9th Circuit revives a False Claims Act lawsuit alleging CalCon Mutual Mortgage fraudulently obtained a…
Relator, LLC v. Erskine
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9th Circuit revives a False Claims Act lawsuit alleging CalCon Mutual Mortgage fraudulently obtained a nearly $5M COVID-19 PPP loan, ruling the case was not blocked by the public disclosure bar.
Why it matters
The Ninth Circuit reversed a district court's dismissal of a qui tam lawsuit alleging that CalCon Mutual Mortgage and its CEO made false statements to obtain and keep a nearly $5 million Paycheck Protection Program loan. The court found that the public disclosure bar of the False Claims Act did not block the case, because the information the plaintiff relied on was not substantially the same as what appeared on a government oversight website, and CalCon's own website does not count as news media. The court also found the district court abused its discretion by refusing to let the plaintiff amend its complaint, and sent the case back for further proceedings.
Who it affects
This ruling directly affects businesses that received PPP loans and may face similar qui tam False Claims Act challenges, as well as private parties who bring fraud suits on the government's behalf. It also affects courts and litigants interpreting when the public disclosure bar blocks False Claims Act cases and when plaintiffs must be given leave to amend their complaints.
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Decision issued Jul 15, 2026
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- Decision issued Jul 15, 2026Published opinion
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Jul 15, 2026 · Published opinion
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This case arose from a qui tam lawsuit, meaning a private party sued on behalf of the federal government, alleging that CalCon Mutual Mortgage LLC and its founder Joshua Erskine made multiple false statements to obtain a nearly $5 million PPP loan during the COVID-19 pandemic. The False Claims Act allows such private suits but includes a public disclosure bar, which blocks claims based on information that has already been publicly disclosed in news media or government reports. The central questions on appeal were whether that bar applied here, and whether the plaintiff should have been given another chance to fix its complaint. The Ninth Circuit held that the public disclosure bar did not apply. Even assuming the government website PandemicOversight.gov counts as a federal report, the court concluded that the specific information the plaintiff used to build its case was not substantially the same as what was posted there. The court also ruled that CalCon's own company website does not qualify as news media under the False Claims Act, so disclosures there cannot trigger the bar either. The appeals court agreed with the district court on one narrow point: the plaintiff had not adequately pleaded that CalCon falsely inflated its employee count in the loan application. However, the Ninth Circuit found that the district court went too far by denying the plaintiff any opportunity to fix this deficiency through an amended complaint, calling that decision an abuse of discretion. The case was sent back to the district court for further proceedings, meaning the plaintiff will have the chance to revise and refile its complaint. The other alleged misrepresentations, including that CalCon was ineligible for PPP funds as a lender, that it falsely certified the loan was necessary, and that it misrepresented how it would use the funds, remain in play.
CITATION AND RECORD
Record source: CourtListener
FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT United States of America ex rel. No. 25-2073 RELATOR, LLC, a California limited liability company, D.C. No. 3:22-cv-01158- Plaintiff - Appellant, LL-AHG v. OPINION JOSHUA K. ERSKINE, an individual; CALCON MUTUAL MORTGAGE, LLC, a California limited liability company; DOES 1- 10, Defendants - Appellees. Appeal from the United States District Court for the Southern District of California Linda Lopez, District Judge, Presiding Argued and Submitted April 23, 2026 Pasadena, California Filed July 15, 2026 2 RELATOR, LLC V. ERSKINE Before: Michelle T. Friedland and Eric D. Miller, Circuit Judges, and Mark C. Scarsi, District Judge. * Opinion by Judge Scarsi SUMMARY ** False Claims Act The panel reversed the district court’s dismissal, for failure to state a claim, of a qui tam action under the False Claims Act and remanded for further proceedings. Relator, LLC, alleged that CalCon Mutual Mortgage, LLC, and its founder and chief executive officer, Joshua K. Erskine, made false statements in a Paycheck Protection Program loan application. The panel held that Relator’s claim was not barred under the False Claims Act’s public disclosure bar, 31 U.S.C. § 3730(e)(4)(A), which prevents litigants from bringing claims based on facts that have been publicly disclosed in the news media or in government proceedings or reports. Assuming without deciding that information on PandemicOversight.gov qualifies as a federal report, the panel concluded that the information Relator pleaded in support of its claim was not “substantially the same” as the * The Honorable Mark C. Scarsi, United States District Judge for the Central District of California, sitting by designation. ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. RELATOR, LLC V. ERSKINE 3 information disclosed on that website. The panel also concluded that CalCon’s own website did not qualify as “news media” for purposes of the public disclosure bar. The panel agreed with the district court that Relator failed to plead a facially plausible claim that CalCon falsely inflated its number of employees in its loan application materials. The district court, however, abused its discretion by denying Relator leave to amend its complaint. COUNSEL Michael Eggenberger (argued), Hecht Partners LLP, New York, New York; Kathryn L. Boyd, Hecht Partners LLP, Los Angeles, California; for Plaintiff-Appellant. Terence M. Grugan (argued) and Matthew A. Stoloff, Ballard Spahr LLP, Philadelphia, Pennsylvania; Scott S. Humphreys, Ballard Spahr LLP, Los Angeles, California; for Defendants-Appellants. 4 RELATOR, LLC V. ERSKINE OPINION SCARSI, District Judge: Relator, LLC, brought a qui tam action against CalCon Mutual Mortgage, LLC, and its founder and chief executive officer, Joshua K. Erskine, alleging that CalCon made false statements in its Paycheck Protection Program (“PPP”) loan application in violation of the False Claims Act (“FCA”). The district court dismissed Relator’s amended complaint without further leave to amend. Among other issues, Relator asserts on appeal that the district court erroneously applied the public disclosure bar to dismiss Relator’s claim and abused its discretion in denying leave to amend. We agree and, therefore, reverse and remand for further proceedings. I. Congress established the PPP in March 2020 to provide emergency loan assistance for businesses affected by the COVID-19 pandemic. Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 1102, 134 Stat 281, 286–94 (2020). Under the PPP, eligible businesses could obtain low-interest, forgivable loans to cover payroll costs, rent, utilities, and other business expenses during the pandemic. 15 U.S.C. §§ 636(a)(36)(F)(i), 636m(b); see Business Loan Program Temporary Changes; Paycheck Protection Program, 85 Fed. Reg. 20811, 20812 (Apr. 15, 2020). To obtain a PPP loan and have it forgiven, applicants had to certify that they were eligible for the loan and provide information on how they intended to use the funds. 15 U.S.C. §§ 636(a)(36)(G)(i), 636m(e)(3); Business Loan Program Temporary Changes, 85 Fed. Reg. at 20812, 20814, 20816; Business Loan Program Temporary Changes; Paycheck Protection Program—Revisions to Loan Forgiveness and RELATOR, LLC V. ERSKINE 5 Loan Review Procedures Interim Final Rules, 85 Fed. Reg. 38304, 38310 (June 26, 2020). As alleged in Relator’s amended complaint, CalCon is a mortgage lender that provides conventional mortgage loans as well as other, less traditional products like jumbo, “fix and flip,” construction, and bank statement loans. CalCon also acquires loans from other lenders, which it repackages into mortgage-backed securities. CalCon received and had forgiven a $4,964,200 PPP loan. Relator contends that CalCon made several misrepresentations in its applications to obtain the loan and have it forgiven, in violation of the FCA. First, Relator argues that CalCon is a mortgage lender ineligible for PPP funds. Relator cites 13 C.F.R. § 120.110(b), which excludes “[f]inancial businesses primarily engaged in the business of lending” from PPP eligibility, with some exceptions for mortgage servicing companies. To support its argument that CalCon fell under § 120.110(b)’s exclusion, Relator points to CalCon’s use of North American Industry Classification System (“NAICS”) code 522292 in its PPP application, 1 which signifies that CalCon is a lending company that uses real estate as collateral. Relator also alleges that CalCon offers certain financial products that excepted mortgage servicing companies could not sell. Relator contends that, together, these facts indicate that CalCon is subject to § 120.110(b)’s exclusion and does not qualify for any exception. Relator reasons CalCon must have misrepresented its eligibility to 1 “NAICS is the standard used by federal statistical agencies to classify businesses in collecting, analyzing, and publishing statistical data related to the U.S. business economy.” Gose v. Native Am. Servs. Corp., 109 F.4th 1297, 1307 n.9 (11th Cir. 2024) (citation modified). 6 RELATOR, LLC V. ERSKINE receive PPP loans given its status as a mortgage lender excluded from eligibility. Second, Relator alleges that CalCon’s use of PPP funds necessarily failed to comply with the purposes authorized by statute because CalCon was not eligible to receive a PPP loan at all. Thus, CalCon’s certification that it would not use PPP funds for any unauthorized purpose was also false. Third, Relator contends that CalCon falsely certified that the PPP loan was necessary to support its operations because CalCon’s revenue and profits did not decline during the pandemic. In support of this assertion, Relator alleges that the Federal Reserve supported mortgage lenders like CalCon by purchasing large amounts of mortgage-backed securities, that CalCon had access to significant capital through its parent company, and that CalCon increased the volume and profitability of its business during the relevant time period. Fourth, Relator alleges that CalCon falsified its number of employees, which artificially inflated the size of the loan it received. Fifth, because the foregoing certifications and s
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