[00:00:14] Speaker 02:
Good morning, Your Honors. Here, the district court far exceeded this court's X plus Y equals Z test for determining whether the public disclosure bar applies as set forth in Metesky and other precedent in two ways. First, the X, or the true state of facts, CalCON's ineligibility to participate in the Paycheck Protection Program was not, and in fact could not, have been disclosed by the NAICS code.

[00:00:42] Speaker 02:
Second, that code did not and could not have put the government on notice to investigate the true state of affairs, which in any event is not the correct standard under the FCA.

[00:00:53] Speaker 02:
These errors create a statutorily unanticipated catch-22, where the NAICS code both disclosed and did not disclose CALCONS ineligibility.

[00:01:03] Speaker 00:
Can we dig in on that code? Because I think that seems to be the crux of an issue here. So the argument is that the code is for – lending companies that use real estate. And the exception is for mortgage service company that disperses loans and sells them within 14 days. Aren't those two inconsistent? I mean, is it possible to both be a business that backs up with loans with real estate and then recycle them within 14 days?

[00:01:40] Speaker 02:
Your Honor, what the actual NAICS code reveals is not whether or not CalCon is eligible or ineligible. And this mismatch you're talking about here stems from the SBA's prohibition on lending companies, banks and lenders, participating in Section 7A loans, of which the PPP program was.

[00:02:03] Speaker 02:
And the NAICS code 522292, which, as you noted, applies broadly to companies that use real estate as collateral. And the exceptions that you noted for flipping within 14 calendar days of closing or for mortgage servicing companies that primarily engage in the business of servicing loans. creates an ambiguity within the NAICS code disclosure itself.

[00:02:26] Speaker 00:
But what I'm saying is how can a company both be a lending company that uses real estate as collateral and also disperse loans and sell them within 14 calendar days?

[00:02:36] Speaker 02:
Because the NAICS code applies generally to companies that use real estate as collateral, but that also includes companies that do that and flip them within 14 days or service such loans on behalf of other companies. And so what the NAICS code does not do is reveal categorically that CalCon is ineligible. But combined with the other information on the disclosures to the government, that is how we make that determination and resolve that ambiguity.

[00:03:03] Speaker 00:
So are you saying that that you could use that code and be a lending company that uses real estate as collateral and also handle loans that are recycled within 14 days?

[00:03:15] Speaker 02:
Yes, Your Honor. The code actually encompasses both of those.

[00:03:18] Speaker 03:
And so what did you contribute in the complaint beyond – I guess let me say this. What are the facts that you added – beyond just the NAICS code that establishes the falsity?

[00:03:32] Speaker 02:
Sure. So the facts that were added by relator here was information found outside of the confines of the PPP loan database, which was the only public disclosure relied upon by the district court, and we would submit as the only public disclosure that would trigger the bar. Relator found information that CalCon issues jumbo and other non-standard types of loans, including fix and flip loans, bank statement loans, construction loans, that it claims to be a direct lender that holds a portfolio of loans and acquires loans from other lenders.

[00:04:05] Speaker 02:
Each of these facts would tend to rebut the express certifications of eligibility that CalCon made here. and eliminate any impressions that they fall into any of the exceptions.

[00:04:17] Speaker 03:
And are those facts that you also got from public sources?

[00:04:21] Speaker 02:
Well, Your Honor, depending on how you want to define the term public sources, I think you could say that these do fall under what we found from public sources. However, not everything that comes from what's called public sources would trigger the public disclosure bar.

[00:04:36] Speaker 04:
Do we know what the sources were at this point, or would that be something we need to remand to determine if we agree with you about the code?

[00:04:45] Speaker 02:
Your Honor, we haven't gotten into discovery or exchanges. This was decided on a motion to dismiss. But of course, we later had to submit a packet of information to the government prior to filing its complaint, and it would be information that would have been contained in there. So it's not before the court at this moment.

[00:05:04] Speaker 04:
Is that before the district court, though?

