Ineligible PPP Loan Leads Lake Ridge Association To Make Settlement

LAKE RIDGE, VA — There have been numerous cases in the U.S. of homeowners associations that received Paycheck Protection Program loans and later were forced to make repayments because of ineligibility. One of these was Lake Ridge Parks and Recreation Association, a homeowners association based in Lake Ridge.

On Monday, federal prosecutors announced a settlement by the Lake Ridge Parks and Recreation Association. The homeowners association is paying $695,000 for False Claims Act allegations that it received a PPP loan that it was ineligible for.

Prosecutors say the Lake Ridge organization is was not eligible due to its 501(c)(4) social welfare organization status. When the association applied for the PPP loan, prosecutors say it certified that it was eligible for a loan under the program's rules.

The PPP was a loan program for eligible small businesses during the COVID-19 pandemic. Applicants had to provide income and supporting documents to qualify for the loan amount and for the later loan forgiveness. A whistleblower provision of the False Claims Act allowed private individuals to file on behalf of the U.S. on false claims and keep a share of the money recovery.

In the Lake Ridge Parks and Recreation Association case, the whistleblower will receive a 10 percent share of the settlement. Wade Riner, a real estate investment leader who first filed the claim, has been part of other PPP fraud cases, according to the New York Times.