Four labor organizations have agreed to pay a total of $5.1 million to settle allegations that they violated the False Claims Act by obtaining loans under the Paycheck Protection Program (PPP) for which they were ineligible. The United States alleged that these organizations caused the Small Business Administration (SBA) to pay loan forgiveness, interest, and processing fees to financial institutions.
The PPP was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March 2020. It provided forgivable loans to eligible small businesses for job retention and other expenses during the COVID-19 pandemic. Organizations applying for these loans had to acknowledge program rules and certify their eligibility.
However, certain organizations were not eligible for PPP loans at the time covered by these settlements. Despite this, some ineligible organizations received forgiven loans after certifying their eligibility.
The labor organizations involved in this settlement are:
– Local Union No. 3 of the International Brotherhood of Electrical Workers (IBEW Local 3), based in Flushing, New York, will pay $2,697,929.88.
– International Brotherhood of Electrical Workers Local Union 596 (IBEW Local 596), based in Clarksburg, West Virginia, will pay $269,995.83.
– United Association of Journeymen 598 (UA Local 598), based in Pasco, Washington, will pay $835,508.00.
– International Brotherhood of Teamsters Local 986 (Teamsters Local 986), based in Covina, California; IBEW Local 3 has agreed to pay $1,356,832.50.
Acting United States Attorney Randolph J. Bernard stated: “By obtaining PPP loans for which they were ineligible, these organizations took advantage of the taxpayers and millions of American citizens who were hurting and suffering from the economic effects of the pandemic.” He added that his office would continue pursuing those who wrongfully enriched themselves at others’ expense.
Assistant United States Attorneys Maximillian F. Nogay and Jordan V. Palmer litigated this matter on behalf of the Northern District of West Virginia’s U.S. Attorneys’ Office.
