Bracker & Marcus Scores Second PPP Settlement, This Time Against Marijuana Marketing Company Docklight Brands
Since early 2022, our firm has thirteen intervened False Claims Act settlements, resulting in recoveries of more than $37 million for the federal and state governments and American taxpayers.
To be honest, writing these FCA settlement announcements every few months is starting to Drive Me Crazy. I’m A Slave 4 these blog posts. So I thought I’d try something a little different, and hopefully more interesting to the reader, featuring the music of Britney Spears.
Baby One More Time
On the heels of our $9 million Paycheck Protection Program settlement, we are pleased to announce another PPP settlement of a False Claims Act case brought by our client Sidesolve LLC. Defendant Docklight Brands, Inc. has agreed to settle the FCA allegations for $989,438.
Our client will receive a 15% relator’s share for investigating and bringing this matter to the Government’s attention.
Criminal
In this case, filed in the Western District of Washington, Sidesolve alleged that the Seattle-based company Docklight Brands, Inc. was not eligible for PPP funds because it was a “Marijuana-Related Business.”
The PPP eligibility requirements, and the application itself, required loan recipients to certify that “The Applicant is not engaged in any activity that is illegal under federal, state or local law.” This, according to guidance from the SBA, included businesses that profited from the sale of marijuana, even in states where the sale of recreational marijuana was legal since it was, and still is, illegal under federal law.
This prohibition applied whether the entity was a “Direct Marijuana Business,” meaning that it directly profited from the distribution or sale of marijuana, but also if it was an “Indirect Marijuana Business,” meaning that it profited from sales to Direct Marijuana Businesses by selling products or services that were considered to enhance or promote the illegal activity of selling marijuana. For example, companies that sell smoking devices or grow lights would be considered an Indirect Marijuana Business.
Toxic
Sidesolve alleged that Docklight was a holding company for the brand “Marley Natural,” the official Bob Marley cannabis and smoking accessories brand. It was essentially an intellectual property holding company that licensed this brand to cannabis producers and distributors.
Sidesolve alleged that Docklight was at least an Indirect Marijuana Business since its revenues were derived from this marijuana brand. If true, then Docklight would not have been eligible for the almost $500,000 in PPP loan forgiveness it received. The Government agreed—Docklight did not—and settled the case.
The False Claims Act settlement is for two times the amount of loan forgiveness. Docklight denies having engaged in illegal activities, that it is a Marijuana-Related Business, as defined by the SBA, or that it was ineligible to apply for or receive PPP funds.
Stronger
Whistleblowers, including data miners like Sidesolve, are proving invaluable regarding PPP fraud. The Government can use all the help it can get in identifying and investigating PPP fraudsters.
As we reported back in July, the Government estimated having lost more than $200 billion to PPP and EIDL fraud. This was after the AP estimated $280 billion in fraud, which came after the DOJ Inspector and another study estimated closer to $100 billion. This wide variance in estimate shows so much fraud that it is impossible to count!
The report also indicated that the SBA had received nearly 100,000 “actionable leads” and over 250,000 hotline complaints (as of July). It needs as many tips as possible to be vetted and supported by knowledgeable relators and experienced False Claims Act attorneys so that the DOJ and SBA aren’t spinning their wheels on fruitless investigations.
Lucky
We are fortunate to have formed a relationship with our wonderful client Sidesolve, who put in a lot of work to identify ineligible PPP loan recipients.
Although some people might consider us lucky to have two successful PPP cases now, this was not an easy process for Sidesolve. It took a lot of time and effort to find candidates to report to the Government for potential PPP fraud and weed out the rest (no pun intended) after extensive investigations. We appreciate their work in these cases and look forward to working with them on more successful FCA matters.
Sometimes
Matt Waldrop and his team at the U.S. Attorney’s Office for the Western District of Washington achieved an excellent outcome in this case.
To paraphrase Britney, they believed in everything that we said because our complaint sounded so good. They didn’t run or hide from the allegations, they didn’t move slowly—resolving just over a year after we filed—and they treated us right with a 15% relator’s share.
We congratulate and thank AUSA Waldrop for his efforts, and we look forward to working with this office again to prosecute more PPP fraud and other False Claims Act cases.
It’s Bracker & Marcus, B***h
We aren’t done yet!
If you know of a company or individual that committed PPP fraud, please call to speak to one of our attorneys. The Government is eager to investigate PPP cases and recoup money from entities that were not entitled to it, and we need more whistleblowers to Scream & Shout what they know to bring these fraudsters to justice.