(RNS) — A dispute over a single word in a COVID-era relief law — and the political divides over Israel – have cost a Jewish advocacy group dearly.
Jewish Voice for Peace, a Washington, D.C.-based anti-Zionist nonprofit, agreed in mid-January to pay $677,634 to settle allegations made by a pro-Israel lawyer that the progressive Jewish organization had fraudulently received a second Paycheck Protection Program loan.
At issue was a provision in the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, that authorized the PPP COVID-era loans, which banned groups that “primarily engaged in political or lobbying activities” from applying for a second loan.
Jewish Voice for Peace, while it opposes military aid for Israel and supports “Palestinian liberation,” said its activities are not primarily political.
The Department of Justice disagreed. The department also alleged that JVP committed fraud by checking a box on an application for a $338,817 loan that said the group was not primarily political. That loan was granted in September 2021 and forgiven later that year.
To avoid a costly legal battle over the word “primarily,” JVP decided to settle — paying twice the amount of its second PPP loan, with no admission of guilt. If JVP had lost in court, the group would have had to repay three times the amount of the loan.
“The details of our loan were perfectly ordinary — we maintain we did absolutely nothing wrong,” said JVP in announcing the settlement. “However, we determined that opposing a politically motivated investigation would cost more than the settlement itself.”
Jewish Voice for Peace is one of at least five nonprofits, including three groups critical of Israel, to run afoul with federal officials over the rules about political involvement and PPP loans. That clause also barred groups that describe themselves as think tanks — such as the Middle East Institute, which paid $718,558 to resolve fraud allegations over its PPP loans.
Some of the early civil investigations into PPP loans appeared to be politically motivated, in part because the Department of Justice has relief on whistleblower complaints filed under a federal law known as the False Claims Act while investigating fraud. That’s led a group of entrepreneurs to file fraud complaints about alleged fraud in hopes of earning rewards and, in some cases, harming their political enemies.
Among those entrepreneurs is David Abrams of the Zionist Advocacy Center — who filed complaints against Jewish Voice for Peace and other liberal groups, according to the Forward.
Pro-Israel groups that received second loans and are similarly politically active as Jewish Voice for Peace, however, have so far escaped the DOJ’s attention, the Forward — which focuses on Jewish life — reported. The Forward identified six prominent pro-Israel Jewish groups, including StandWithUs and the Conference of Presidents of Major American Jewish Organizations, that fall into that category.
Demonstrators attend a “Seder in the Streets” event April 23, 2024, on Grand Army Plaza in Brooklyn, New York. The Passover-related protest was organized by Jewish Voice for Peace, IfNotNow and Jews for Racial and Economic Justice. (RNS photo/Fiona André)
Other faith-based groups, including Christian think tanks such as the Institute on Religion and Democracy and the Center for Public Justice, also obtained a pair of PPP loans — despite the ban in the law on think tanks receiving such loans. So did Bread for the World, an ecumenical group known for its advocacy on the issue of hunger.
A spokesperson for the IRD said it has not been contacted by the DOJ about its PPP loans. The Center for Public Justice did not respond to a request for comment. Bread for the World declined to comment.
It’s unclear whether other faith-based nonprofits that received two PPP loans and are politically active will be under DOJ scrutiny.
A spokesperson for the U.S. attorney’s office in D.C. directed RNS to the national office for comment about the interpretation of the eligibility requirements in the COVID-19 law and declined to answer questions about other groups that might be under investigation. The national office did not respond to a request for comment.
In a press release about Jewish Voice for Peace, the U.S. attorney’s office said that an investigation found the group was “primarily engaged in political activities.”
“The Paycheck Protection Act Program existed to help businesses survive a devastating global pandemic,” U.S. Attorney Matthew M. Graves said. “When business owners unfairly drain those funds — either by not reading the eligibility requirements or disregarding them — they put the entire program at risk. In the end, those who are harmed are the businesses that actually qualified for and needed the money, and the taxpayers who funded the program.”
Frank Sommerville, a Dallas-area attorney with a long history of working with faith-based nonprofits, doubts that many other faith groups that received the two loans are at risk. That’s in part because they are not as politically active and in part because they are not involved in the political divide over Israel.
“I don’t see this being a big issue for most of our faith-based nonprofits,” said Sommerville.
Launched in the early days of the COVID-19 pandemic, the PPP program provided forgivable loans to businesses and nonprofits to pay staff. More than 11.5 million loans — totaling $793 billion — were made under the program. Almost all were forgiven. Concerns about fraud, however, have led the Department of Justice to launch more than 3,500 investigations, including 1,200 civil cases against groups that received COVID-era relief.
One of the first nonprofit groups to clash with the DOJ over PPP loans and political restrictions was the Washington, D.C.-based Institute for Policy Studies, which has been described as a progressive think tank. In 2023, the group agreed to repay a $481,000 loan, which had been approved in 2021 and forgiven the following year. The group also agreed to repay a small amount of interest.
The IPS settlement, however, did not involve allegations of fraud.
“In its review of the eligibility criteria, the government disagreed that IPS was entitled to the second payment, but nonetheless agreed that it was not appropriate to resolve the dispute under the False Claims Act,” the group said in an email statement. “Accordingly, in a civil settlement based on contract claims, not fraud, IPS agreed to repay the 2021 loan and associated lender fees, plus 1.5 percent interest, but with no penalty.”
At least one nonprofit accused of PPP fraud is fighting the DOJ in court. After receiving a Civil Investigative Demand from federal investigators, lawyers for the Center for Immigration Studies, a conservative group, filed a motion to modify or set aside that demand.
Attorneys for the Center for Immigration Studies say the group asked the Small Business Administration, which oversaw the PPP loans, about the limits on political activity and on think tanks and was told “go and get the money,” according to filings in federal court.
Scott St. John, an attorney for the center, also recounted his conversation with the DOJ, in those filings, saying the dispute was over loan eligibility — not fraud — and rejected an offer to settle for twice the loan amount. He argued that the center disclosed its mission and checked with the SBA and got the go-ahead for the loan — none of which was fraud.
“I made clear that it would consider repayment of the loan if it was not actually eligible, but it was unwilling to repay a multiple when it had acted in good faith by inquiring about its eligibility,” St. John wrote in a filing. He also argued the Department of Justice was trying to pressure the center to settle a fraud claim, despite the facts.
“The story in the petition speaks for itself,” St. John told RNS in an email. “DOJ is abusing its investigatory power by using a breathtakingly broad subpoena to extract a settlement on a meritless claim.”
The DOJ’s response to the Center for Immigration Studies court filings is under seal and not available to the public.
Abrams, who filed the complaints against Jewish Voice for Peace, stands to benefit politically and financially from the PPP fraud settlements. Politico reported last summer that the previous settlement with the Middle East Institute netted him more than $70,000.
He defended his actions, which Abrams referred to as “lawfare,” last summer. He told Politico that groups like Jewish Voice for Peace have the right to criticize Israel.
“However, from my perspective,” he said, “they don’t have the right to take government money to support their work that they’re not entitled to.”
