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False Claims Act Case Tracker for Paycheck Protection Program Fraud

Last Updated September 26, 2022

by Kirk Schuler and Alex Hontos

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In the Spring of 2020, the Small Business Association (“SBA”) began administering the Paycheck Protection Program (the “PPP” or the “Program”) to provide SBA-backed loans to help eligible businesses maintain their workforces during the COVID-19 pandemic.  The Program received three rounds of funding by Congress over the course of the pandemic and allowed eligible borrowers to receive completely forgivable loans (up to $10 million in “first draw” loans and up to $2.5 million in “second draw” loans).  When the Program ended on May 31, 2021, the SBA had approved nearly 12 million loans totaling over $800 billion through over 5,000 lenders.

The funding available through the Program was only an option for certain borrowers and the loans are only forgivable under certain circumstances.  To demonstrate they met the eligibility requirements, borrowers were required to provide documentation and signed certifications to the government supporting their applications for the loans.  Borrowers are required to do the same on their applications for loan forgiveness.  Lenders—acting as intermediaries between the borrower and the SBA—also communicated certifications to the government in order to act as a lender in the Program and thus incurred certain obligations.

Not surprisingly, the borrower and lender communications with the government for the purpose of obtaining government money necessarily created False Claims Act (“FCA”) risk.  Also not surprisingly, since the beginning of the COVID-19 pandemic the government has been actively investigating and prosecuting PPP fraud.  The first year of the pandemic largely saw the government targeting the low-hanging fruit through criminal cases.  DOJ reports over 100 defendants have been charged with crimes related to PPP fraud as of the summer of 2021, with a large amount of these charged in 2020.  See Fraud Section Enforcement Related to the CARES Act, U.S. Dep’t of Justice, available at https://www.justice.gov/criminal-fraud/cares-act-fraud.  2021, however, saw the government’s first use of a familiar tool—civil enforcement actions under the FCA—to target PPP fraud.  With the Program over, the government now has the time to conduct more thorough investigations of more sophisticated PPP fraud (rather than reacting during the pandemic to the obvious cases of fraud with criminal indictments to deter such fraud in real time).  In other words, FCA actions brought by the government are in the offing.  So, too, are relator-initiated FCA actions, because it can take months and even years before such cases come to light under the FCA’s whistleblower provisions (which require the sealing of the whistleblowers’ complaints while the government investigates).  In order to catalog and summarize the FCA cases involving PPP fraud as they come to light, and to stay abreast of the latest news in this area for our borrower and lender clients facing FCA risk, we are pleased to provide this resource to track these important cases.  We hope you find it useful.

For more resources (including Updates and Webinar playbacks) relating to stimulus programs, please visit our Stimulus Acts page. This includes information on the CARES Act, SBA, Main Street Credit, state programs and other governmental stimulus topics.

Date Case Became Public Date Complaint Filed [and/or Settlement / Judgment]  District  Case Name / Defendant(s)  PPP Loan Amount 1  Related Documents 
 
01/12/2021		 [01/12/2021]  Eastern District of California  Slidebelts, Inc. and CEO  $350,000 

FCA Now Blog
Post

DOJ Press
Release

Settlement
Agreement 
Summary:  In a pre-suit settlement agreement, and without admitting liability but stipulating to certain facts, borrower Slidebelts, Inc. and its CEO admitted it submitted false statements regarding the company’s eligibility for its PPP loan (falsely representing that it was not presently involved in bankruptcy proceedings), and that such statements caused the SBA to guarantee the loan and pay the lender $17,500 in loan processing fees.  The company returned the loan prior to settling the allegations, and the company and its CEO agreed to pay $100,000 as part of the settlement.  Notably, according to the settlement agreement the settlement amount “represents the amount the United States is willing to accept in compromise of its civil claims arising from the [alleged violations] due solely to the [company and its CEO’s] financial condition.”
3/10/2021 3/10/2021 Middle District of Florida Rucker v. Great Dane Petroleum Contractors, Inc. $2,850,500.00

Complaint

FCA Now Blog Post

Summary:  On March 10, 2021, Amber Rucker, an employee of Great Dane Petroleum Contractors, Inc. (“Great Dane”), filed a complaint against Great Dane in the Middle District of Florida. Rucker alleged Great Dane violated the anti-retaliation provision of the False Claims Act (31 U.S.C. § 3730(h)) in addition to Florida’s whistleblower protection statutes after Great Dane fired her in retaliation for reporting Great Dane’s alleged violations of PPP loan program. Rucker’s Complaint alleged that while she worked for Great Dane as the CFO’s personal assistant and payroll/human resources manager, she observed Great Dane misuse the $2,850,500 in PPP money it received violation of the program’s requirements. Specifically, Rucker pleaded that Great Dane “knowingly misus[e]d those monies for purposes unintended by the federal program” while also keeping a fictitious paper trail to feign compliance with PPP’s requirements. Rucker further alleged that she was placed on administrative leave and ultimately terminated after repeatedly reporting these illegal actions to Great Dane’s CFO and president. 
04/21/2021 [04/21/2021]  Eastern District of California  Walia Professional Medical Corporation and Owner 

$283,000 (first draw)

$430,000 (second, first draw) 

DOJ Press
Release

Settlement
Agreement
Summary:  In a pre-suit settlement agreement, and without admitting liability, borrower Sandeep S. Walia, M.D. agreed to pay back all of its second first draw PPP loan with interest ($434,377) and an additional $70,000 to settle allegations that the borrower submitted a false claim by applying for a second first draw loan after it had already received a first draw loan of $283,300 (and by representing, on its second application, that it had not received a prior PPP loan).  Notably, the borrower had not sought forgiveness of either loan, but notwithstanding the government alleged the borrower’s false statements caused a false claim to be made to the Small Business Administration as a result of the $12,900 in processing fees the government paid to the lender for the second loan.
06/02/2021  06/02/2021   Eastern District of Virginia  KC Investments Group, Inc. and Owner

 $208,333 (first draw)

$208,333 (second, first draw)

  DOJ Press Release
Summary:  KC Inc. and Sunu entered into a settlement agreement with the government to settle allegations that KC Investments, Inc. and its sole owner, Sunu P. KC, obtained multiple first draw PPP loans, even though the Program only allowed borrowers to obtain one first draw loan.  More specifically, the government alleged Sunu P. KC applied for and received loans in the amount of $208,333 each for KC Inc. and a defunct company called KC Investments Group, LLC, and that Sunu deposited the proceeds from both loans into KC Inc.’s bank account even though Sunu certified that KC Inc. would not receive multiple PPP loans.  Under the settlement agreement, KC Inc. and Sunu agreed to pay $230,414.65 representing the loan processing fees paid to the bank by the SBA and damages under the FCA.  They also agreed to repay the second PPP loan within 30 days of the settlement.
08/26/2021

07/13/2020

[08/25/2021] 

 Southern District of Florida U.S. ex rel. Victoria Hablitzel v. All In Jets, LLC and Seth A. Bernstein  $1,173,382 

DOJ Press
Release

Settlement
Agreement 
Summary:  Relator Victoria Hablitzel (“Relator”), a former employee of defendant All In Jets, LLC dba Jet Ready (“Jet Ready”), filed a sealed qui tam complaint on July 13, 2020 alleging that Jet Ready and its principal, defendant Seth A. Bernstein (“Bernstein”), misappropriated and diverted $98,929 of Jet Ready’s $1,173,382 PPP loan to pay for Bernstein’s person, non-company related expenses.  As part of the settlement agreement between the United States, Relator, and Bernstein (Jet Ready was not a party to the agreement, presumably because Jet Ready filed for bankruptcy shortly after receiving the PPP loan), Bernstein agreed to personally pay the United States $287,055.  Bernstein also agreed that should he fail to pay the settlement amount, a consent judgment may be entered against him for $458,223 plus interest.  From the settlement amount, the United States agreed to pay Relator $57,411, and Bernstein agreed to pay Relator’s counsel nearly $80,000 in attorneys’ fees and costs.
09/22/2021 09/22/2021  Eastern District of New York Eric Bieber v. Cayuga Capital Management, LLC, Sea Wolf Services, LLC, Jacob Sacks, and James Wiseman

$411,217 (first draw)

$575,704 (second draw)

FCA Now Blog
Post

Complaint
Summary:  Plaintiff filed a retaliation claim against defendants solely under the anti-retaliation provision of the FCA (31 U.S.C. § 3730(h)), alleging defendants terminated his employment for complaining to management that Sea Wolf Services, LLC unlawfully spent its PPP loan proceeds to pay defendants’ friends, family, and business associates. 
10/28/2021 [9/29/2021] Southern District of Florida Sextant Marine Consulting, LLC

$150,000.00
(first draw)

$169,811.00
(second, first draw)