[00:05:07] Speaker 04:
Is that something that can be looked at at the motion to dismiss stage?

[00:05:11] Speaker 02:
Your Honor, it wasn't looked at in terms of what Relator actually uncovered for the reasons I just stated. Defendants have gone and done internet sleuthing and identified a number of pieces of information that they believe triggers the public disclosure bar. I would like to explain why they certainly do not and why they don't reveal CalCons and eligibility, which is the central issue in this case.

[00:05:36] Speaker 00:
But the district court hasn't gotten to that point yet.

[00:05:39] Speaker 02:
Correct. The district court dismissed solely on the basis of the NAICS code. And if it might button up that point, Your Honor, the NAICS code was not only ambiguous, but here you had a scheme, the actual PPP program that was set up expressly on the basis where lenders, who are the entities who are processing the applications on behalf of the government and whose loans were guaranteed and later forgiven, were expressly entitled to rely on borrower certifications for eligibility. Now, that conclusively eliminates any chance that the NAICS code could have revealed that they were ineligible, because for the reasons Your Honor stated, there is a sort of narrow window where someone falling under this NAICS code could have been eligible for the PPP.

[00:06:23] Speaker 02:
It is the additional information that Relator was able to uncover that enabled the Relator to make the conclusion that a fraud, in fact, had occurred here.

[00:06:31] Speaker 04:
Why isn't there a C-ENTER problem with this allegation, given that it's kind of confusing? It's like an exception to an exception, and The district court was confused about what it meant, it seems, maybe, according to your argument. So why should we assume that the company knew it was lying, even if you're right?

[00:06:46] Speaker 02:
I don't think it's necessarily an assumption, Your Honor, but what we have here is the PPP. It required an express certification by an authorized representative under penalty of civil and criminal penalty that they understood the rules. Now that combined with the idea that whoever signed this on behalf of the company, an authorized person, would have likely had knowledge about the company's own business. So those two things could create potentially, I see where you're saying there could be some confusion there, but I think that's going to be a fact-intensive inquiry where the party was on notice of a responsibility to affirmatively understand eligibility rules before making this application.

[00:07:29] Speaker 03:
But you, I mean, it's not, I mean, normally we would say, well, you know, that's just a matter to be worked out at the discovery stage. But under Rule 9b, you have to plead fraud with particularity.

[00:07:43] Speaker 03:
You really think that just while you had a general obligation to certify your statements, it's enough to get you the particularity with respect to say enter? Sure.

[00:07:56] Speaker 02:
Well, Your Honor, under Rule 9b, C-ENTER may be alleged generally, and under the FCA, C-ENTER includes any of actual knowledge, deliberate ignorance, or reckless disregard. I would submit that in combination with that certification, there is at least a duty to do more than just assume that your industry did or did not fall into these exceptions, especially when we've alleged that Mr. Erskine, the founder, owner, and CEO of the company, is likely the person that would have sign the form or authorize someone to do so on the company's behalf.

[00:08:28] Speaker 02:
And my final point on that is defendants seem to argue that we need to plead specific contextual facts, clear description of circumstances, but I would submit, Your Honors, that that is not the standard for Sienta to be alleged here. And I would like to reserve the remainder of my time.

[00:09:00] Speaker 01:
Good morning and may it please the court. Terrence Grugin for CalCon and Mr. Erskine.

[00:09:07] Speaker 01:
In briefing, we always start with the basic Twombly-Ikbal pleading standards, but rarely do those most basic formulations of those standards apply so conclusively and definitively to a complaint.

[00:09:20] Speaker 01:
We discussed the public disclosure bar, but the question is going to be whether or not the public disclosure bar applies to the facts asserted here, so I think starting with what actual facts were asserted by Relator is a useful exercise.

[00:09:34] Speaker 01:
Contrary to what they claim in briefing, Relator does not assert that CalCon employed fewer than 432 employees.

