Upstate New York Nonprofit Settles False Claims Act Allegations Involving Inflated Paycheck Protection Program Loan | USAO-NDNY

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ALBANY, NEW YORK – The Rensselaerville Institute (TRI), a nonprofit corporation located in Albany, New York, has agreed to pay the United States $86,676 in damages and civil penalties to resolve allegations that it violated the False Claims Act by getting an inflated Paycheck Protection Program (PPP) loan. TRI also agreed to repay its lender $86,676, releasing the U.S. Small Business Administration (SBA) from liability to the lender for the federal guarantee of the overstated portion of its loan, the U.S. attorney said. Carla B. Freedman.

U.S. Attorney Freedman said, “The Paycheck Protection Program loans were intended to provide critical assistance to small businesses so they can retain employees and continue operations during the COVID-19 pandemic. . We will continue to use all available tools, including the False Claims Act, against businesses that have overstated eligibility for these taxpayer-funded loans.

The PPP was created under the CARES (Coronavirus Aid, Relief, and Economic Security) Act in March 2020, to provide emergency financial assistance to small businesses suffering from the economic effects caused by the COVID-19 pandemic. PPP loan applications were processed by participating lenders, who received a processing fee from the SBA. If a loan application was approved, the participating lender funded the loan, which was fully guaranteed by the SBA.

TRI acknowledged in the settlement agreement that, in early April 2020, its former chief financial officer (CFO) provided another former TRI manager with data and calculations showing that TRI’s “average monthly payroll”, multiplied under the PPP loan eligibility formula, totaled less than $500,000. This person nevertheless applied on behalf of the TRI to an SBA participating lender for a PPP loan of $500,000. Shortly thereafter, the CFO wrote to various members of the TRI Board of Directors: “I have not received a copy of the PPP application. I hope it wasn’t actually submitted,” because “it would be best if we didn’t have a floating federal loan request for more money than we were entitled to.

Later in 2020, as part of an audit of TRI’s annual financial statements, an auditing and consulting firm said it had informed TRI that TRI had applied for and received a loan larger than that to which he was entitled, and that he had advised the former head of TRI to return the excess funds. Rather than return the excess funds, in January 2021 another TRI official submitted a request for forgiveness of the entire $500,000 loan. The SBA later determined that TRI had overstated its average monthly payroll and therefore refused to forgive $86,676 of TRI’s loan.

Special Agent in Charge Janeen DiGuiseppi of the Federal Bureau of Investigation (FBI) Albany Field Office said, “The FBI will continue to work with our partners in the United States Attorney’s Office to investigate and hold accountable all those who are taking advantage of these critically important loan programs designed to provide assistance to American businesses.

The case began in August 2021, when a whistleblower filed a complaint who tam Complaint under seal in the United States District Court for the Northern District of New York. When a whistleblower, or a “reporter”, submits a who tam complaint, the False Claims Act requires the United States to investigate the allegations and choose to step in and resume the action or decline to step in and allow the parent to pursue litigation on behalf of the United States. The parent is usually able to share any recovery afterwards. Pursuant to the settlement agreement, the parent will receive $17,000 from the settlement.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and the FBI. The United States was represented by Assistant United States Attorney Adam J. Katz.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to mobilize Department of Justice resources in partnership with federal government agencies to strengthen enforcement and prevention efforts. pandemic-related fraud. The task force strengthens efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies administering relief programs to prevent fraud, among other methods, by increasing and integrating coordination mechanisms existing ones, identifying resources and techniques to uncover fraudulent actors and their agendas, and sharing and leveraging information and knowledge gained from previous enforcement efforts. For more information about the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about alleged attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) hotline at 866-720-5721 or through the complaint form NCDF online at: https://www. .justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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