYER
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j 16 1. That Defendant cease and desist from violating 31 U.S.C. § 3729 et
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a ~ ~~ 17 seq.;
~ 18 2. That this Court enter judgment against Defendant in an amount equal to
19 three times the amount of damages the United States has sustained because of
20 Defendant's actions, plus a civil penalty of not less than $5,500 and not more than
21 $11,000 for each violation of 31 U.S.C. § 3729;
22 3. That Relator be awarded the maximum amount allowed pursuant to §
23 3730(d) ofthe False Claims Act;
24 4. That Relator be awarded all costs of this action, including attorneys'
25 fees and expenses; and
26 5. That Relator recover such other relief as the Court deems just and
27 proper.
28

30719-00001/748417.1 13
Complaint for Violation of Federal False Claims Act
Case 2:21-cv-06279-MEMF-PD Document 1 Filed 08/04/21 Page 14 of 15 Page ID #:14

1 DEMAND FOR A JURY TRIAL
2 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Relator hereby
3 demands a trial by jury.
4
5 DATED: August 3,2021 KINSELLA WEITZMAN ISER KUMP
6 HOLLEY LLP

s By:
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9 Shawn Holley
a 10 Attorneys for Plaintiff-Relator Liberty Law
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30719-00001/748417.1 14
Complaint for Violation of Federal False Claims Act
Case 2:21-cv-06279-MEMF-PD Document 1 Filed 08/04/21 Page 15 of 15 Page ID #:15

PROOF OF SERVICE

2 United States of America,ex rel. Liberty Law Office, Inc. v. The Bloom Firm; Lisa Bloom;
and Braden Pollock
3
STATE OF CALIFORNIA,COUNTY OF LOS ANGELES
4
At the time of service, I was over 18 years of age and not a party to this action. I am
5 employed in the County of Los Angeles, State of California. My business address is 808 Wilshire
Boulevard, 3rd Floor, Santa Monica, CA 90401.
6
On August 4, 2021, I served true copies of the following documents) described as
7 COMPLAINT FOR VIOLATION OF FEDERAL FALSE CLAIMS ACT on the

8 interested parties in this action as follows:

9 Civil Process Clerk U.S. Department of Justice
10 United States Attorney's Office 950 Pennsylvania Avenue, NW
Federal Building Washington, D.C. 20530-0001
o o~~ 11 300 N. Los Angeles Street, Suite 7516
x ~~~ 12 Los Angeles, California 90012
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BY FEDEX: I enclosed said documents)in an envelope or package provided by FedEx
w w J '~ 14 and addressed to the persons at the addresses listed in the Service List. I placed the envelope or
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package for collection and overnight delivery at an office or a regularly utilized drop box of FedEx
15 or delivered such documents)to a courier or driver authorized by FedEx to receive documents.
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foregoing is true and correct.
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20 entry . C m

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