DOJ Press Release

Settlement Agreement

Summary:  Sextant Marine Consulting, LLC (“Sextant”) executed a settlement agreement with the government and lawyer relator Bryan Quesenberry to settle allegations that Sextant obtained multiple first draw PPP loans in 2020 in violation of the Program rules.  Specifically, the agreement states that Sextant applied for two separate PPP loans through different banks in April 2020—the first for $150,000.00 and the second for $168,811.00—but certified in connection with the first loan application that it sought only one PPP loan as required by the program.  The relator filed his qui tam action against Sextant after learning of its false certification on the loan application. Several months later, upon receiving service of a civil investigative demand from the government, Sextant repaid the lender of the second loan in full. As part of the agreement, Sextant further agreed to pay the government $30,000 representing civil penalties and damages under the FCA, and of which $8.490.55 amounted to restitution for the processing fees the SBA paid to the bank to process the second loan.  The parties also agreed that the relator would receive 15% of this amount, or $4,500, as his portion of the recovery.  Notably, the press release states this “matter remains under seal as to allegations against entities other than Sextant,” and thus it is believed the government is still investigating additional claims that the relator has alleged against other defendants.
 01/31/2022  06/01/2022  Eastern District of Virginia  Stephon Brooks

 $20,832
(First Draw Loan)

$20,833
(Second Draw Loan)

$20,833
(Third First Draw Loan)

$20,000
(Fourth First Draw Loan)

Complaint

Report and Recommendation

Default Judgement Order
 Summary:  On June 1, 2022, Judge Hilton in Alexandria, Virginia adopted Magistrate Judge Anderson’s Report and Recommendation to enter a default judgment against Stephon Brooks (“Brooks” or “Defendant”), a self-employed real estate agent, following the U.S. government’s (“the government”) allegations that Brooks was liable under the False Claims Act, 31 U.S.C. § 3729 et seq (“FCA”) for impermissibly receiving multiple First Draw loans under the Paycheck Protection Program (“PPP” or “Program”). Under the PPP, an applicant seeking a loan had to certify to seeking only one First Draw loan, and an applicant seeking forgiveness of that loan had to certify to compliance with all applicable PPP rules. As Judge Anderson summarized the government’s contentions in the Complaint, Brooks is alleged to have obtained improperly four First Draw PPP loans. The government alleged Brooks applied for his first First Draw loan on April 2, 2021 for $20,832, his second First Draw loan on April 4, 2021 for $20,833, his third First Draw loan on April 21, 2021 for $20,833, and his fourth First Draw loan on April 26, 2021 for $20,000. All told, according to the government, the Small Business Administration (“SBA”) paid around $10,000 to process these loans. The government also alleged that Brooks obtained these loans from different lenders and used different TIN/EINs and email addresses on his loan applications—details that Judge Anderson determined suggested Brooks knew he was misrepresenting facts to obtain multiple PPP loans. Further, the government alleged that Brooks applied for loan forgiveness for the first First Draw loan on June 3, 2021 and for the fourth First Draw loan on October 3, 2021. According to the government, he certified compliance with applicable PPP rules on each loan forgiveness form, causing the government to forgive these two loans despite his alleged noncompliance. Based on this alleged conduct, and notwithstanding Brooks’ failure to respond to the government’s contentions that Brooks’ conduct violated the FCA, Judge Hilton entered a default judgment against Brooks for nearly $450,000 on the FCA claims. 
 
2/7/2022 		  [12/22/2021]  District of New Jersey Christopher Construction Company, Inc.  $255,507.00

DOJ Press Release

Settlement Agreement

Summary: The U.S. government executed a settlement agreement with Christopher Construction Company, Inc. (“CCC”), Dennis Christopher, and relator Pat L. Christopher to settle allegations that CCC and Dennis Christopher submitted a false claim for monies under the PPP in violation of the program’s certification rules for eligible participants. Specifically, the settlement agreement states that around April 27, 2020, CCC, through its representative Dennis Christopher, falsely certified, when submitting an application for a PPP loan, that no individual owner of at least 20% of the company was then currently indicted or otherwise subject to criminal charges. Upon learning this, relator filed a qui tam action on June 19, 2020 in the United States District Court for the District of New Jersey, contending that relator, who owned more than 20% of CCC, had been indicted for tax fraud, theft, and embezzlement in August of 2019, and that CCC and Dennis Christopher knew this fact while certifying to the contrary on the PPP loan application. According to the U.S. government in the settlement agreement, this false certification caused the lender issuing the loan to submit a false claim to the SBA for $12,775 in processing fees. The settlement agreement represents that CCC and Dennis Christopher returned the amount of the PPP loan to the lender and have not sought loan forgiveness from the SBA. As part of the settlement agreement, CCC and Dennis Christopher have agreed to pay $53,325 in civil penalties and damages under the FCA, of which $12,755 represents restitution to the SBA for payment of the processing fee. Finally, the settlement agreement provides that CCC and Dennis Christopher shall each pay half of the $53,325 settlement amount, which is due no later than 30 days from December 22, 2021, and that CCC and Dennis Christopher will be responsible for relator’s attorney’s fees.  
2/11/2022   [2/3/2022] Eastern District of Virginia Zen Solutions, Inc.

$181,055.00
(first draw)

$192,727.00
(second, first draw)

DOJ Press Release

Settlement Agreement

Summary: The U.S. government reached a settlement agreement with Zen Solutions, Inc. (“Zen”) and lawyer relator Bryan Quesenberry to settle allegations that Zen received multiple first draw PPP loans in 2020 in violation of the Program’s rules. The settlement agreement states that Zen applied for its first PPP loan on April 13, 2020 in an amount of $181,055, and that Zen applied for its second PPP loan on April 28, 2020 in an amount of  $192,727.** PPP Rules required applicants to certify on each loan application that they would apply for only one PPP loan prior to December 31, 2020. Upon learning that Zen applied for two loans prior to December 31, 2020, the relator filed his qui tam action against Zen on September 7, 2020 in the United States District Court for the Eastern District of Virginia. As part of the settlement agreement, Zen agreed to pay the United States $31,226.53 representing civil damages and penalties under the FCA, of which $9,636.35 amounts to restitution for processing fees the SBA paid to the lender to process the second loan. The settlement agreement also provides that Zen is able to seek forgiveness of the first loan but may not seek forgiveness on the second loan, and will instead repay the second loan according to the terms of its promissory note. However, the settlement agreement states Zen must repay within twelve months or else risk defaulting and accruing additional interest. According to the agreement, if Zen defaults, it shall have three business days from the date of receiving a written notice of default, yet, the remaining balance on the $31,226.53 shall become immediately due, accruing 10% interest per year. And finally, if Zen defaults, the settlement agreement provides that Zen must immediately pay the United States treble the amount of any SBA guarantee paid with respect to the second loan.

**N.B.: Whereas the DOJ settlement agreement states the second, April 28, 2020 loan amounted to $192,727, publicly available data on PPP loan recipients show the amount of this second loan was $153,334.

03/25/2022   [03/21/2022] Eastern District of Washington HMP Corporation, Hollie P. Mooers, and Grover C. Mooers  $1,344,700

FCA Now Blog Post

DOJ Press Release

Settlement Agreement

Deferred Prosecution Agreement

Summary: HPM Corporation (“HPMC”), Hollie P. Mooers (“Ms. Mooers”), and Grover C. Mooers (“Mr. Mooers”) (collectively, “Defendants”) entered a settlement agreement** with the U.S. government to settle allegations that Defendants obtained forgiveness of a PPP loan by falsely certifying that the PPP funds were used for a permissible purpose when in fact Defendants failed to use any of the loan proceeds during the covered period, and ultimately donated the proceeds to charities after they obtained full forgiveness. Specifically, Defendants admitted to the following facts as part of the settlement agreement: HPMC successfully applied for and received a $1,344,700 PPP loan in April 2020. In applying for these funds, HPMC, through Mr. Mooers, certified that the proceeds would be used for Program-eligible expenses. The proceeds, however, sat idle and unused in HPMC’s checking account for over a year. On April 6, 2021, HPMC, through Mr. Mooers, applied to have this PPP loan forgiven, and certified the PPP loan had been used for Program-eligible expenses. The SBA forgave the full loan amount (including both principal and interest) on April 13, 2021, and it paid Community First Bank, the lender, a lender fee of $40,341. Notably, after obtaining forgiveness of the loan, on July 1, 2021, the $1,344,700 that HPMC received a year earlier was transferred from HPMC’s business bank account to a personal checking account owned by Mr. and Ms. Mooers, where it was subsequently donated to charities. Under the terms of the settlement agreement, HPMC will pay the U.S. government $2,393,400, which represents $1,344,700 in restitution for the forgiven loan and $1,344,700 as a penalty to the U.S. government. Further, Mr. and Ms. Mooers will pay $250,000 as a penalty to the U.S. government. Mr. Mooers also agreed to step down from his managerial role at HPMC and agreed not to assume any other managerial or advisory role at HPMC for at least three years. Finally, the settlement agreement emphasized that: 1) HPMC was a Department of Energy contractor and that DOE continued to make contract payments to HPMC when it was to be using its PPP loan on eligible expenses, and 2) HPMC was required to cooperate with the United States’ investigation into entities and individuals not covered by the agreement, thereby indicating additional claims or charges may be in the offing.

