A word of caution from a suspicious lawyer on PPP Loans

A word of caution from a suspicious lawyer . . . .So instead of downsizing our massive behemoth of government bureaucracy, Congress passed the CARES Act, establishing the so-called Paycheck Protection Program (PPP), which allows the SBA to guarantee 350 BILLION in loans to help small businesses. As of April 16, 2020, a total of 1,661,397 loans have been made through 4,975 lenders nationwide, eating up all the available money thus far.

Many businesses and investors believe they’re not going to have to pay back these loans. If you believe that, you don’t know government. But there’s way more at stake here than just being required to pay back a low interest loan. Way more. Expect the DOJ to turn their attention to small businesses in the very near future. They’re gonna “help” small business all right….

Take a look at the bill. It’s “Yuge.”

It’s gonna take more government officials to run this thing than would be necessary to run 10 or 12 third world countries. I’m skeptical about who’s paychecks are being protected here. But it’s not just the size of the program that gives me concern. More importantly, these loans have been rushed through, under the hysterics created by the government itself, as well as the media. What does one facing the apocalypse – basically, the scenario of riding motorcycles with spiked shoulder pads – represent on an emergency rushed bank loan application? Therein lies the question of the very near future.

Due to widespread shutdowns, we’re headed into an epic economic depression. That will be a depression for those of us in the private sector. At least at first. They can always take out more debt and print money. But that will collapse too without the forecast of an income stream of real money. The government will want its money from these PPP loans. The government always wants its money. Several quotes come to mind:

  • 1. “I’m from the government. I’m here to help.”
  • 2. “F*ck you, pay me.”
  • 3. “There’s no such thing as a free lunch.”

The False Claims Act (FCA) is a federal law which imposes liability on persons and companies (see “small businesses“) who defraud governmental programs. This law includes a qui tam provision that allows people who are non-government employees (see lawyers and law firms) called “relators” to file lawsuits on behalf of the government. There’s another name for this: “whistleblowers.” Under the FCA, the relators / whistleblowers receive a portion of any recovered damages – generally 15 to 30 percent. This is the basis or all these pharmaceutical lawyer commercials you see on TV. Those lawyers are gonna jump all over this. We need only look to the last “bailout” from Obama’s TARP program in 2008. Just in 2015 alone, the DOJ recovered over 3.5 BILLION in damages under the FCA. And that was the “fourth consecutive year” for such large damages recoveries, as the DOJ proudly announced. It’s an annual expected component of the budget at this point.

Legal experts who practice in the area of the FCA are already warning other lawyers to expect a heightened focus on individuals and small businesses now that these new loans have been made on such a rushed basis. The DOJ recently restated its “commitment to use the False Claims Act and other civil remedies to deter and redress fraud by individuals as well as corporations.”

And it’s not just the private lawyers. Do you think the mountain of lawyers and investigators at the DOJ are going to sit idly by and do nothing? No, they’re ready to get back to work. Remotely of course. In fact, they’ll need even more resources and employees in order to combat the coming fraud crisis you’ll hear about. “With a new national crises at hand, and an even bigger commitment of federal assistance to combat it, expect a plethora of federal and state agencies to join the effort to police recovery spending. Indeed, oversight mechanisms in the act go beyond establishing the special inspector general and include establishing a Pandemic Response Accountability Committee, which is also charged with oversight.” Id.  

Now that’s an acronym that ought to scare the hell out of anyone involved in the application of these loans. I can see that on the side of a van pulling up next to front doors in a Polish ghetto, looking for whatever is deemed verboten.It’s not just the applicants, but the bankers as well, and anyone else connected to the process, or the business. The FCA lawyers and the DOJ, using a theory of mere “false certification” of application information, can go after individuals, small businesses, and the lenders who participated in the program. All it takes is to show false information included in the laundry list of certifications in the applications, including, but not limited to:

  • the recipients must use the funds to retain 90% of their workforce;
  • the recipients must remain neutral in union-organizing efforts;
  • the uncertainty of economic conditions as of the date of the application makes the loan necessary to support ongoing business operations;
  • the recipient INTENDS to restore not less than 90% of its workforce and to restore all benefits to workers no later than 4 months after the termination of the health emergency;
  • the recipient is not a debtor in a bankruptcy proceeding;
  • the recipient will not pay dividends to stockholders.

