Fraud Friday – Three Companies Agree to Pay More than $500,000 to Settle False Claims Act Allegations

February 3, 2023

Delaney Sexton
Contributing Editor

Fraud Friday – Three Companies Agree to Pay More than $500,000 to Settle False Claims Act Allegations

“PPP loans were intended to help qualified businesses retain their employees and pay other bills during the pandemic,” says U.S. Attorney Stephanie M. Hinds for the Northern District of California. “This Office will continue to pursue any business that misused the program by obtaining PPP loans for which they were not eligible, as the three settlements announced today reflect.”

This week, the Department of Justice announced that three California businesses agreed to pay more than half a million dollars to settle allegations of violating the False Claims Act to obtain more than one PPP loan before December 31, 2020. PPP applicants were required to certify that they would not receive more than one PPP loan prior to this date.

The first company, La Baguette, LLC, operates a bakery. They agreed to pay $430,000 to settle claims that they received and retained a duplicate PPP loan and later applied for and received forgiveness for the loan.

An industrial equipment supplier, Dynamic Integrated Solutions, Inc., will pay $50,000 in civil penalties for receiving and keeping a duplicate loan. The company also agreed to pay the loan back in full to its lender and relieve the SBA of liability to the lender for the guaranty of $985,000 on the loan.

The final company, Priority Acquisitions, Inc., is a licensed general contractor, and they also agreed to pay civil penalties of $50,000 to settle allegations. In addition, the company will repay the loan in full to the lender, also relieving the SBA of a $200,625 liability to the lender because of the guaranty.

In the release, the settlements resolve claims brought under the whistleblower provisions of the False Claims Act. The private party who filed an action on behalf of the U.S. can receive a portion of any recovery. As a result, Quesenberry will receive $80,000 in connection to the three settlements.

“Those who violate the False Claim Act by fraudulently receiving and retaining SBA pandemic program funds will be held accountable,” says Special Agent in Charge Weston King of SBA OIG’s Western Region. “This settlement demonstrates that wrongfully obtaining taxpayer dollars will not go unnoticed, and violators will be identified. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their support and dedication to pursuing justice in this case.”

DOJ Press Release