First-ever False Claims Act settlement received from Paycheck Protection Program lender
Summary
A U.S. Attorney's Office for the Southern District of Texas press release dated Tuesday, September 13, 2022 announcing that Prosperity Bank agreed to pay $18,673.50 to resolve allegations that it improperly processed a PPP loan for an ineligible customer. It says that in May 2020 the bank approved a $213,400 PPP loan for Woodlands Pain Institute PLLC, whose sole owner, Dr. Emad Bishai, was facing criminal charges in Montgomery County and answered No to the application's question about pending charges, and that bank employees knew of the charges. The release says the bank received a 5% processing fee of $10,670 to which it was not entitled, and that the settlement is believed to be the nation's first with a PPP lender under the False Claims Act. It says the claims are allegations only and there has been no determination of liability.
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“First-ever False Claims Act settlement received from Paycheck Protection Program lender.”
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Press Release First-ever False Claims Act settlement received from Paycheck Protection Program lender Tuesday, September 13, 2022 For Immediate Release U.S. Attorney's Office, Southern District of Texas HOUSTON – Prosperity Bank has agreed to pay $18,673.50 to resolve allegations it improperly processed a Paycheck Protection Program (PPP) loan on behalf of an ineligible customer, announced U.S. Attorney Jennifer B. Lowery. Prosperity Bank is a regional bank with branches throughout Texas and Oklahoma. It is a subsidiary of Prosperity Bancshares Inc. The Coronavirus Aid, Relief and Economic Security (CARES) Act authorized the issuance of PPP loans in order to provide relief to small businesses experiencing economic hardship during the pandemic. Those loans would be forgiven if certain conditions were met. Lenders like Prosperity Bank who originated PPP loans were entitled to receive a fixed fee from the Small Business Administration (SBA).That fee ranged from 1% to 5% depending on the size of the loan. In May 2020, Prosperity Bank approved and processed a $213,400 PPP loan for Woodlands Pain Institute PLLC. The PPP application included a question asking whether the applicant (or any individual owning more than 20% equity) is subject to an indictment, criminal information, arraignment or other means by which formal criminal charges are brought in any jurisdiction. Dr. Emad Bishai was the sole owner of Woodlands Pain Institute PLLC. However, at the time of the application, Bishai was facing criminal charges in Montgomery County arising from his practice of prescribing opioid medicines. When filling out the application, he checked the box marked “No” and initialed his name beneath the question. At that time, Prosperity Bank employees knew Bishai was facing charges and was therefore ineligible to apply for the PPP loan. However, the bank processed the application anyway and falsely granted the money to Bishai. As a result, Prosperity Bank received a 5% processing fee of $10,670 to which it was not entitled. Bishai entered into a $523,331 settlement in November 2021 to resolve his liability arising from fraudulent medical billing and his submission of the PPP loan application. He also repaid the PPP loan in full in 2022. The settlement announced today is believed to be the nation’s first settlement with a PPP lender pursuant to the False Claims Act. The settlement amount also reflects Prosperity Bank’s efforts to cooperate with the government’s investigation and provide relevant facts along with its implementation of additional compliance measures. The SBA’s Office of Litigation provided assistance. Assistant U.S. Attorney Brad Gray handled the matter. The claims resolved by the settlement are allegations only and there has been no determination of liability. Updated September 13, 2022 Topic False Claims Act Component USAO - Texas, Southern Related Content Press Release Stainless-steel components supplier pays over $1.1 million to resolve False Claims Act allegations Stafford-based Matrix Metals LLC has agreed to pay $1,175,529.20 to resolve allegations of fraudulently obtaining a Paycheck Protection Program loan for which it was ineligible July 23, 2026 Press Release South Texas doctors agree to pay nearly $5 million to settle False Claims Act liability Six South Texas doctors and their respective practices have agreed to pay $4,855,844 to resolve allegations they submitted false claims to Medicare, Medicaid and TRICARE that were not rendered or... February 25, 2026 Press Release International ocean bottom seismic operations company pays over $4 million to settle False Claims Act allegations A Houston-based company that provides ocean bottom node seismic acquisition services to energy companies has paid to resolve allegations of fraudulently securing Paycheck Protection Program loans December 18, 2025
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