What is “necessary” and who gets to determine what was “necessary?” And who gets to determine what the recipient “intended?” If the FBI can make General Flynn into a convicted felon just by asking their questions in a certain tricky way, what can they do to you? Not only that, but these applicants are also certifying to all other information provided in these applications. Just take a look:

Government doesn’t word things in such a way as to be concise and clear so that everybody’s on the same page. They word things in such a way so that, if they want to get you, they’ll get you:

Who’s angus is on the line? It’s not just the person who signs the application, but many other potential individuals within a “small business”:

Lastly, to go after you civilly, rather than criminally, under the FCA, the DOJ doesn’t have the usual constraints of the Bill of Rights and the standard of beyond a reasonable doubt. Instead, they only need to prove the civil standards of “deliberate indifference” and “reckless disregard.” You know, like what happens many times when you rush through an emergency apocalypse relief application. It’s just paperwork….

“If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions.” – James Madison

New changes in West Virginia law regarding hemp and medical marijuana

Update: Facebook video I made:   https://www.facebook.com/JohnBryanLaw/videos/244860226411030/


So last night I attended a great seminar on the developing legal changes in West Virginia. Here are some of my notes, regarding my take-aways…  This is a completely new area of the law, and economy, in West Virginia.  Here were my basic takeaways.  Excuse the short-hand notes:

Things learned from the hemp seminar last night:

1. There will be a boom of investment into West Virginia, including a land rush, for hemp and medical marijuana, similar to the marcellus shale.  Foreign investors and land agents are going to be looking for lease contracts.  Private property owners and farmers are going to want to cash in as well.  A legal quagmire is imminent, due to the next thing:

2. The difference between hemp and marijuana is a chemical difference only.  You cannot tell the difference, nor can law enforcement, between hemp and M. by looking at it.  A chemical analysis has to be performed.  Hemp is, by law, .3% or less THC of a certain strain of marijuana plant, and therefore not illegal.

3. State and federal law, and authorities are not on the same page.  The WV DOA is fully on-board and is looking to assist landowners and businesses in developing this new economy, while the feds are still looking for pot needles……  There are differences in state and federal law which can land you in big trouble very easily…..

4. Industrial hemp growing, and production, is going to be much easier than dealing with medical marijuana.  Pretty much anyone is going to be able to get into hemp, so long as all owners, and land owners, pass background checks.  While MM is going to be limited to 10 growers, and 10 processors…..  Insert WV good ole’ boy politics.  

5. Both hemp and MM are going to be cash-intensive businesses.  While hemp is reasonable as far as permit fees go, there currently is no access to banking institutions, nor insurance for those activities.  MM has the same problems, with the added bonus of enormous filing fees and capital requirements.  To get into that business, it looks like millions in liquid capital is going to be necessary.  With the added bonus of no banking, no insurance, and high legal risk.  The cherry on top is that apparently the IRS is auditing pretty much 100% of these businesses….

6. LEOs are going to be very slow in understanding the legalities and the differences.  You must get legal advice prior to getting involved.  Transporting can be big trouble. Likely better to fully notified any applicable agencies ahead of time.  Be proactive.

7. This is going to be a regulation nightmare, but it will be necessary.  Permitting is going to be key.  Permits will be denied based on nondisclosure, lies, or omissions.  Better to be fully compliant than sorry.

Summary:

Get ready and buckle up because this industry is coming; and it could be an economic boom for West Virginia.  There’s a lot of money to be made, and let’s try to keep it in WV rather than the out of state investors.  But as they say, you’re going to need a lot of 

Lawyers, guns, and money…….

Thanks to Jennifer Mason, Esq., of Dinsmore & Shols law firm for the presentation last night.  The thoughts here are my own and not hers BTW…..

