Delta Airlines Pays $8.1 Million to Settle COVID-19 Relief Fund Misuse Claims
ATLANTA, GA – Delta Airlines, Inc. has paid $8.1 million to the United States to resolve allegations that the company violated executive compensation caps tied to federal relief funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s Payroll Support Program (PSP).
The United States alleged that Delta violated conditions placed on the PSP funds, which required companies to impose compensation caps on highly paid executives, and then falsely certified its compliance with these caps.
“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 originated from a whistleblower lawsuit filed under the False Claims Act by a third-party financial researcher. The False Claims Act allows whistleblowers, or “relators,” who bring fraud to the government’s attention to share in any recovery. In this case, the relator, H. Remidez, LLC, will receive $825,000 from the settlement, plus attorney’s fees.
The PSP, created in early 2020, provided financial support to domestic airlines and other businesses through grants and low-interest loans administered by the Treasury Department. To receive PSP funding, businesses were required to limit compensation for executives who earned more than $425,000 in 2019. This condition was imposed by Congress to prevent executives from receiving substantial compensation packages while their companies received taxpayer support.
Delta received approximately $11.9 billion in PSP funds, including at least $8.2 billion in non-repayable grants. The company 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 exceeding these caps and then falsely certified its compliance, failing to notify the Treasury Department of the breach.
The settlement resolves the qui tam lawsuit, United States ex rel. H. Remidez, LLC v. Delta Airlines, Inc., No. 1:23-CV-1116, filed in the U.S. District Court for the Northern District of Georgia.
The 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, Trial Attorney James Nealon, and former Senior Trial Counsel Dan Spiro.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
