Michigan Nonprofit Organizations Agree to Pay $225,887 to Settle False Claims Act Allegations Related to Improperly Receiving Paycheck Protection Program Loans | GRANDPA
Two Michigan nonprofits, the Michigan Education Association (MEA) and the Michigan Education Special Services Association (MESSA), have agreed to resolve allegations that the organizations violated the False Claims Act (FCA) by issuing loans under the Have applied for and received a Paycheck Protection Program (PPP) for which they knew or should have known they were ineligible.
Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial assistance to millions of Americans experiencing 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 that are struggling to pay employees and other business expenses. Under the rules in effect at the time of the loans, which are the subject of today’s settlement, certain nonprofit organizations were not eligible to receive a PPP loan.
In 2020, MEA, a 501(c)(5) non-profit union organization, and MESSA, a voluntary 501(c)(9) workers’ beneficiary organization, each applied for and received a PPP loan. The United States contended that these organizations knew, or should have known, that they were not eligible to receive their PPP loans and caused the Small Business Administration (SBA) to pay lender fees to the bank making the loans edited. In connection with the settlements announced today, MEA will pay the United States $115,265 and MESSA $110,622 to resolve these allegations. MEA and MESSA fully repaid their loan proceeds in December 2020.
“The PPP should bring critical economic relief to eligible small businesses and other entities,” said Brian M. Boynton, senior deputy assistant attorney general, chief of the Justice Department’s civil division. “This settlement reflects the department’s commitment to ensuring the integrity of the PPP lending process.”
“Those who violate the False Claims Act by fraudulently receiving SBA Pandemic Program funds intended for eligible small businesses will be held accountable,” said Sharon Johnson, the SBA’s Central Region special representative in charge OIG. “Today’s settlements send a strong signal that those responsible will be held accountable. I want to thank the Department of Justice and our law enforcement partners for their dedication and quest for justice.”
The settlement resolved a lawsuit filed under the qui tam or the FCA’s whistleblower rule, which allows private parties to bring suits on behalf of the United States alleging false allegations and participate in a portion of the government’s recovery. The qui tam The lawsuit was filed by the Mackinac Center for Public Policy and is lettered US ex rel. Mackinac Center for Public Policy v Michigan Education Association, et al., dct. #1:22-cv-00028-HYJ-PJG (WD Mich.). Under the False Claims Act, individuals can sue on behalf of the government and participate in any recovery. The Mackinac Center for Public Policy’s part in the settlement was not determined.
The resolution reached in this matter was the result of a coordinated effort between the Civil Division’s Commercial Disputes Division, the Fraud Division and the United States Attorney’s Office for the Western District of Michigan with the support of the SBA’s Office of the General Counsel and the SBA’s Office of the Inspector General .
This matter was handled by Trial Attorney Evan J. Ballan of the Civil Division and Assistant US Attorney Andrew J. Hull of the Western District of Michigan.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to pool the resources of the Department of Justice in partnership with agencies across government to increase efforts to combat and prevent pandemic-related fraud. The task force is increasing efforts to identify and prosecute the most guilty domestic and international criminal actors and assisting agencies tasked with administering fraud prevention assistance programs, including by expanding and incorporating existing coordination mechanisms, identifying resources and techniques for detecting fraudulent actors and their systems, and sharing and utilizing information and lessons learned from previous enforcement efforts. For more information on the Department’s response to the pandemic, visit https://www.justice.gov/coronavirus.
Tips and complaints from any source about potential fraud affecting government response programs from COVID-19 can be reported on the Civilian Division’s Fraud Division website, located here. Anyone with information about suspected COVID-19-related fraud may also report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) hotline at 866-720-5721 or through the NCDF web complaint form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The claims settled by the Settlements are allegations only and no liability has been determined.