[00:09:41] Speaker 01:
In contrast, it speculates based on square footage analysis. Let's assume you win that issue and talk about the other ones. Similarly, it does not allege that CalCon misspent its loans. It simply posits that because it didn't have the employee's based on square footage analysis, it could not have spent the loans properly.

[00:10:00] Speaker 04:
I thought it used announcements about how successful the company was to create that issue.

[00:10:06] Speaker 01:
Well, I think that was a separate issue about the good faith certification that the loan was necessary. That is another issue on which Relator speculates. They say, quote, it is very unlikely defendants suffered any economic downturn, but they don't address the fundamental issue that that necessity certification is made at the time, in April 2020.

[00:10:28] Speaker 01:
At that moment, does a borrower believe, and the certification itself is, that current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant. It has nothing to do with what happens during the pandemic a year, two years later. There's no after-the-fact analysis of whether or not they, in fact, did suffer. It is whether or not at that point in time, They had a good faith basis to believe that economic uncertainty existed. That is what the necessity certification was.

[00:11:00] Speaker 01:
And there, again, no facts whatsoever in the complaint concerning the state of mind at that time that would go to that issue. The only facts alleged in the complaint that we can call facts are three. One, that CalCon received a PPP loan. That was gleaned by a relator from pandemicoversight.org. Number two. that CalCon disclosed it is a lending company that uses real estate as collateral. Now, Relator goes on to, this is a quote from paragraph 21 of the amended complaint. Defendants admit that its business function included lending functions reporting its industry type with NAICS code 522292, which is for lending companies that use real estate as collateral.

[00:11:38] Speaker 01:
According to the amended complaint, the only basis for Relator to claim that CalCon was ineligible for this loan was the application, was analysis of the NAIA.

[00:11:48] Speaker 03:
That's not quite true, though, because the next sentence acknowledges that there are exceptions to the code, and some of those exceptions might have made them eligible, but then they allege CalCon did not fit within this limited category but held loans in portfolio.

[00:12:04] Speaker 01:
And I beg your pardon, in addressing what are not well-pled facts, I should have touched on that point as well. because what they essentially put out there is a non sequitur saying that a business that issues jumbo loans cannot qualify for these exceptions. There's no explanation of why that is.

[00:12:21] Speaker 01:
What is the relation of jumbo loans or any other loan type to that exception? It's just a theory that jumbo loans must necessarily remove them from the exception, but there's no facts that they actually do not apply, that the exception does not apply. If they had pleaded that...

[00:12:41] Speaker 03:
I mean, that I take it as an Iqbalt plausibility objection, not a public disclosure objection.

[00:12:49] Speaker 01:
Yes, that's right. That's why I corrected myself. I should have included that analysis of that purported fact. And it seems to be a mistake of the general rule of thumb that jumbo loans cannot be closed within 30 days. That has nothing to do with actual existing mortgages being repackaged and sold.

[00:13:06] Speaker 04:
So I don't know where they get the... I guess I thought the difference, correct me if I'm misunderstanding this, but I thought the difference was that if they were issuing those loans, which I thought was the allegation, but tell me if I'm wrong, that's different than just servicing someone else's loan because you're issuing it. Is that not right?

[00:13:21] Speaker 01:
I think the allegation is that loans that we issued, they say because they are jumbo loans, we cannot then sell them to investors within 14 days. They don't...

[00:13:33] Speaker 01:
they don't draw a connection between jumbo loans and why they can't be packaged. That's, that's the issue there. It's as if saying there can't be a contract because auto parts are at issue. It's like, why? What, what is the relation?

[00:13:44] Speaker 04:
This is a new argument that they haven't had a chance to respond to.

[00:13:47] Speaker 01:
Am I right? Well, this is, this is just addressing the plausibility of their factual allegations, which we've, which we did in our papers, but I'm, and I'm addressing it here just for purposes of boiling this down to what is actually at issue with the public disclosure bar, what actually well-pled facts were at issue. Um, And even if we want to assume that there were facts that implicated the 14-day exception, then that still doesn't save their complaint on the public disclosure bar based on what is required for the bar to apply. And maybe you're about to say this, but why is that?

