Foreign-Owned Company To Pay Nearly $2 Million To Resolve Improper Paycheck Protection Program Loan

DETROIT – Acting United States Attorney Julie A. Beck announced today that Monofrax LLC, which is located in Falconer, New York, has agreed to pay $1,977,119 to resolve allegations that it improperly obtained a Paycheck Protection Program (PPP) loan from the U.S. Small Business Administration (SBA) for which it was not eligible.

Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations provided various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for foreign-owned companies.

In 2021, Monofrax obtained a second draw PPP loan through a Michigan bank. At the time of its loan application, Monofrax was ultimately owned and controlled by a private equity firm registered in Germany. Through common ownership and management, Monofrax was affiliated with multiple other companies worldwide. The United States contends that Monofrax was ineligible for the second draw loan because, together with its affiliates, it had more than 300 employees, in violation of the PPP rules in effect at the time Monofrax obtained the funds.

“PPP loans were intended to help small businesses in the United States, and not large companies owned by foreign entities,” said Acting U.S. Attorney Julie A. Beck for the Eastern District of Michigan. “This settlement demonstrates our office’s continued commitment to hold accountable those businesses and individuals who obtained COVID-19 relief funds that they didn’t deserve.”

This matter was handled by Assistant U.S. Attorney Anthony Gentner from the United States Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA’s Office of General Counsel.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

The claims resolved by the settlement are allegations only; there has been no determination of liability.