Non-profit organization Americans For Peace Now, Inc., which operates out of Washington D.C., has agreed to a settlement of $261,890 to clear allegations of making false claims under the Paycheck Protection Program (PPP), as part of the CARES Act relief efforts. This resolution comes after the organization was alleged to have applied for and received a $130,945 loan, which it later sought to have forgiven, despite being purportedly ineligible due to its engagement in political activity.
The details of the settlement were discussed on Sept. 3 by U.S. Attorney Matthew M. Graves of the District of Columbia, and Special Agent in Charge Amaleka McCall-Brathwaite, Eastern Region of the U.S. Small Business Administration's Office of Inspector General, according to the U.S. Department of Justice's announcement. The CARES Act was initially established in March 2020 to provide emergency aid for those facing economic distress due to the pandemic, offering forgivable loans to small businesses and non-profits alike, provided they were not primarily engaged in lobbying or political advocacy.
When applying for the second round of PPP loans, Americans For Peace Now certified that it was not involved primarily in political activities, which was a prerequisite for eligibility. However, TZAC, a public interest group, filed a whistleblower complaint under the qui tam provisions of the False Claims Act, questioning the accuracy of this certification and raising alarms over potential funds misuse.
Had it been proven in court, the non-profit could have faced penalties up to three times the loan amount, plus additional fines, under the False Claims Act. Instead, in the settlement, the non-profit will pay twice the amount they borrowed. "Misusing SBA program funds is a serious violation that affects the integrity of the assistance programs meant to support those in genuine need," said Special Agent in Charge McCall-Brathwaite. Despite the settlement, there has been no formal verdict on liability—a point emphasized in the civil settlement announcement.
The recovery of the funds and the subsequent settlement were due to efforts by federal agencies and private individuals committed to uncovering fraudulent activity. Assistant U.S. Attorney Stephen DeGenaro and Auditor Timothy Hurley spearheaded the investigation with collaborative efforts from the SBA General Counsel's office, including Attorneys Gary Fox and Kandace Zelaya. Suspected fraud pertaining to government relief programs tied to COVID-19 can still be reported to the Department of Justice's National Center for Disaster Fraud Hotline or through an online complaint form.