**N.B. In addition to executing this settlement agreement regarding the U.S. government’s allegations of liability under the False Claims Act, HPMC has also entered into a Deferred Prosecution Agreement with the U.S. government on the government’s count of submitting false or fraudulent claims in violation of 18 U.S.C. § 287.
 03/31/2022  [May 19, 2022] Eastern District of Virginia Latifa Brooks

$20,833

$21,768

 Press Release

Complaint

Joint Stipulation of Dismissal
Summary:  According to a Joint Stipulation of Dismissal, on May 19, 2022, the government executed a settlement agreement with Latifa Brooks to resolve allegations that she violated the FCA by submitting false documents and making false certifications in PPP loan documents. Under PPP rules, sole proprietors and independent contractors could receive PPP loans up to $20,833 by providing the SBA with their Form 1040 Schedule Cs for tax years 2019 or 2020. According to the Complaint filed on March 31, 2022, Brooks applied for two loans, the first as a sole proprietor for $20,833, and the second as an independent contractor for $21,768 (an amount higher than permissible). The government contended Brooks did not submit tax returns for 2019 or 2020 but instead submitted a fraudulent Schedule C for tax year 2020 that caused the government to approve the loans and pay $2,500 in processing fees for each loan. The government alleged that Brooks later sought forgiveness of loans, that she certified the fraudulent Schedule Cs were accurate, and that the SBA forgave the loans based on the false certifications. According to DOJ’s press release, Brooks agreed to repay $47,772 (the sum of the two loan amounts plus the processing fees) as well as $59,575 in additional damages and penalties.
 04/21/2022  [03/17/2022]  District of New Jersey  Daniel Markus, Inc. and Margarita Risis
$248,849
First Draw

$268,300
Second First Draw 

FCA Now Blog Post

DOJ Press Release

Settlement Agreement
 Summary: Daniel Markus, Inc. (“DMI”) and Margarita Risis, DMI’s sole shareholder, entered a settlement agreement with the U.S. government and relator Bryan Quesenberry (“Relator”) to settle allegations that DMI obtained two first draw loans under the Paycheck Protection Program (“PPP” or “Program”) in violation of Program rules. These rules required applicants to certify on each loan application that they would apply for only one PPP loan prior to December 31, 2020.  According to the settlement agreement, the government contends that DMI, through Risis, applied for and received a PPP loan in April 2020 for $242,849 and that DMI applied for a second loan with a different lender, also in April 2020, and received another $268,300 in PPP loan funds. The government alleges in the settlement agreement that DMI, through Risis, certified on both the first and second loan applications that it had not and would not receive another PPP loan. The settlement agreement states that Relator filed a qui tam suit in the District of New Jersey against DMI on September 12, 2020, alleging it unlawfully applied for and received two PPP loans despite certifying it would receive only one. To settle these allegations, the settlement agreement says that DMI and Risis, jointly and severally, shall pay the government $50,000 within two weeks of the execution of the settlement agreement. Further, under the terms of the settlement agreement, DMI shall not seek forgiveness of its first PPP loan and shall fully repay the first lender within 12 months from the date of the settlement agreement. Finally, the settlement agreement states that Relator shall be entitled to recovery of $3,541.05 following DMI and/or Risis’ payment of $50,000.  
4/12/2022   [03/24/2022]  Middle District of Florida  Physician Partners of America LLC, Dr. Rodolfo Gari, and Dr. Abraham Rivera $5,978,709 

 FCA Now Blog Post

Settlement Agreement
 Summary: Physician Partners of America, LLC, as well as several of its affiliated entities (collectively, “PPOA”), Dr. Rodolfo Gari, PPOA’s founder and owner, and Dr. Abraham Rivera, PPOA’s medical director (all together, “Defendants”) entered a settlement agreement with the U.S. government (“government”), the State of Florida, and numerous relators to settle allegations that Defendants violated the False Claims Act (“FCA”) by engaging in a scheme to defraud federal healthcare programs. As a consequence of this alleged scheme, the government also contends that PPOA, which sought a PPP loan during the pandemic, violated FCA by falsely certifying on the PPP loan application that they had not engaged in “illegal activity.” Specifically, the government contends in the settlement agreement that PPOA applied for a PPP loan on April 10, 2020. On this application, according to the government, PPOA stated it was not engaged in any illegal activities. Notwithstanding that certification, the government contends in the settlement agreement that PPOA had engaged in numerous illegal activities related to submitting false claims to Medicare, TRICARE, and other federal healthcare programs for reimbursement of certain medical treatments or devices deemed unnecessary. The State of Florida also alleged in the settlement agreement that this conduct caused false claims to be submitted to Florida’s Medicaid Program. To settle these allegations, the terms of the settlement agreement state that Defendants have agreed to pay the government, as well as the State of Florida, a sum of $24,500,000. The terms allocate the breakdown of this payment such that Defendants shall pay (i) $10,000,000 to the government, plus interest, within seven days of the effective date of the settlement agreement, and (ii) the remaining $14,500,000, plus interest, to the government within ninety days of the effective date of the settlement agreement. Further, the terms state the government will distribute $8,786.20, plus interest, to the State of Florida, of which $4,393.10 constitutes restitution. The government, under the terms of the settlement agreement, will keep the remaining balance and will designate $11,550,692.58 as restitution. Notwithstanding these terms, Defendants denied the government’s and State of Florida’s allegations. Notably, the settlement agreement does not state what specific portion of the settlement funds apply to resolve the PPP-related FCA claim. 
 04/21/2022  04/21/2022
[06/14/2022] 		 Northern District of Mississippi  Darlene Johnson $20,830

 Complaint

Consent Judgement
Summary: The government sued Johnson for FCA violations on April 21, 2022, alleging that she had applied for and received a PPP loan of $20,830 in April 2021 while claiming falsely to operate a self-employed daycare business, that she misrepresented payroll costs to receive a larger loan than otherwise allowed under PPP rules, that she then used the loan proceeds for ineligible purposes, and that based on these misrepresentations, the SBA forgave the loan and origination fee. The government also alleged Johnson received help from an unnamed individual in submitting the PPP loan application and paid this individual a $5,000 commission for the assistance. Pursuant to a consent judgment dated June 14, 2022, the parties stipulated to the entry of judgment against Johnson in the amount of $20,916.79, and agreed the execution of the judgment would be stayed as long as Johnson made monthly payments until the judgment was satisfied.
06/10/2022   06/10/2022  Northern District of Mississippi  Bailey’s Trucking LLC, and Xavier Bailey $143,738   Complaint
Summary: On June 10, 2022, the U.S. government (“the government”) filed suit  in the Northern District of Mississippi  against Bailey’s Trucking LLC and Xavier Bailey, individually (collectively, “Defendants”) alleging that Defendants violated the False Claims Act, 31 U.S.C. § 3729 et seq (“FCA”) by making false representations in pursuit of a loan and loan forgiveness under the Paycheck Protection Program (“PPP” or “Program”). Under Program rules, a borrower had to certify that the loan funds would be used for permissible purposes and that a knowing misuse of the funds could subject the borrower to liability, including for fraud. When seeking loan forgiveness, the borrower also had to certify compliance with Program rules. In the complaint, the government alleged that Defendants obtained improperly a PPP loan worth $143,738.00 around April 8, 2021 by misrepresenting payroll costs to receive more monies than otherwise eligible to receive under Program rules. Additionally, the government contends the Defendants knowingly misused the funds and knowingly misrepresented this use when seeking forgiveness of the PPP loan, which the government alleges the SBA forgave around November 10, 2021. The government’s allegations stem predominantly from an approximate March 18, 2022 meeting between a federal agent and Xavier Bailey, during which Bailey stated, according to the government, that he signed the PPP loan application, that he supplied the information on the PPP loan application, and that he made the certifications on the PPP loan application and loan forgiveness application. The government contends these certifications were knowingly false, and thus seeks relief under the FCA for treble the loan amount, plus one percent interest, as well as the processing fee the SBA paid to Defendants’ bank. The government also seeks relief based on claims of unjust enrichment and payment by mistake.  
06/14/2022   06/14/2022
[06/28/2022] 		 Northern District of Mississippi  Erica Rice $20,733
(first draw)
$20,733
(second, first draw) 		Complaint

Consent Judgment

Summary: The government sued Rice for FCA violations on June 14, 2022, in which it alleged that Rice applied for and received two PPP loans of $20,733 each in early 2021 while claiming to operate a self-employed jewelry and clothing store, that Rice misrepresented her payroll costs and annual income to obtain higher loan amounts, that Rice used the PPP loan funds for ineligible purposes, that Rice misrepresented her use of these funds when applying to the SBA for loan forgiveness, and that based on these misrepresentations, the SBA forgave the loans. The government also alleged that Rice received help from an unnamed individual in submitting the two PPP loan applications and that Rice paid this individual a $5,000 commission for the assistance. Pursuant to a consent judgment dated June 28, 2022, the parties stipulated to the entry of judgment against Rice in the amount of $46,957.80, and agreed the execution of the judgment would be stayed as long as Rice made monthly payments until the judgment was satisfied.
 06/14/2022  06/14/2022
[07/12/2022] 		 Northern District of Mississippi  Cierra Smith  $20,833
(first draw)
$20,833
(second, first draw) 		Complaint

