Six Michigan Businesses Agree to Pay Over $500,000 to Resolve False Claims Act Allegations Relating to Improper Paycheck Protection Program Loans

DETROIT– United States Attorney Dawn N. Ison announced today that six Michigan businesses have agreed to pay $534,630 to settle allegations that the businesses violated the False Claims Act (FCA) by knowingly making false certifications to the U.S. Small Business Administration (SBA) relating to loan eligibility under the Paycheck Protection Program (PPP).

Joining in the announcement was Brady Ipock, Acting Special Agent-in-Charge of the SBA’s Office of the Inspector General, Central Region.

Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to provide emergency financial support to the millions of Americans suffering economic hardship due to the COVID-19 pandemic.  The CARES Act authorized billions of dollars in forgivable loans to certain small businesses and other entities struggling to pay employees and other business expenses.  PPP loan applicants were required to certify that neither the applicant, any owner of the applicant, nor any business owned or controlled by any of them, had ever obtained a direct or guaranteed loan from the SBA that was currently delinquent or had defaulted in the last seven years and caused a loss to the government.

In 2020 and 2021, Burton Hotel, Inc., 8 Mile & Hubble, Inc., Gather of Troy, Inc., Alyass Toledo, Inc., DB Troy Pub, LLC, and Fort Wayne Business Hotel, Inc. collectively obtained 10 PPP loans.  The United States contended that these businesses falsely certified that they were eligible for the PPP loans, when in fact they were categorically ineligible because, in the last seven years, one of their owners had defaulted on a prior SBA loan and caused a loss to the government.

“PPP loans were intended to provide critical relief to help small businesses here in Michigan and elsewhere,” said U.S. Attorney Ison.  “Our office will continue to investigate and hold accountable any individual or business that obtained relief funds under the PPP or other COVID-19 assistance programs 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 and the SBA Office of the Inspector General.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.  The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.  For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here.  Anyone with information about allegations of attempted fraud involving COVID-19 can also 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 and there has been no determination of liability.