[00:14:21] Speaker 01:
No, because the public disclosure bar is not required – it requires only the – the underlying transaction and facts of it to be disclosed. And then the question is, what is the fraud alleged here? The fraud is that CalCon was a lending company that was excluded from PPP, and that fact is based on the NAICS code, according to their own allegations, and they received a PPP loan despite that.

[00:14:52] Speaker 01:
It does not require, under Ninth Circuit law, that public disclosure include an express disclosure of fraud. That's not required. It does not require that every allegation or every fact of the fraud be disclosed.

[00:15:09] Speaker 03:
And in this case... It's not a fraud unless there's something that's false, right? And so you have the statement that you made that was publicly disclosed.

[00:15:22] Speaker 03:
But if showing that it's false requires combining the NAICS code, which I guess is public, and some other pieces of information from different sources, why does that fall within the public disclosure bar? If they have to go out and find different bits of information and put them together?

[00:15:47] Speaker 01:
And I apologize for not having a citation, but there is – law in this circuit that the public disclosure bar does not mean one source. It can be compiled from various public sources.

[00:16:00] Speaker 03:
Just to abstract from the facts here, if you look at the PPP database and then you say there's a geological survey report that exists only in print form in a dozen depository libraries. And you look at that, and then you combine it with a statement in an alternative weekly newspaper published in Vilnius.

[00:16:28] Speaker 03:
and those things together show that the statement was false. You think that's out because it's all publicly disclosed?

[00:16:33] Speaker 01:
Assuming those three sources, we will accept that they are public sources for the purpose of this discussion. Yes, that is out. That is publicly disclosed. The essential elements of the fraud have been publicly disclosed. I think there is ample law to that point.

[00:16:48] Speaker 01:
I'm sorry to go off on a tangent.

[00:16:50] Speaker 04:
But what if instead of it being – something issued by the Geologic Survey or some government entity, that piece is in someone's diary, but it's available in a library.

[00:17:03] Speaker 01:
If it's an essential element of the fraud, and it's not publicly disclosed, then the bar would not apply at that point.

[00:17:10] Speaker 04:
And so how have you shown that all of the things they're talking about count as the news sources that they need to be for you to win this?

[00:17:18] Speaker 01:
Well, first off, by determining what facts we actually have to determine if they were publicly disclosed. So we've already addressed the employee issue. We don't need to address that. We've addressed their claims that we received financing. We put it in our motion to dismiss, and we attached the press releases that our financing was revealed on. So that information comes from press releases issued by— And the financing is what you think shows that you fit into the exception?

[00:17:49] Speaker 01:
No, no. I'm just discussing facts that they rely on.

[00:17:55] Speaker 01:
We don't get into – we don't have to defend application of the exception at this point. We just have to determine – which we would down the line. But that's not – the question is just what other sources did they derive their alleged facts from?

[00:18:12] Speaker 04:
But don't you need to show that those alleged facts, the ones that put together their theory that there was a falsehood? doesn't that need to have public all the way down?

[00:18:21] Speaker 01:
Well, and we did. That was my point. Their claim that we issue jumbo loans, again, setting aside the plausibility issue of why that, if that indicates fraud anyway, assume for a second that it does. That was also issued, and that was in our motion to dismiss as well, press releases that we issued that describe our business. It was gleaned from our own company website, itself a public source.

[00:18:44] Speaker 04:
But you'd have to convince us that a public, that a website, just by being public, counts as a press document, right?

[00:18:51] Speaker 01:
Well, I mean, I would say a press release counts as a press document and that counts as media, news media.

[00:19:00] Speaker 04:
That would be a new holding though, right? Has anyone said that before?

[00:19:05] Speaker 01:
There is case law. I mean, if not in this circuit, then there's certainly district court cases in this circuit that hold that even more attenuated public disclosures fall within the public disclosure bar. I think this is less attenuated than those. We are not saying, and we don't really need to address the outer parameters of what constitutes news media because we think that a company's website plainly constitutes news media. And why is that? Because to define news media would be A source that is publicly available that disseminates information of public note to the public is how I would kind of generally – it is not a defined statutory term.