Amended Complaint

Consent Judgment

Summary: In a consent judgment dated July 12, 2022, Smith agreed to pay $46,796.05 arising from the government’s allegations that she violated the FCA by presenting false claims and making false statements to obtain two PPP loans in early 2021. The June 17, 2022 amended complaint alleged that Smith applied for and received two PPP loans of $20,833 each while claiming to operate a self-employed babysitting business, that Smith misrepresented her annual income and payroll costs to obtain higher loan amounts, that Smith knowingly used the loan funds for ineligible purposes and knowingly misrepresented this use when seeking forgiveness of these loans, and that based on these misrepresentations, the SBA forgave these loans in August 2021. In accepting this consent judgment, Smith will make monthly payments to pay off the $46,796.05 owed to the government.
06/17/2022   06/17/2022
[08/31/2022] 		 Northern District of Mississippi  Robert Curry, Jr.  $20,833
(first draw)
$20,833
(second, first draw) 		Complaint

Consent Judgment

Summary: The government filed suit against Curry and alleged that he fraudulently applied for and received two PPP loans for $20,833 each in early 2021 while claiming to operate a self-employed landscaping business.  The government further alleged that Curry misrepresented his annual income and payroll costs to receive higher loan amounts, that Curry knowingly used the PPP loan funds for ineligible purposes, that he misrepresented his use of the loan funds when seeking forgiveness of the loans, and that based on these misrepresentations, the SBA forgave the loans in August 2021. Pursuant to a consent judgment dated August 31, 2022, the parties stipulated to the entry of judgment against Curry in the amount of $46,783.01, and agreed the execution of the judgment would be stayed as long as Rice made monthly payments until the judgment was satisfied.
09/13/2022   [09/13/2022] Southern District of Texas  Prosperity Bank (Lender)  $213,400

DOJ Press Release

 
Summary: In April 2020, borrower Woodlands Pain Institute obtained a $213,400 first draw loan through its lender, Prosperity Bank. At the time, the borrower certified that no owner with more than 20% equity in the company was facing criminal charges, even though the sole owner of the borrower, Dr. Emad Bishai, was facing criminal charges arising from his practice of prescribing opioid medicines. Dr. Bishai entered into a settlement in November 2021 to resolve his liability arising from fraudulent medical billing and his submission of the PPP loan application. Subsequently, the government targeted and ultimately settled with the lender, because lender employees knew Dr. Bishai was facing charges and was therefore ineligible for the loan. The lender received a 5% processing fee of $10,670 to process the loan, and as a result of the settlement it has to pay $18,673.50 to resolve the allegations it improperly processed the PPP loan.

 

1 The information in this column was either obtained from the relevant court filings or settlement agreements, or from the publicly available data on PPP loans available here: https://projects.propublica.org/coronavirus/bailouts/.

 

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Litigation Privilege Does Not Automatically Protect Communications with Funders: The Commercial Court Clarifies the Limits of Privilege in the Context of Litigation Funding

In Uber London Ltd & Ors v Garry White & Ors; Mishcon de Reya LLP [2026] EWHC 1610 (Comm), the Commercial Court held that documents created to help a funder decide whether to invest in a claim will not ordinarily attract litigation privilege. This means that information a firm gathers while acting for a funder can later fall within the control of the claimants it goes on to represent in the same matter. Background The Claimants (a claim group of over 10,000 individual London black cab drivers and the assignee of two former minicab operators) alleged that the Defendants (three companies in the Uber group) obtained and retained their private hire operator's licence through an unlawful means conspiracy alleged to involve fraud. Because the claims were issued outside the ordinary six-year limitation period, the Claimants relied on section 32 of the Limitation Act 1980, contending they could not, with reasonable diligence, have discovered the fraud before June 2018. A preliminary issue trial was listed to determine the question of whether the Claimants discovered, or could have discovered with reasonable diligence, the alleged fraud and/or deliberate concealment only after June 2018. The Claimants were represented by Mishcon de Reya ("MdR"). However, before MdR’s engagement with the individual drivers had begun, in late 2017 it was engaged by the litigation funder Harbour to investigate the merits and value of the potential claim. During that stage, MdR corresponded extensively with Harbour and with the Licensed Taxi Drivers' Association ("LTDA"), a black cab drivers' trade association. MdR was not formally engaged by the Claimants until October 2018 onwards. Once the proceedings had started, the Defendants sought disclosure of communications exchanged between MdR and Harbour before the engagement of MdR by the Claimants (the "Harbour Communications"). This included correspondence between MdR and Harbour, communications with the LTDA, and documents held on MdR's file opened in Harbour's name in connection with the potential claim. The Claimants resisted disclosure on four grounds: (i) that the documents were not relevant; (ii) on the grounds of litigation privilege; (iii) that the documents were outside their control; and (iv) that disclosure occurring so close to trial would be disproportionate. Judgment (i) Were the Harbour Communications relevant to the preliminary issue? The Court held that the Harbour Communications were likely to contain relevant material, on two bases. First, where the Claimants or the LTDA had communicated directly with MdR, that material could shed light on individual Claimants' actual knowledge of the alleged facts. Secondly, what MdR and Harbour had discovered during their investigation could inform the question of what a Claimant could reasonably have discovered at the time (even though the Defendants accepted that MdR's knowledge could not simply be imputed to the Claimants). (ii) Were the Harbour Communications protected by litigation privilege? As set out in the classic cases of Three Rivers (No. 6) [2005] 1 AC 610 and WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652, communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged when the following conditions are satisfied: Litigation must be in progress or in reasonable contemplation. The communications must have been made for the sole or dominant purpose of conducting litigation. The litigation must be adversarial, not investigative or inquisitorial. The Court rejected the Claimant’s claim to be able to withhold the Harbour Communications on the basis of litigation privilege. The Court confirmed that litigation privilege protects only communications created for the dominant purpose of conducting litigation. The Court found that Harbour had instructed MdR so that Harbour could decide whether to fund the proceedings. As such, the dominant purpose of the communications was in relation to funding, not the conduct of litigation. This was distinguished from the situation where an individual litigant who takes its own funding decision. In that situation, the decision whether to fund and the decision whether to litigate are one and the same, made by the person who will actually be the claimant, and so it forms a part of that person's conduct of their own litigation. In contrast, a third-party funder's commercial decision whether to fund someone else's claim is not necessarily part of conducting that litigation. The fact that litigation privilege can, in principle, be claimed by a non-party funder (as recognised in the case of Al Sadeq v Dechert [2024] EWCA 28) did not assist Harbour, since there was no evidence it intended to play any role in the litigation itself beyond funding it. Communications between Harbour and MdR did remain capable of attracting another kind of privilege: legal advice privilege, because of the solicitor-client relationship between Harbour and MdR. But communications with third parties such as the LTDA were not automatically protected in the same way. (iii) Were the Harbour Communications within the Claimants' control? The Court also rejected the argument that the Harbour Communications sat outside the Claimants' control because they belonged to Harbour and not the Claimants. The Court’s reasoning was that once the individual Claimant drivers became MdR's clients, MdR also owed them a duty to disclose material information. That included information that MdR had originally acquired while acting for Harbour. As held in the case of Hilton v Barker Booth & Eastwood (a firm) [2005] 1 WLR 567, a solicitor owing duties to two clients cannot simply prefer one over the other, and it was unrealistic to suppose MdR would investigate the same claims for Harbour, then represent the Claimants, while disregarding everything it had already learned. The obvious commercial expectation was that this earlier work would be used to advance the Claimants' case. MdR sought to rely on a confidentiality clause in a 2024 retainer agreement between it and RGL Management Ltd (a claims management company acting on behalf of the Claimants) to argue that it was relieved of any duty to disclose information obtained while acting for other clients. The provision stated that MdR may "have acted for persons in the same or similar sector as yours and by agreeing to the terms of this letter you agree that will have no duty to disclose to you any confidential information that we have obtained, or might in the future obtain, from acting for such persons or which is derived from any other source". The Court rejected this on several grounds. Claimants who had already become MdR's clients had an existing right to information in the Harbour Communications where it was relevant to their claims before the 2024 retainer agreement. If they were to surrender that right, it would have required their informed consent (also required under the SRA Code of Conduct). The Court found no evidence that such informed consent had been given. The terms had simply been made available to the Claimants through a portal, with no indication that Claimants understood they were giving up existing rights to relevant information. The Court found that even if the terms had been contractually binding, that would not have amounted to informed consent. In addition, the wording of the clause was not sufficiently clear to show that the Claimants had agreed to waive access to this information. (iv) Was disclosure reasonable, proportionate, and necessary at this stage? The Claimants argued that it was neither reasonable nor proportionate for disclosure to be given at such a late stage (approximately two weeks before the start of the preliminary issue trial) and that it was not necessary for the just disposal of the proceedings. The Court rejected this, but it drew a distinction between two categories of documents within the Harbour Communications: Documents bearing on the actual knowledge of the individual drivers, including communications with the LTDA, were not privileged, likely straightforward to review, and directly relevant to the preliminary issue. Their disclosure was ordered as reasonable, proportionate, and necessary. Documents reflecting only MdR's or Harbour's own assessment of the merits were of more marginal, indirect relevance and largely likely to fall under legal advice privilege. A review to isolate the smaller pool of non-privileged material in this category would be time-consuming for limited benefit, so this was excluded from the order. Key Points to Note The judgment is an important reminder of several practical points: However closely a funder is involved in evaluating a claim's merits, litigation privilege will only apply to communications where the sole or dominant purpose of the communication is the conduct of litigation, not the funder's own decision on whether to finance it. Unless that communication separately attracts legal advice privilege, it may need to be disclosed. The same considerations apply to other communications. For example, in RBS Rights Litigation [2017] 1 WLR 3539 the argument that an After the Event (ATE) policy was subject to litigation privilege was rejected on a similar basis. Whilst in this case, there was no dispute as to whether litigation was in contemplation, it is important to note that litigation privilege will not automatically apply to the investigative stages of a claim, i.e. before litigation is in contemplation. Even where litigation is reasonably contemplated, the dominant purpose test must still be satisfied. Material created primarily for fact-finding, risk assessment, or other investigative purposes will not attract litigation privilege unless those activities are actually undertaken for the dominant purpose of conducting the litigation. (See The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB)). When engaging a law firm, clients should ensure that they understand whether the firm has previously obtained information about their claim while acting for another party (for example, a funder or another interested party) and how that information will be handled. Any restrictions on the firm’s ability to share relevant information with the client should be explained clearly at the outset, including what information may be withheld and why. If this decision raises questions about your own funding arrangements, disclosure strategy, or privilege position, please get in touch with our Commercial Litigation team.