West Virginia Excessive Force Litigation Update: Sawyer Case

We are currently litigating the defendants’ motion for summary judgment in Sawyer v. Asbury, et al.  Our response contains a fairly thorough walkthrough of excessive force law for most types of excessive force claims.  Of course this is tailored to the 4th Circuit as much as possible.  But the law is similar throughout all of the circuits.

Two of the exhibits:

The Federal Officer Removal Statute 28 U.S.C. 1442(a)(1)

Here is a recent filing in the United States District Court for the Southern District of West Virginia.  It has to be one of the oddest things I have ever done in the realm of criminal defense.  Most lawyers know that a civil case in state court can be removed by the defendant(s) in certain circumstances.  In fact, most plaintiffs lawyers in West Virginia, usually myself included, do everything they can to avoid such a scenario.  But did you know that in certain instances, state criminal prosecutions can be removed to federal court?  Well it’s true.  Similar to being a plaintiff in the 4th Circuit, usually it would be a really bad idea to handle a criminal case in federal court rather than in state court.  Defendants almost always get hammered in federal criminal prosecutions.  But conceivably there are situations where you do want to be in federal court – especially one in which state court officials (e.g., prosecutors/magistrate judges) have formed a lynch mob and are going after your client.

28 U.S.C. 1442(a)(1) is known as the federal officer removal statute, and allows state court cases of almost any sort to be removed (forcibly) to federal court.  It is usually used in civil cases. For instance, if you were to try to sue an FBI agent in state court, it would quickly make its way to federal court using this removal statute, and it would be there about 5 seconds before being dismissed.  But 1442(a)(1) also allows for state criminal prosecutions to be removed.  It has rarely been used, mostly because scenarios which would invoke it rarely occur.  It requires that a federal officer be charged with a crime in state court, and that he or she have a colorable federal defense (usually federal immunity) to the charge.

In our scenario, my client does indeed have a colorable federal defense – LEOSA (Law Enforcement Officers Safety Act).  Passed in 2004, it allows current or required qualified law enforcement officers to carry concealed weapons notwithstanding any state or local laws to the contrary.  My client is a federal law enforcement officer and was charged with carrying a concealed weapon. The arresting state cop and the state prosecutors have claimed complete ignorance of the federal law.  And since it is a misdemeanor, it has been in the West Virginia magistrate court system, which in this case at least, equaled complete ignorance and disregard for federal law.  Using 1442(a)(1) I was able to file a Notice of Removal in federal court, which barring a remand by the federal judge, will completely divest the state courts from jurisdiction over the prosecution.

Between the civil lawsuit we filed over this, and the protracted criminal litigation (which is on its way to a state record for volume of misdemeanor litigation) it is mind numbing that state prosecutors and law enforcement would dedicate so many resources and expenses in order to secure a misdemeanor conviction on one person.  Beware, cross your local authorities and you could be next.

Federal lawsuit against Wood County Sheriff’s Department in the news

In the Charleston Gazette this morning is an article on a federal lawsuit I filed yesterday on behalf of Brian Sawyer, replete with a video of his beating at the hands of a Wood County, WV deputy.  This is an excessive force case which is currently the subject of an FBI investigation, as the article confirms.

This incident would have coasted under the radar if it were not for Sgt. Dave Westfall of the Wood County Sheriff’s Department, who blew the whistle on what happened, and saved the surveillance video of the beating, providing it to the FBI after his superior allegedly told him to not throw his fellow deputy “under the bus.” Westfall is a veteran of the U.S. Special Forces, with a distinguished career as a law enforcement officer.  He is also a certified self defense instructor and use of force instructor.  It goes to show that real men do not need to use their badge to beat people up.  Real men use restraint and act with a clear head.  Real men do what is right and would never cover up a civil rights violation just because he can.

