ATLANTA — This is an official press release from the U.S. Department of Justice (Civil Division), published as received.
ATLANTA – Delta Airlines, Inc. (“Delta”) paid $8.1 million to the United States to settle claims that the company violated conditions Congress placed on federal relief funds provided to Delta under the Payroll Support Program (PSP). The PSP was created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide financial support to airlines and other businesses. Under the terms of the PSP, companies that accepted federal relief money had to impose compensation caps on highly paid executives. The United States alleges that Delta violated these caps and then falsely certified that it had abided by them.
“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,” said U.S. Attorney Theodore S. Hertzberg. “We will continue to enforce all available laws to punish the misuse of taxpayers’ money.”
The investigation began when a third-party financial researcher filed a whistleblower lawsuit under the False Claims Act referred to as a qui tam suit. The False Claims Act is a federal law that imposes civil liability on any person who submits false claims to the federal government or its contractors. The law imposes treble damages and civil penalties on those who submit false claims. Under the law, whistleblowers (also called “relators”) who bring fraud to the government’s attention share in any recovery obtained by the government.
In this case, the whistleblower alleged that Delta violated the terms of the PSP. The PSP was created in early 2020 as part of the CARES Act to offer domestic airlines and other businesses money in the forms of grants and low-interest loans issued and administered by the Treasury Department. To obtain PSP funding, businesses were required to limit compensation paid to executives who had earned more than $425,000 in 2019. This condition was imposed by Congress to prevent executives from receiving substantial compensation packages after their companies accepted taxpayer-funded support.
Delta received approximately $11.9 billion in PSP funds, including at least $8.2 billion in the form of grants that did not have to be repaid. To receive this money, Delta agreed to abide by the CARES Act’s compensation caps until April 2023. However, the whistleblower alleged that, between March 2020 and April 2023, Delta paid some corporate officers amounts that exceeded the caps set by the agreements. Delta then allegedly falsely certified its compliance with the caps and failed to notify the Treasury Department of its breach of the agreement.
This settlement announced today also resolves the qui tam lawsuit filed in the U.S. District Court for the Northern District of Georgia, United States ex rel. H. Remidez, LLC v. Delta Airlines, Inc., No. 1:23-CV-1116. The relator will receive $825,000 from the settlement in this matter, plus attorney’s fees.
This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the Civil Division’s Commercial Litigation Branch, and the U.S. Department of the Treasury, Office of Inspector General.
The civil settlement was reached by Assistant U.S. Attorney Anthony DeCinque and Trial Attorney James Nealon and former Senior Trial Counsel Dan Spiro of the Civil Division’s Commercial Litigation Branch.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6185. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