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State Affordability Infrastructure Districts (SAIDs) — A Financing Tool for Taiwanese Investment in Arizona Science and Technology Parks

If you have developed a facility inside one of Taiwan's science or technology parks, you are accustomed to the one-stop-shop of government planning the park and delivering the roads, water, power, and other infrastructure before your building is even constructed. In the United States, including Arizona, land development generally does not work that way. In Arizona, the cost of infrastructure such as water, sewer, stormwater, roads, power, and the digital backbone, typically falls on the private landowner and is incurred up front before operations generate revenue to offset that cost. For a company entering the Arizona market, this is often the largest and earliest capital burden of the entire project. Arizona recently created a tool that provides a more cost-effective way for landowners and developer to finance some of that infrastructure. House Bill 2999, signed into law June 2026 and codified at Chapter 40 of Title 48 of the Arizona Revised Statutes, establishes the creation of a State Affordability Infrastructure District (SAID). How a SAID Works Landowners are now able to use a SAID to finance public infrastructure such as water, sewer, stormwater, roads, parking, lighting, communications, rail sidings and signalization, and similar improvements, through tax-exempt bonds. The bonds are repaid over up to 30 years and secured solely by the property within the SAID. No city, county, or state credit is pledged, and no obligation falls on other taxpayers, and therefore no city, county, or state approval other than from the Arizona Finance Authority (AFA). In effect, a SAID lets you spread the cost of horizontal infrastructure over the life of the asset instead of funding it entirely at the outset. And tax-exempt bonds often offer a lower interest rate than taxable or other types of financing. How a SAID is Formed A SAID is formed upon the filing of a petition with the AFA. The petition must include the finance plan, general plan, estimated costs, maximum tax rate, appraisal, bond counsel certificate, consultant list, petitioner experience, legal description, title report, and other materials. While the landowner is required to provide notice to the local governing jurisdiction, local governing jurisdiction does not have the right to approve or deny. The petition is reviewed administratively by the AFA through a standards-based process. For an inbound investor without long-standing local relationships, an objective, criteria-driven process is a meaningful advantage to the overt political process associated with other financing districts in Arizona. Formation requirements. A SAID requires consent from 100% of landowners within the proposed district; public infrastructure costs must exceed $5 million (easily met at any real scale); the district property must all be in the same county and need not be contiguous provided that noncontiguous property is located within five miles of the district's other property; and the board is initially appointed by the forming owners of the SAID district, later transitioning to election as ownership diversifies. Actual bond issuance requires an election of the SAID property owners. Ownership and corporate structure. Consent rights and board seats run with title. If you hold the Arizona land through a U.S. blocker beneath your Taiwan parent, the standard model for Taiwanese/Arizona real estate and operating investment, the U.S. property-holding entity, rather than it’s corporate parent, is the landowner of record for the district. Before formation, our Dorsey team will confirm that you have the proper corporate structure and board mechanics to be compliant.  Board composition has no citizenship or residency requirement. This is a common concern for foreign investors, and the statute answers it cleanly. Under A.R.S. § 48-7004, a director must either hold fee title to real property in the district or be an individual designated or appointed by a fee-title owner. Corporations, partnerships, and other business entities are expressly permitted to be those owners, to vote as owners, and to designate an individual to serve. There is no requirement that a director be a U.S. citizen or resident. So your U.S. property-holding entity, as landowner of record, can appoint whichever of your principals you choose, including a Taiwan-based individual, as the three-member board.  Power infrastructure limitation. The enacted definition of "public infrastructure" in A.R.S. § 48-7001 does not include electrical power generation or transmission. The reference to electrical facilities appears only as components of lighting and traffic-control systems, and the Legislature removed broader energy infrastructure from the definition during the Senate amendments. A SAID will likely not finance the high-load power infrastructure required for semiconductor fabrication, data storage, or heavy manufacturing.  Water infrastructure within a current utility CC&N. Where water, sewer, or wastewater facilities fall within a regulated utility's certificated service territory, the SAID cannot build or own them without the utility's written consent and must convey them to the utility on completion. Entitlements and zoning: The determination of entitlements, zoning, and other land use permitting, as well as construction permitting for a technology or manufacturing facilities remain with the local jurisdiction and run on a separate track. Our Dorsey team will help you coordinate the financing and entitlement timelines together. Our Dorsey team works regularly with Taiwanese and other Asia-Pacific companies entering the Arizona market. If a SAID fits your project, we can structure it for your cross-border ownership.

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Proposed CMS Rule Ramps Up Potential Medicare Fraud Administrative Remedies

