Port Richey, Florida-based automotive management company Victory Automotive Group Inc. (VAG) has agreed to pay $9 million to resolve allegations that it violated the False Claims Act (FCA) by knowingly providing false information in support of a Paycheck Protection Program (PPP) loan forgiveness application it submitted.
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized these businesses to seek forgiveness of the loans if they spent the loan funds on eligible expenses. Only small businesses were eligible for PPP loans. Whether an applicant qualified as a small business depended on various factors, including the number of employees, amount of revenues and net worth of the applicant, along with any other corporate affiliates that share common operational control. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
VAG’s application for a PPP loan certified it was a small business with fewer than 500 employees. However, VAG shared common operational control with dozens of automobile dealerships across the country, and VAG and its affiliates had more than 3,000 employees in total. For that reason, VAG was not eligible for the $6,282,362 PPP loan it received, which was later forgiven in full.
“PPP loans were intended to help small businesses during the pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to holding accountable those who undermined the purpose of the PPP program and knowingly obtained PPP funds for which they were not eligible.”
“Even though the PPP Program has ended, our mandate to investigate and redress the harm from improper PPP loans to companies and sole proprietors continues,” said U.S. Attorney Roger Handberg for the Middle District of Florida. “We will continue to seek repayment of those loans and, where appropriate, additional sanctions from applicants who obtained a loan to which they were not entitled.”
“This resolution demonstrates the department’s resolve in pursuing businesses that improperly received pandemic relief funds,” said Director Michael C. Galdo of the Justice Department’s COVID-19 Fraud Enforcement. “I want to thank the Small Business Association (SBA) and our law enforcement partners for their assistance with the Justice Department’s pandemic fraud enforcement efforts.”
“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 PPP misconduct,” said SBA General Counsel Therese Meers. “The federal government is strongly committed to identifying and aggressively pursuing any instances of fraud or misconduct within the Paycheck Protection Program.”
The settlement resolved a lawsuit filed under the qui tam or whistleblower provision of the FCA, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit is captioned U.S. ex rel. Jones v. Victory Automotive Group, Inc, et al., No. 8:21-cv-1742 (M.D. Fla.). The whistleblower will receive a total of approximately $1.62 million in connection with the settlement.
The resolution obtained in this matter was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida, with assistance from the SBA’s Office of General Counsel and the SBA’s Office of Inspector General.
This matter was handled by Senior Trial Counsel Benjamin C. Wei of the Civil Division and Assistant U.S. Attorney Lindsay Saxe Griffin for the Middle District of Florida, with assistance from Christopher J. McClintock of the SBA.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department 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 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 Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The claims resolved by the settlement are allegations only. There has been no determination of liability.