ALBANY, N.Y. (NEWS10) — A nonprofit corporation, The Rensselaerville Institute (TRI) in Albany, has agreed to pay $86,676 in damages and civil penalties according to United States Attorney, Carla B. Freedman. By paying this TRI resolves allegations that it violated the False Claims Act by obtaining an inflated Paycheck Protection Program (PPP) loan.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the PPP in March 2020. PPP provided emergent financial assistance to small businesses suffering economic effects caused by COVID-19. If a loan application for PPP was approved, the participating lender funded the loan which was fully guaranteed by the U.S Small Business Association (SBA).
According to the US Attorney’s Office, TRI acknowledged in the settlement agreement that, in early April 2020, its now-former Chief Financial Officer (CFO) provided another now-former TRI official with data and calculations showing that TRI’s “average monthly payroll,” when multiplied by the PPP loan eligibility formula, totaled less than $500,000. That individual applied on TRI’s behalf to an SBA participating lender for a $500,000 PPP loan. Shortly thereafter, the CFO wrote various TRI board members: “I have not received a copy of the PPP application. I am hopeful it was not submitted” because “it would be better if we don’t have a federal loan application floating out there for more money than we were entitled to.”
US Attorney’s Office reported that later in 2020, as part of an audit of TRI’s annual financial statements, an audit and consulting firm represented it notified TRI that TRI had applied for and received a larger loan than it was entitled to and that it advised the former TRI official to return the excess funds. Rather than return the excess funds, in January 2021, yet another TRI official applied for the forgiveness of the entirety of the $500,000 loan. The SBA subsequently determined that TRI had overstated its average monthly payroll and declined to forgive $86,676 of TRI’s loan.
United States Attorney Freedman stated, “Paycheck Protection Program loans were intended to provide critical relief to small businesses so that they could retain employees and continue operations during the COVID-19 pandemic. We will continue to use all available tools, including the False Claims Act, against companies that overstated eligibility for these taxpayer-funded loans.”
According to the US Attorney’s Office, the case began in August 2021 after a whistleblower filed a qui tam complaint which requires the US to investigate the allegations per the False Claim Act. On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across the federal government to enhance efforts to combat and prevent pandemic-related fraud.