On July 6, 2026, the Centers for Medicare & Medicaid Services (“CMS”) proposed a rule that would expand its administrative remedies to combat potential fraud. The proposed rule is the latest in a round of administrative actions that signal CMS’s intent to aggressively pursue allegations of Medicare and Medicaid fraud and heighten the risk of fraud enforcement against even well-intentioned Medicare and Medicaid providers and suppliers. The proposed rule includes several changes to regulations that govern Medicare billing privileges. Providers and suppliers should be aware that these changes dramatically expand the flexibility afforded to CMS in enrollment and revocation actions, potentially leading to harsh consequences for ministerial and administrative errors. If finalized, moreover, the proposed rule could have material implications for providers and suppliers facing threatened revocation, including heightened risk of overpayment liability and increased hurdles to challenging revocations and denials of enrollment. Added Flexibility to Existing Revocation Grounds CMS has proposed to remove a number of factors that the regulations list as relevant to a determination of whether a provider has engaged in “abuse of billing privileges.” While acknowledging that the inclusion of these factors in the regulations was permissive (requiring consideration only where “as appropriate or applicable”), CMS stated that it must be afforded “the maximum flexibility to address all possible . . . scenarios without the rigid constraints of our existing factors.” CMS provided little guidance as to the outer bounds of what conduct could constitute an “abuse of privileges” that merits revocation of Medicare billing privileges. Instead, CMS noted that a “pattern of practice” of abuse of billing privileges might be established “by a simple finding that several of a provider’s claims do not meet Medicare requirements.” Similarly, CMS has proposed to expand the regulatory provision that permits revocation of enrollment if a provider certifies as “true” false or misleading information in Medicare enrollment application or renewal forms to include any scenario in which a provider submits “false or misleading information on or associated with any CMS Medicare enrollment-related form,” including materials submitted to Medicare contractors. CMS stated that it interprets this expanded rule to include anything related to Medicare enrollment, and not only those submissions that are “intended to gain or maintain Medicare enrollment.” If finalized, the proposed rule would add significant flexibility to CMS’s ability to pursue revocation of a provider’s enrollment. While CMS has assured providers that it would “invoke [the revised regulations]. . . only when legitimately warranted under the facts and circumstances and not as a matter of course,” such expanded flexibility threatens unpredictability in the event of even administrative or ministerial errors in submissions and claims. These changes would, moreover, make it more difficult for providers to challenge a revocation action. Expanded Revocation Grounds In addition to adding flexibility to existing grounds for revocation, CMS’s proposed rule adds to and expands CMS’s already broad authority to revoke provider and supplier enrollment. Such proposed changes include adding the following grounds for revocation: Denial of Enrollment Application. Where CMS could previously revoke a provider’s other enrollments if one enrollment is revoked, CMS would also be able to revoke a provider’s existing enrollments if an application for enrollment submitted by the provider is denied. High-Risk Enrollments. CMS would be able to revoke enrollment if it determines the provider or supplier (including owning/managing employees or organizations) poses a high risk of fraud, waste, or abuse due to “. . . an affiliation under [42 C.F.R.] § 424.519” or “the provider’s or supplier’s location within a limited geographic area that has an excessive number of providers and suppliers.” Certain Misdemeanor Convictions. CMS would be able to revoke enrollment if a provider or supplier—or its owners, managing employees, managing organizations, officers, or directors—are convicted of a “misdemeanor related to sexual assault or financial misconduct within the past 10 years that CMS deems detrimental to the best interests of the Medicare program and its beneficiaries.” Ownership Changes (HHA, Hospice, DMEPOS). CMS would have broad authority to revoke enrollment of home health agencies, hospices, and DMEPOS suppliers who do not comply with the regulations governing provider changes of ownership. These proposed, expanded grounds for revocation are notably broad, and CMS provides only limited guidance as to what conduct might result in revocation under these grounds. As with the proposed expansion of existing grounds for revocation, the open-ended nature of these proposed grounds for revocation may make it more difficult for providers and suppliers to challenge revocation actions. Expanded Grounds to Deny Medicare Enrollment As with revocations, CMS proposes to expand the grounds under which a provider’s application to enroll in Medicare can be denied. These expanded and additional grounds include many of the grounds added for revocations, but also include: Medicare Debt or Payment Suspension. CMS proposes expanding the ground to deny enrollment based on Medicare debt or payment suspension to include a provider or supplier’s “managing employee, managing organization, or individual or entity with any other form of business or financial relationship with the provider or supplier[.]” Significantly, this expansive definition (called an “associated party” under the proposed regulation) currently contains no material limitations, meaning almost any person or entity with whom an applicant does business could create denial liability. Sharing Locations with Denied/Revoked Providers or Suppliers. CMS would have authority to deny applications where a “provider’s or supplier’s practice location is in the same suite or office as another provider or supplier whose Medicare enrollment has been revoked or denied.” Hospices with Distant Medical Directors or Administrators. CMS would have discretion to deny hospice applications if the hospice’s medical director or administrator serves “multiple other hospices” or practices/is located “at such a distance (for example, in a different state) from the enrolling hospice that the medical director cannot realistically perform all medical director functions,” with a similar provision for administrators. In addition, CMS proposes applications denied for “other program termination or suspension,” may be applied to the provider or supplier in its own name or NPI or that of its owners, managing employees, or managing organization regardless of whether any appeals are pending. Retroactive Revocation CMS proposed to restructure and expand the regulatory grounds for retroactive revocation of billing privileges. Currently, Medicare regulations provide that revocations are, by default, prospective in nature: effective 30 days after CMS or the CMS contractor mails notice to the provider. Under certain circumstances, the regulations provide for revocations to be retroactive, such as when a provider is convicted of a felony, the date a professional license is suspended, revoked, or surrendered, or when a provider submits a false certification in their enrollment application. CMS has proposed to reframe the rule so as to default to retroactive revocation of billing privileges. CMS expressed concern that providers may collect payment from Medicare while remaining so non-compliant with enrollment requirements as to merit revocation. To address this concern, CMS proposed that all revocations be retroactive to the date of determined non-compliance.[1] As a result, providers suspected of misconduct or non-compliance are likely to face claims of retroactive overpayments in addition to the immediate concern no longer receiving Medicare payments while their enrollment is revoked. Reapplication Bar CMS’s proposed rule expands the grounds from which a provider may be prohibited from seeking reapplication as a Medicare provider. Under current regulations, CMS may prohibit prospective providers from enrolling in Medicare for up to 10 years if its enrollment application is denied because the applicant submitted false or misleading information in its application. Under the proposed rule, CMS will have the discretion to prohibit a provider from enrolling in Medicare if their enrollment application is denied for any reason. Conclusion As a part of the federal government’s increasingly aggressive push to combat real or perceived healthcare fraud, the proposed rule both broadens CMS’s authority to revoke and deny Medicare enrollment and raises the stakes for revocation and denial. What the proposed rule does not share is how CMS plans to exercise this expanded discretion: as a result, the proposed rule, if enacted, increases the unpredictability and potential ramifications of even technical noncompliance with CMS rules. As a result, Medicare providers should keep a close eye on potential revisions to these rules and their potential implementation and consider proactively evaluating their compliance under CMS standards. [1] In the proposed rule, CMS identifies, with respect to each ground for revocation, what it will consider to be the effective date of revocation.

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Dorsey Partner Melissa Raphan Elected a Fellow of the College of Labor & Employment Lawyers

International law firm Dorsey & Whitney LLP is pleased to announce that Partner Melissa Raphan has been elected a Fellow of the College of Labor & Employment Lawyers (CLEL) as part of its 2026 class. “Melissa’s election to this prestigious fellowship comes as no surprise to those of us who have had the privilege of working with her,” says Peter Nelson, Dorsey’s Managing Partner.  “She is an exceptional employment lawyer, a trusted advisor, and a leader whose impact extends far beyond her matters. Clients rely on her deep knowledge, strategic counsel, and ability to navigate complex workplace disputes and sensitive employment matters with both confidence and compassion. She has helped shape our firm, strengthen our profession, and opened doors for countless others through her commitment to mentorship and diversity. We are incredibly proud of her accomplishments and delighted to see her receive this recognition.” CLEL is a nonprofit professional association that honors the nation’s leading attorneys in the field of labor and employment law. Originally established to recognize excellence in the profession, CLEL has evolved into a respected intellectual and practical resource for the legal community and its many audiences. Its mission centers on recognizing individuals who have made significant contributions to the field, fostering the exchange of knowledge and delivering value to academia, government, the judiciary, and the broader public. Election as a fellow represents the highest level of peer acknowledgment, reflecting sustained achievement, integrity, and a commitment to advancing the profession. Melissa’s career reflects CLEL’s mission. She has been recognized both regionally and nationally for her advocacy, leadership, and achievements both inside and outside of the courtroom. Her employment litigation experience spans class actions, collective actions, and high-stakes individual disputes in state and federal courts, as well as arbitration forums including the American Arbitration Association and the Financial Industry Regulatory Authority (FINRA). She is also a trusted advisor on a full range of workplace issues, from hiring and performance management to sensitive terminations and organizational change. She brings decades of experience representing clients across the financial services, healthcare, food and agriculture, and energy sectors. Melissa will be formally inducted during CLEL’s installation ceremony held in conjunction with the American Bar Association’s Labor & Employment Law Conference in Washington, D.C., on November 7.

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Real Estate Attorney Alexis Olsen Joins Dorsey in Phoenix

Attorney Alexis Olsen has joined Dorsey & Whitney LLP as Of Counsel in the Real Estate group in Phoenix, the law firm announced today. Alexis focuses her practice on large-scale residential, mixed-use, and multi-asset development projects as well as multi-state commercial leasing transactions. She guides clients through sophisticated acquisitions, dispositions, leasing, entity structuring, investment strategies, and due diligence matters. She has structured co-investment arrangements that drive capital deployment into housing subdivisions nationwide and has represented both landlords and tenants in commercial leasing transactions involving office, retail, industrial, and specialty-use properties, including cannabis dispensaries. Alexis received her J.D. from Sandra Day O’Connor College of Law and her B.A. from the University of Arizona. Alexis comes to Dorsey from Squire Patton Boggs. “Alexis strengthens Dorsey’s real estate capabilities at a time when Phoenix remains one of the fastest-growing and most dynamic real estate markets in the country,” said Scott Jenkins, Dorsey’s Phoenix office head. “Her addition further enhances our deep bench of 12 real estate attorneys in Phoenix and reflects our continued investment in serving clients throughout Arizona and supporting their real estate transactions and objectives across the country. We are thrilled to welcome Alexis to Dorsey.” “Joining a firm with such a deep bench of experienced attorneys in the Phoenix office, especially in the Real Estate group, presents an exciting opportunity not just for my own professional growth, but for the clients we service,” said Alexis Olsen. “I look forward to building on this strong foundation, growing our national practice, and delivering top-tier service to our clients.”

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Dorsey Recognized in IP STARS 2026 Asia Pacific Rankings

Dorsey & Whitney LLP is proud to announce that the firm has been recognized in the IP STARS 2026 Asia Pacific rankings as a Trusted Talent Firm for Intellectual Property in Hong Kong SAR. In addition, Partner Janet Wong has been recognized as a Trademark Star. IP STARS, published by Managing IP, is a leading guide to intellectual property firms and practitioners worldwide. Its rankings are based on extensive research conducted by Managing IP analysts, including firm submissions, client and peer feedback, interviews, and independent research. The Trusted Talent Firms designation recognizes firms with one or more ranked practitioners who have been researched and recognized by the IP STARS team. In addition, a Trademark Star is recognized as an intellectual property practitioner who has been recommended by peers and clients and is integral to the success of their firm. Janet is the head of Dorsey's Hong Kong office and the head of the firm's Greater China Intellectual Property group. With more than 20 years of experience, she advises local and multinational clients on intellectual property matters, including trademark protection, enforcement, commercialization, and related disputes, as well as commercial litigation, financial fraud matters, and corporate transactions.

