Delta Settles $8.1M Lawsuit Alleging Misuse Of Pandemic Funds: DOJ

Updated 4:04 p.m. to include Delta statement

ATLANTA, GA — Delta Airlines paid $8.1 million to the U.S. in a lawsuit settlement involving misuse of federal pandemic relief funds paid to the Atlanta-based company, the U.S. Department of Justice said Tuesday.

The funding was part of the Payroll Support Program, an initiative established under the Coronavirus Aid, Relief and Economic Security Act for the purpose of supporting businesses, including airlines.

The PSP provided grant money and low-interest loans, the DOJ said.

Delta was accused of violating a bullet point of the program, which included capping compensation for executives who earned more than $425,000 in 2019. In addition, the DOJ accused the major airlines of falsely certifying that it adhered to the caps.

“When companies accept federal assistance, especially generous pandemic-relief funds like those at issue here, they owe a duty to the American people to respect the conditions placed on those funds,” U.S. Attorney Theodore S. Hertzberg said in a news release. “We will continue to enforce all available laws to punish the misuse of taxpayers’ money.”

Authorities first investigated Delta after they say a third-party financial researcher filed a whistleblower lawsuit under the False Claims Act, a federal law that imposes consequences on anyone who submits false claims to the government.

The DOJ said Delta received about "$11.9 billion in PSP funds, including at least $8.2 billion in the form of grants that did not have to be repaid."

However, the whistleblower claimed some of Delta's corporate officers were paid more than the PSP's mandated cap, the DOJ said. The caps were put into place until 2023.

Delta was accused of not notifying the U.S. Department of Treasury of its breach of the agreement.

"The relator will receive $825,000 from the settlement in this matter, plus attorney’s fees," the DOJ said.

In a statement to Patch, Delta said it "strongly believes it fully complied with all requirements of the CARES Act."

The statement continued:

"At issue is a disagreement about a technical matter involving the time periods used to measure executive compensation during the pandemic. Delta has consistently maintained the claim is without merit and settled to avoid the expense and distraction of litigation. Delta remains grateful for the Treasury Department's efforts that kept essential airline employees operating our nation's air travel system."

ALSO SEE: Get The Latest Local News (For Free!) With One Quick Tap