[00:19:43] Speaker 01:
It is not defined in the case law. But as the cases discuss, what does news mean?

[00:19:48] Speaker 04:
Why would it say news media then instead of just saying public?

[00:19:52] Speaker 04:
Well, because there are limits. What would be the limit at that point? Because I would think the little bakery down the corner's website is probably not news media when they have their menu.

[00:20:03] Speaker 01:
It depends on what information they're disseminating, I suppose. But one example of a case will be a doctor's website that reveals an appointment schedule. That's not information of public note. That is information for basically private use. But a press release, that is literally disseminated for public purposes. But I think you need a website.

[00:20:22] Speaker 04:
I don't think you can get all the way there with your press releases, can you?

[00:20:25] Speaker 01:
I think we can get there with the company's website, though. There's never been a case in any circuit, let alone here, that has said a company's public website does not constitute a public disclosure. There have been none that would back up that.

[00:20:39] Speaker 01:
But the term you need it to be is a news media, right? News media, news media, yes. So, again, what would we consider news? What would we consider media? A media would be a source of information. News would be information disseminated to the public for public consumption.

[00:20:54] Speaker 04:
So if I look up the bakery website to find the menu and their ingredients, that's news media?

[00:21:02] Speaker 01:
A company's public website, I would believe, would be news media.

[00:21:07] Speaker 01:
But again, I don't think that question needs to be answered here. I don't think we need to get to the definition of news media here based on the district court's opinion that the essential elements of the fraud that we were a lending company that applied for and received a PPP loan. That's really all that was needed. We don't need to get into the nature of. our loans and our press releases based on the district court's opinion.

[00:21:32] Speaker 03:
Can I ask you just to go back to the point we started with about the fact that it's jumbo loans isn't enough to show that they're actually holding the loans? If we think that you're right about that, why shouldn't they get a chance to amend the complaint?

[00:21:47] Speaker 01:
Well, this gets to sort of the nature of this relator in my belief, Your Honor. There is no reason to think that this relator has any additional information that could bolster these allegations outside of what it may glean from Google based on its history. This is not an insider. It's not even an existing company. It's a shell company that is run by the attorneys that founded it. They've already had a chance to bolster their complaint. This was the first amended complaint that was dismissed after.

[00:22:12] Speaker 00:
Let me ask you about that. They filed an amended complaint after there was a motion to dismiss. The court seemed to indicate that because they amended their complaint once, any further leave to amend would be futile. The court cited the Zucco Partners case for support for that proposition. But in that case, there was an order on a motion to dismiss. And I could see a situation where you get an order from the judge on a motion to dismiss.

[00:22:42] Speaker 00:
You don't correct what the deficiencies that the judge points out. It would seem at that point maybe it makes sense that you don't allow a motion – you don't allow a leave to amend again because they had an opportunity. But is there any precedent for the fact that somebody should take a motion to dismiss, and unless they respond to everything argued in that motion, they've missed the opportunity?

[00:23:05] Speaker 01:
No, I don't think there's any categorical rules that apply to when – how many complaints you have filed or anything like that. Now, I don't think that's how it works. I think it's just really an examination of the facts that they've asserted twice, the two times, and whether or not we can – it is reasonable to conclude that they can possess any other information that would make their claims any more plausible.

[00:23:27] Speaker 04:
It seems like your theory that they can't amend, though, depends on accepting your definition of news media.

[00:23:32] Speaker 01:
No, I don't – well, I – it depends.

[00:23:36] Speaker 04:
You want it to be because they're not an insider, they have to use public information and all public information –

[00:23:41] Speaker 01:
I do not believe that all public information is news media. I do believe that some sources are more credibly considered news media. I think a company's website is. If they can glean information from other sources, I don't know what that would be. I can't speculate, except to wonder if they could, why didn't they on their first attempt?