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Alaska HB 126: What Changes for Alaska Native Corporations, Proxy Filings, and Annual Reports

Alaska House Bill 126 (HB 126), sponsored by Representative Neal Foster and passed by the 34th Alaska Legislature, is now law. The bill changes which Alaska Native Corporations (ANCs) must file proxy and annual report materials with the State of Alaska, and makes it easier to reinstate certain dissolved Village Corporations. For many smaller Village Corporations, the practical result is less public disclosure. For shareholders, advisors, and the public, it means some financial information that used to be available through the State will no longer be readily obtained. This eUpdate explains what HB 126 does in plain terms, walks through the practical trade-offs, and answers common questions. 1. What HB 126 Changes The old rule Under prior law (Alaska Statutes Sec. 45.55.139), an Alaska Native Corporation had to file its annual report, proxies, and proxy statements with the Alaska Division of Banking and Securities (the Division) if it had more than $1 million in assets and 500 or more shareholders on its current rolls. A filing ANC was also required to follow the Division’s proxy rules (3 AAC 08.305 through .365), which require specific disclosures such as top 5 executive compensation, and related-party transactions. Because these filings are treated as public records, they gave non-shareholders, including the public and the press, visibility into ANC financial information that is not filed with the SEC. The new rule HB 126 changes how the 500-shareholder test is measured. Now, the asset test is removed, and the shareholder count is based on how many shareholders the corporation originally enrolled when it was formed under the Alaska Native Claims Settlement Act (ANCSA), not how many it has today. As shares have passed down through families over the decades, some Village Corporations that started with fewer than 500 shareholders now have more than 500 recordholders. Under the old current-count test, when those corporations had crossed the threshold, they had to file. Under the new original-enrollment test, they do not. Who is affected Village Corporations that originally enrolled fewer than 500 shareholders are the main beneficiaries. They no longer have to file proxy and annual report materials with the Division or follow the Division’s proxy regulations at 3 AAC 08.305 through .365. Two groups must continue to file as before: all twelve ANCSA Regional Corporations, each of which enrolled more than 500 shareholders at creation, and all Village Corporations that originally enrolled 500 or more shareholders. As reported by the Alaska Beacon, when the bill was under consideration, the Division identified 59 corporations then filing, expected at least seven village corporations to become exempt, and was reviewing roughly 30 more. 2. Practical Analysis HB 126 reduces a real compliance burden for smaller Village Corporations, which now need not spend time and money on State filings. In coming years, the exempt Village Corporations may experience benefits associated with less public disclosure and less regulation. But at the same time, less public disclosure carries trade-offs. Benchmarking will become harder Publicly-filed proxy statements and annual reports have long served as a reference set. Shareholders, corporations, advisors, and counsel use them to compare governance practices, compensation, and financial results across similarly-situated ANCs. Since fewer of these materials will be filed publicly, there will be fewer comparable documents available, which will make benchmarking and market-checking more difficult for like-sized ANCs over time. Executive compensation transparency may be reduced The Division’s proxy rules require disclosure of the compensation of ANC’s top five most highly compensated individuals (3 AAC 08.345(b)(2)), related-party transactions above $20,000 (3 AAC 08.345(b)(3)), and audited financial statements and management’s discussion and analysis (3 AAC 08.365). When a corporation is no longer required to file these disclosures publicly, it becomes harder for shareholders and others to obtain the information, to understand how compensation is set for their corporate leadership, and how it compares across corporations of similar size and complexity. Transparency may matter more as ANCs grow Some ANCs have grown into large, complex enterprises with substantial revenue and many subsidiaries, even with fewer than 500 shareholders. For an ANC with a broad and dispersed shareholder base, public materials can be an important way for shareholders and other stakeholders to understand governance, compensation, and performance across ANCs. Reduced disclosure may carry more practical weight in those settings than for a small corporation whose shareholders are closely connected to the business. The ANCSA annual report obligation continues It is important not to overstate what HB 126 does. HB 126 changes the state filing proxy requirements. It does not remove the separate obligation under ANCSA itself. That obligation comes from ANCSA at 43 U.S.C. Sec. 1625(c), which requires a Native Corporation that would otherwise be subject to the Securities Exchange Act of 1934 to prepare and transmit to its shareholders an annual report containing substantially the information a company subject to that Act would include. Similarly, ANCs that solicit proxies for an annual meeting are still required to furnish shareholders with those proxy materials under general Alaska corporate law. However, ANCs are now no longer required to transmit proxy statements to the State. ANCs’ reporting obligations to their shareholders are unaffected by HB 126. Any corporation newly exempt from state filing still owes its shareholders a detailed annual report and a proxy statement, even though that report is no longer routed through the State and made public. Reinstatement of dissolved Village Corporations Separately, HB 126 amends AS 10.06.960(k) to remove the prior deadline (previously December 31, 2020) for reinstating an involuntarily dissolved Native Village Corporation. A dissolved Village Corporation may now apply to be reinstated under AS 10.06.633(e) at any time. Reinstatement still runs through the commissioner under AS 10.06.633(e). In general, that means the ANC must apply, cure the neglect or delinquency that led to dissolution, and pay the amounts owed, and the corporation’s name must be available or be changed to one that is. Once reinstated, the corporation and its shareholders are restored to the rights, privileges, liabilities, and obligations they would have had as if the dissolution had never occurred, and corporate and shareholder actions taken during the dissolution are treated as valid. If the previously-used corporate name is no longer available, the board alone may amend the articles to adopt a new name (without the necessity for shareholder approval). 3. Frequently Asked Questions What does HB 126 do? It changes how Alaska measures the 500-shareholder test that decides which ANCs must file proxy and annual report materials with the state. It removes the asset test, and it counts shareholders based on original enrollment rather than the current rolls. It also removes the deadline for reinstating an involuntarily dissolved Native Village Corporation. Which ANCs are affected? Village Corporations that originally enrolled fewer than 500 shareholders, because they may no longer need to file with the Division. Regional Corporations and Village Corporations that originally enrolled 500 or more shareholders must continue to file as before. Does HB 126 eliminate all reporting obligations? No. It changes the state filing requirement under AS 45.55.139, but it does not remove the separate ANCSA obligation (43 U.S.C. Sec. 1625(c)) to provide shareholders with an annual report, and general corporate law still calls for a proxy statement when the ANC solicits proxies. Corporations that remain subject to state filing requirements must also continue to comply with the Division's rules. We think we are now exempt. What should our ANC board and management consider? Confirm your ANC’s original enrollment number and whether your corporation falls below the new threshold. Watch for communications from the State on this topic as they proceed with their research. If your ANC is now exempt, decide how your corporation will meet its continuing ANCSA obligation to shareholders, review proxy and annual meeting materials and timelines, and consider what to communicate to shareholders about any change in how they will receive information. It is worth documenting the basis for any exemption. What should ANC shareholders watch for? Shareholders should watch for how and when they will continue to receive annual report and proxy statement information directly from their ANC, since some material that used to be available through the State’s online website will no longer be publicly filed. If something is unclear, shareholders can ask their ANC how it intends to meet its ANCSA reporting obligations. How Dorsey Can Help HB 126 lightens the State filing load for smaller Village Corporations, but it also raises practical questions: confirming who is exempt, meeting continuing ANCSA obligations to shareholders, keeping proxy and annual meeting processes on track, and maintaining benchmarking when public materials become less available. These are exactly the kinds of judgment calls that benefit from early planning. Dorsey’s attorneys work closely with Alaska Native Corporations and related stakeholders. If you have questions about HB 126, ANC governance, proxy filings, annual reports, disclosure obligations, or shareholder communications, please contact your Dorsey attorney, including the authors of this eUpdate.

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Patent Partners Al Araiza and Lena Petrovic Join Dorsey in Palo Alto

Patent partners Al Araiza and Lena Petrovic have joined Dorsey & Whitney LLP in Palo Alto, the international law firm announced today. Al Araiza works with clients to develop and implement patent strategies that align with corporate objectives, supporting growth initiatives, financing efforts, and successful exits, including initial public offerings and acquisitions. He advises on building, managing, and optimizing patent portfolios across a broad range of emerging and frontier technologies, with depth in wireless communications, artificial intelligence, and energy innovation. Before practicing law, Al gained engineering experience in the defense industry, working on energy system modeling and communications circuitry design. He also conducted biomedical research, with findings published in peer-reviewed journals. He has been recognized in the IAM Patent 1000 for his work advising clients on patent strategy and portfolio development. Al received his J.D. from Duke University School of Law, his M.E. in Biomedical Engineering from Tulane University, and his B.S. in Electrical Engineering from UCLA. Lena Petrovic works across the software and hardware industries to develop clear, well-supported patent applications. She guides clients through the prosecution process and advises on global trademark and copyright matters, including licensing and portfolio management. Lena regularly supports clients developing technologies such as artificial intelligence and machine learning, fintech, cryptography, interactive and immersive experiences, and digital media, and works with companies in entertainment, gaming, and sports. Before practicing law, Lena spent a decade at Pixar, where she contributed to major films including The Incredibles, Ratatouille, WALL‑E, and Brave. Lena received her J.D. from Santa Clara University School of Law, her M.S. in Computer Science from Princeton University, and her B.S. from California Institute of Technology. “Al and Lena bring a practical, technical, and business-focused approach informed by extensive experience working with technology companies, startups, and investors,” said Gina Cornelio, Patent Practice Group Co-Leader. “We are thrilled to welcome them to the Patent team and our growing Palo Alto office.” “Dorsey’s Patent practice is dedicated to understanding each client's business deeply, tailoring patent strategies that directly advance their goals,” said Al Araiza. “We are proud to join this outstanding team and look forward to driving success for our clients.”

