A duct cleaning company based in Florida agreed to pay $30,000 in damages and civil penalties to settle allegations that it obtained more than one Paycheck Protection Program (PPP) loan, in violation of the False Claims Act.
According to an October 28 Department of Justice (DOJ) press release, Sextant Marine Consulting LLC (Sextant) “also repaid the duplicative PPP funds in full to its lender,” which relieved the Small Business Administration (SBA) “of liability to the lender for the federal guaranty of approximately $170,000 on the improper loan.”
The PPP is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. PPP aimed “to provide emergency financial support to the millions of Americans suffering the economic effects” brought on by the pandemic, the DOJ press release explains. The Act distributed “billions of dollars in forgivable loans” to small businesses, and loan applicants “were required to certify that they would not receive more than one PPP loan prior to Dec. 31, 2020.” According to the press release, “this settlement resolves allegations that Sextant applied for and received a second, duplicative PPP loan in 2020.”
The settlement “includes the resolution of a claim brought under the qui tam or whistleblower provisions of the False Claims Act.” The whistleblower, J. Bryan Quesenberry, will receive $4,500 for their disclosures. According to the DOJ, “[t]he matter remains under seal as to allegations against entities other than Sextant.”
Under the False Claims Act’s qui tam provisions, individuals can file lawsuits on behalf of the government and “receive a portion of the total money recovered as a reward for the risk and damages they assume by doing so,” previous WNN reporting states. In all qui tam cases, the government has the option to take over the case and deploy their resources to pursue the litigation.
“PPP loans were intended to provide critical relief to small businesses so that they could retain employees and keep their doors open,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division in the press release. “We will ensure that those who improperly obtain federally guaranteed PPP loans are held accountable.”
“The Paycheck Protection Program is intended to provide a lifeline to the nation’s small businesses and its employees” Inspector General Hannibal “Mike” Ware of the SBA Office of Inspector General (OIG) said. “OIG will aggressively investigate allegations of wrongdoing in SBA’s pandemic response programs. I want to thank the Department of Justice for its dedication to achieving this settlement.”
“The settlement in this matter demonstrates the excellent results achieved through the combined efforts of SBA and the Department of Justice to uncover and forcefully respond to Paycheck Protection Program fraud,” said General Counsel Peggy Delinois Hamilton of the SBA Office of the General Counsel. “SBA is strongly committed to identifying and aggressively pursuing instances of fraud perpetrated by those taking advantage of SBA COVID-19 assistance programs.”
The end of the press release mentions the COVID-19 Fraud Enforcement Task Force, which Attorney General Merrick Garland established on May 17. The Task Force aims to combat COVID-19 fraud and includes several DOJ entities, as well as other governmental agency partners like the Department of Labor, Small Business Administration, Department of the Treasury.
In a memo announcing the task force, Garland said that the DOJ “will use every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud. We look forward to working with our federal government colleagues to bring to justice those who seek to profit unlawfully from the pandemic.”
The DOJ’s press release about Sextant’s settlement reminds the public how to report “potential fraud affecting COVID-19 government relief programs.” Individuals can learn more about reporting fraud against the federal government here, and “[a]nyone 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.”
Read the DOJ press release here.