[00:24:00] Speaker 01:
We have no reason to think they have any kind of independent knowledge whatsoever. None, because there are no people behind the company to possess independent knowledge. So if they had the ability to glean from Google any further information that could bolster their claims, presumably they would have done that already.

[00:24:21] Speaker 01:
And there is the issue of the myriad grounds for dismissing the suit that weren't addressed by the district court, but that this court can consider if they're apparent from the records, such as the absolute complete failure to allege Sienta. The allegations as to Sienta are Mr. Erskine was a cunning businessman.

[00:24:41] Speaker 01:
They knew they lied because they must have known they lied. That is the sum total of their Santer allegations, and that's plainly insufficient under Twombly-Nickball. There is the lack of any false statements, as we discussed earlier. There's no falsity as to employee headcount.

[00:24:56] Speaker 04:
I think we've taken you over your time, and it looks like we don't have more questions unless anyone does. Okay. Thank you. Let's put four minutes on the clock because we took

[00:25:09] Speaker 02:
Appreciate the extra time your honors I Would like to begin by addressing the comments on the news media prong of the public disclosure bar I heard a lot of Talk about public sources and public this and public that but that of course is not the standard In fact, defendants did not grapple with the textual analysis of what news media means or engage with that standard properly. The Integra 1 court, which we cited extensively throughout our briefs, did just that textual analysis.

[00:25:39] Speaker 02:
And the very cases cited by defendants were called out by that court for failing to perform that analysis and having the same conclusion that anything that's on the internet is apparently news media. That's simply not the case under the Integra Court's five-factor test or just looking at it in terms of what is the ordinary meaning of the term. What about a press release, though? A press release does not qualify as news media. As the Integra Court noted, there's an element of curating that typically comes with the ordinary definition of news media.

[00:26:12] Speaker 02:
In fact, we heard counsel say that there are no cases finding a website of a company that was not found to be news media and in fact i believe that's exactly what happened in the case valley health that wasn't cited in the briefs but was overseen by your honor and i'll try to find that citation i have it in my notes here but there's a valley health case where looking at integra one and applying those factors your honor held the company's website actually isn't what is traditionally considered news media.

[00:26:43] Speaker 04:
A website and a press release are different, though. A press release seems a lot closer to news media to me than just a company's website with information on it.

[00:26:52] Speaker 02:
The Integra I Corps did grapple with these sort of nuances under the five-factor test, and the difference would be a curating element, that someone independently says, this is something that is newsworthy, versus a company's website or a press release saying, Which is, it's not news that's curated in the same way. It is a biased person telling you what they want you to hear about a particular company. It wouldn't fall under the ordinary meaning of the term news media as it's .

[00:27:18] Speaker 03:
Isn't the point of the public disclosure bar in the statute to sort of distinguish between people who are bringing some inside information to the table and revealing something that otherwise might not have been revealed? versus people who are just sort of piggybacking on, you know, other people's revelation of facts into the world. And when we think of it in those terms, just reading a press release, you're not actually contributing anything to the government's understanding of what's happened, are you?

[00:27:50] Speaker 02:
I don't think that's quite correct, Your Honor. There is no requirement that a relator have insider information. And in fact, the public disclosure bar has those three specifically enumerated channels that are written that way for a reason. The first two involve federal hearings and federal reports. And in fact, it was amended to just include only federal and not state such reports. This shows that Congress had a limit that they intended on the public disclosure bar. And in fact, as the integral court put it, the public disclosure bar is intended to block cases where the government is likely already aware of the false allegations.

[00:28:28] Speaker 02:
Now here, where we have to go through you know, what they're calling press releases, which I would submit doesn't even reveal the actual ineligibility, the central issue here. The company's website and various other sources, that does not trigger those same sort of concerns and, in fact, would not fall under, I'd submit, the purpose of the public disclosure bar.