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The Long-Awaited Public Infrastructure Financing Solution for Development in Arizona

Every developer who has taken raw Arizona ground to a finished project knows the largest upfront cost other than the land price is almost always the cost to install the public infrastructure. Water, sewer, stormwater, streets, dry utilities, and the fiber backbone all have to be in the ground before a single lot closes or a building opens. That capital is deployed early and generates no return for years. For decades the standard workaround has been the Community Facilities District (CFD). That tool has grown materially harder to use, for reasons cited below, and House Bill 2999, signed in June 2026 and now codified as Chapter 40 of Title 48, is Arizona's response. Some Background I have spent a good part of my career on the other side of this problem. In the 1990s and early 2000s I served as general counsel of SunCor Development Company, one of Arizona's most active master-planned community developers, where we used Community Facilities Districts to finance hundreds of millions of dollars of major infrastructure across Arizona in cities such as Goodyear, Phoenix, Tempe, Litchfield Park, and Prescott Valley. For its time the CFD was an effective structure, and a great deal of what is now on the ground in those communities was financed with this tool. Unfortunately, CFDs have over time become considerably harder to use. Successive legislative amendments have layered on tax-rate ceilings, homebuyer disclosure obligations, and added procedural steps. Another drag on the use of CFDs is that formation of them runs through the municipality, where approval can turn as much on local politics as on the merits of a project. Developers now routinely are asked to absorb delay and uncertainty that a project's economics cannot support, which is a large part of why Arizona has fallen behind Colorado, Texas, and Utah in getting infrastructure financed. A better tool was needed, and Chapter 40 is it. How a SAID Improves on a CFD A State Affordability Infrastructure District (SAID) keeps what worked about the CFD: tax-exempt, property-secured, non-recourse infrastructure financing — while shedding much of what made the CFD cumbersome. Its principal advantages over a traditional CFD: Administrative formation. A SAID is formed by the Arizona Finance Authority against fixed statutory criteria, through a yes-or-no compliance review on a sixty-day clock, rather than through the discretionary approval of a city council or a board of supervisors. Insulation from municipal politics. Because formation is a state-level compliance determination, a meritorious project is far less exposed to local political headwinds than it is under the CFD process. Landowner control of the board. A SAID is governed by a board of the landowners — appointed at formation, then elected on an acreage basis. In a typical municipal CFD, the city council sits as the district board; here, the developer controls governance. Advance funding of impact fees. A SAID can use bond proceeds to advance-pay municipal development impact fees, unlike CFDs, removing one of the largest upfront cash burdens in a project. A uniform, statewide process. The criteria are the same regardless of jurisdiction, replacing the municipality-by-municipality variation that has made CFD outcomes hard to predict. Flexible boundaries. A district may include noncontiguous parcels in the same county within five miles of one another, which fits phased and multi-tract development. Capped cost and a fixed timeline. Authority fees to form a district are capped at $15,000, and a complete petition must be acted on within sixty days. The full range of bonds. A SAID may issue general obligation, special assessment, revenue, and refunding bonds, secured solely by district property and creating no obligation for any other taxpayer. What is a SAID A SAID is a special taxing district that the owners of a development form to finance public infrastructure with tax-exempt bonds: general obligation bonds, special assessment bonds, and revenue bonds. The bonds are secured only by the property inside the district and are repaid over the long term, with terms up to 30 years. They do not affect the credit of the city, the county, or the State, and they create no obligation for any taxpayer outside the district. In practical terms, a SAID lets you finance horizontal infrastructure over the life of the asset instead of writing the check at the front end. The maximum ad valorem rate securing general obligation bonds is capped by statute at $5.00 per $100 of net assessed limited property valuation, with a limited step-up to cover a debt-service shortfall. SAIDs Work for Commercial as Well as Residential Development The SAID bill drew most of its press as a housing-affordability measure, and it appears to be a strong one. It is the first Arizona district statute to let bond proceeds advance-fund municipal development impact fees, which pulls one of the largest upfront cash burdens off a homebuilder's pro forma. But the statute's eligible infrastructure categories apply with equal force to commercial, industrial, and mixed-use projects. An industrial or logistics project can finance roads, rail crossings, sidings, and grade separations. A life-sciences or technology campus can finance its water, sewer, roads, and broadband the same way a subdivision can. Read Chapter 40 as a general-purpose infrastructure finance platform, not a subdivision-only device. How Formation Works A SAID is formed administratively by the Arizona Finance Authority. The Authority reviews the petition for compliance with the statute; it is a yes-or-no review against fixed criteria, not a discretionary negotiation with a city council or a board of supervisors, and it runs on a sixty-day clock once a complete petition is filed. Formation requires the written consent of 100% of the landowners in the proposed district and an engineer's certification that public infrastructure costs will exceed $5 million. The district may include noncontiguous parcels so long as they lie in the same county and within five miles of the district's other property, which accommodates phased and multi-tract development; if any part of the district sits inside a municipality, the whole district must stay within that municipality's limits or planning area. The Authority's fees to form a district are capped at $15,000. Issuing bonds requires a district election. Governance Simplified A SAID is run by a three-member board. The initial directors are named in the petition; after that, directors are elected by the landowners on an acreage basis as ownership diversifies. Board service runs with ownership; a director must either hold fee title inside the district or be an individual designated by a fee-title owner; and corporations, partnerships, and other entities may hold that ownership, vote as owners, and designate the individual who serves. A district has no power of eminent domain and no zoning authority, and directors may not be officials or employees of the municipality in which the district sits. What a SAID Does Not Do It finances; it does not entitle. Zoning, platting, rezonings, use permits, and the specialized approvals a manufacturing or life-sciences facility may need all remain with the local jurisdiction and proceed on their own track. The financing and entitlement timelines should be coordinated with formation of the SAID, but they are separate processes. Two substantive limits are worth flagging at the planning stage. First, electric power is largely outside the tool: the statutory definition of public infrastructure does not reach power generation or transmission, and broader energy infrastructure was removed from the bill during the Senate amendments. A power-intensive user should not assume a SAID will carry its electrical load. Second, where water, sewer, or wastewater facilities fall within a regulated utility's certificated service territory, the district cannot build or own them without the utility's written consent and must convey them to the utility upon completion. Our Take For most master-planned residential work, and for a wide range of commercial and industrial development, a SAID will be the most efficient infrastructure-financing structure Arizona has offered. The right time to evaluate it is early in the acquisition and pre-development process, while the capital stack, the development agreement, and the entitlement strategy are still being set. Once the district's boundaries, general plan, and financing parameters are set, it is cumbersome at best to bring those into conformance later. Our Dorsey team has begun advising our developer clients on SAID formation on residential, commercial, and industrial projects statewide. If you would like us to assess whether a SAID fits a project you are working on, please reach out.

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37 Dorsey Attorneys Named 2026 Top Lawyers by Minnesota Monthly

Minnesota Monthly has recognized 37 Dorsey attorneys across 27 practice areas as 2026 Top Lawyers in Minnesota. Honorees are selected through a peer nomination process and a curated survey of practicing attorneys in Minnesota, who identify leading lawyers across a range of practice areas. Administrative / Regulatory Law Jennifer Coates Antitrust Law Michael Lindsay Banking & Financial Service Law Peter Nelson Copyright Law  Jeffrey Cadwell Corporate Law  Robert Hensley Robert Rosenbaum Criminal Defense: White-Collar  Beth Forsythe Edward Magarian RJ Zayed Health Care Law  Claire Topp Immigration Law  J. Mike Sevilla Insurance Law  Daniel Brown Intellectual Property and Patent Law  Stuart Hemphill International Trade Law  Jonathan Van Horn Labor and Employment Law  Edward Magarian Ryan Mick Melissa Raphan Land Use & Zoning  Jay Lindgren Marcus Mollison Litigation – Antitrust  Michael Lindsay F. Matthew Ralph Jaime Stilson Litigation – Commercial  Michael Lindsay Litigation – Construction  Eric Ruzicka Litigation – Intellectual Property  Peter Lancaster RJ Zayed Litigation – Labor Employment Benefits  Ryan Mick Melissa Raphan Litigation – Trusts and Estates  William J. Berens Theresa Bevilacqua Bridget Logstrom Koci Mass Tort Litigation / Class Actions  James K. Langdon Mergers & Acquisitions Law  Keith Ahlgren Rachel Benedict Brian Burke Morgan Helme John Jorgenson Brian Moore Robert Rosenbaum Jonathan Van Horn Bri Whiting Municipal Law Jay Lindgren Nonprofit/Charities Law Claire Topp Securities / Capital Markets Law Cam Hoang Robert Rosenbaum Securities Regulation Theresa Bevilacqua James K. Langdon Tax Law William J. Berens Trusts and Estates Jennifer Ede Bridget Logstrom Koci Sonny Miller Kiley Petty Henry