Unfortunately, now Sgt. Westfall is defending himself against the Wood County Sheriff’s Department.  He alleges that he was caught by his superiors showing this video to two FBI agents secretly at a Cracker Barrel restaurant, and now they are seeking to discipline him for unrelated allegations.  And we wonder why other officers do not come forward to report misconduct . . . .  Their choice is to have a long, quiet career with no bumps in the road by staying quiet, or to do what is right and face persecution.

Now we all need to stand behind Sgt. Westfall and keep him from getting thrown under the bus for having integrity.

This is a good lesson on what the proper role of the federal government is.  I was watching the Maynard / Rahall debate last night, and there was a lot of discussion on the proper role of the federal government.  There are a couple of things that we do need the federal government for: raising, maintaining, and operating a military; and stepping in to local situations where there is questionable accountability and integrity within state or local government.  Thank God we live in a country where we can go to the FBI if we believe that there has been a coverup or conspiracy among law enforcement at the state or local level.  Otherwise, what could we do?

UPDATE: (10/28/10)

Other Media Links for this case:

WTAP article

WTAP video (Note: during the video the anchor says something about Sawyer pleading guilty to assault on an officer, and at the exact time she says that you see Sawyer in the background being choked and held up off his feet.  Obviously a vicious assault against that officer.  Of course when he took the plea offer, he would have had no idea about the video, and without a video it’s like talking to a brick wall when you tell people you were beaten up.  That’s the usual way things work.  You get beaten up, and they charge you with assault.  Then they give you a good deal on the jail sentence if you just plead to assaulting an officer.)

News and Sentinel

Daily Mail

Statement released by Sheriff Jeff Sandy:

“On October 26th, 2010, a federal law suit was filed concerning alleged “excessive force” violations being committed by a former employee of the Wood County Sheriff’s Office. I assure the public that the Wood County Sheriff’s Office will continue to cooperate fully. As Sheriff of Wood County, I am responsible for all events that have occurred at the Wood County Sheriff’s Office since taking office. Under my watch the Sheriff’s office has not and will not tolerate illegal and unethical behavior by any employee that has taken the oath of office. The Wood County Sheriff’s Office has some great public servants, and this alleged incident should not reflect upon the entire organization. In ending, as Sheriff, I welcome any and all investigations by federal and state investigators, because after their investigation is completed it will show an unbiased detail of the events.”

Note: probably not coincidentally, I also have another case currently pending in federal court for a police beating which occurred in Parkersburg – Tim Mazza.  At least this time officials have not been blaming me or tort reform….

DOJ investigations of pattern or practice police misconduct resume (and shift course)

You might have noticed in the news today, as per CNSNews.com, that the DOJ has commenced an investigation of Arizona Sheriff Joe Arpaio – a man known for the strict enforcement of laws – and who is hated by the political left.  The article doesn’t say so, but his Sheriff’s Department is being investigated by the Special Litigation Section of the Civil Rights Division of the DOJ – a place I once worked.

It’s probably not a coincidence that this investigation comes on the heels of the inauguration of President Obama.  Either every career liberal in the DOJ has finally been given a green light to conduct their dream investigations, or grateful federal employees are scrambling to secure their jobs in light of the sudden shift in political leaning in the executive branch.

The Special Litigation Section is responsible for pattern or practice police misconduct investigations (among other things) – which results only in civil – not criminal – litigation.  Individual incidents could be prosecuted criminally by the Criminal Section of the Civil Rights Division.  

You will notice from the few and far between police misconduct investigations in the past 8 years, that they were not high on the Bush Administrations’ priority list – except to assist law enforcement agencies throughout the country in evading civil 1983 lawsuits.  For instance, see this letter to the Austin Police Department from the SLS.  By the way, this letter, and others that the DOJ provides the public, contains some great stuff for plaintiff’s attorneys, or anyone else who wants to learn more about proper “use of force” and “supervisory oversight” and other policies and procedures for police departments – at least according to the DOJ.

Nevertheless, the SLS has not yet even listed the Arpaio investigation in it’s website.  And until then, the public will not know what the specific allegations are.

 – John H. Bryan, West Virginia Attorney.