[00:28:47] Speaker 03:
But the purpose, I mean, if I understand you right, I mean, like, the purpose is the government is already aware of what's in the news media, right, because they can read the newspaper, but they aren't aware of what's in press releases?

[00:29:00] Speaker 02:
No, Your Honor, because press releases do not typically fall under what's determined to be news media. And more importantly, I don't think there's been a showing that any of the press releases here show CalCons ineligibility.

[00:29:11] Speaker 04:
Could you speak to this argument that jumbo loans are not inconsistent with the – with the exceptions?

[00:29:20] Speaker 02:
Correct. Because it's not just jumbo loans. It's the construction loans. These nonstandard loan types are going to be more difficult for a company to flip within 14 days because what this exception really is about is companies that originate and flip loans. And so these would be standard things that like a Freddie Mac or a Fannie Mae would sort of purchase in bulk. But beyond just those unstandard loan types that make it unlikely that they could actually fall under this exception, drawing reasonable inferences, There's also the fact that Relator has alleged that they actually hold loans in portfolio, and that would be disqualifying under those exceptions.

[00:29:58] Speaker 03:
I'm not sure that's very clearly explained.

[00:30:02] Speaker 03:
That's maybe being generous in the complaint.

[00:30:07] Speaker 03:
Could you sketch out for us what more you might be able to say if you were granted leave to amend?

[00:30:13] Speaker 02:
We would flesh out the inferences that are drawn and explicitly why those inferences lead to a reasonable conclusion that they do not qualify for any of the noted exceptions, which the two biggest ones would be companies that merely service loans held by others or ones that initially originate and then immediately slip those loans within 14 days.

[00:30:36] Speaker 04:
And there's an allegation in here already, you say, that they hold them?

[00:30:40] Speaker 02:
Yes, in paragraphs 14 and 15.

[00:30:45] Speaker 02:
In the end of paragraph 14, there's an allegation that it was a direct lender that held its loans in portfolio to collect interest.

[00:30:52] Speaker 02:
And then in paragraph 15, it goes on to explain why, even if CalCon's business involves servicing loans, it also acts as a lender, a traditional lender. And therefore, it would be ineligible to qualify under the PPP.

[00:31:09] Speaker 04:
Did you ask for leave to amend?

[00:31:12] Speaker 00:
Yes, we did. And that was denied.

[00:31:16] Speaker 00:
And is there anything more you would say about CNTER? Because what I'm wondering about is the use of the code 522292 in the application would seem to be a – if the company was intending to somehow hide the fact that they didn't qualify for this loan, using that code in the application would seem to be a dead giveaway. So doesn't that cut against the finding of CNTER?

[00:31:44] Speaker 02:
I think, Your Honor, in the absence of other facts, that might be correct. But here, with the express certifications that were made and the very public announcement that lenders were entitled to rely on these certifications and the fact that there were exceptions that they knew they could at least argue to qualify under, I think that that undercuts the conclusion that they did not have C-ENTER. In other words, I think the reasonable inference in the totality of the circumstances is that C-ENTER was more than adequately applied under the correct standard.

[00:32:09] Speaker 04:
I think you didn't ask us for leave to amend. Am I right?

[00:32:15] Speaker 02:
Your Honor, I would have to, I believe that was one of the issues presented. I would have to double check if I may have one moment here.

[00:32:28] Speaker 02:
Did the district court air? Yes.

[00:32:29] Speaker 04:
I don't remember an argument about that, but okay. Because I don't think you told us what you would do to fix it, did you?

[00:32:35] Speaker 02:
We would further expand on not only the facts alleged in paragraphs 14 and 15, but then better explain why that would disqualify CALCON. And as a final point, I would like to point out that the conclusion that Relator came to that CALCON is not eligible can be made entirely from sources that are not the NASCS code, which further reveals that the NASCS code is itself ambiguous and cannot reveal the fraud.

[00:33:07] Speaker 04:
Thank you. MR. Thank you, Your Honor. Thank you, both sides, for the helpful arguments. This case is submitted.