In a stark reminder of the rigorous enforcement of federal financial aid programs, Slifco Electric, LLC, based in Sterling Heights, Michigan, has agreed to pay a substantial sum to the U.S. government. The company owned by John P. Slifco will pay more than $1.4 million to settle claims that it misrepresented its eligibility for loan forgiveness under the federal Paycheck Protection Program (PPP), a program designed to assist small businesses during the COVID-19 pandemic.
The announcement came from the U.S. Attorney's Office, Julie A. Beck, who asserted that, "When businesses and individuals obtained COVID-19 relief funds that they didn't deserve, taxpayers were cheated." The alleged deception involved Slifco Electric obtaining a PPP loan in April 2020 for over $2.6 million and then, contrary to the program's rules, failing to disclose nearly $730,000 in capital distributions paid to its owner for personal expenses.
These financial distributions, occurring between March 13, 2020, and the end of the covered period for loan forgiveness, represented a violation of the certifications necessary to be considered for PPP loan forgiveness. This program, established by Congress in March 2020, aimed to mitigate the economic impact of the pandemic on small businesses and included specific requirements for borrowers regarding the accuracy of information submitted to the Small Business Administration (SBA).
With a concerted effort from various federal agencies, a "favorable settlement" was reached, according to SBA General Counsel Wendell Davis. In his view, the resolution is a testament to the hard work and cooperation among these agencies, which are committed to "addressing fraud perpetrated against government programs." Thus, the $1,460,062 settlement Slifco Electric has paid, which is neither an admission nor a legal determination of wrongdoing, covers the alleged fraud and penalties, according to the U.S. Attorney's Office.
The case was driven forward by Assistant U.S. Attorney Anthony Gentner from the United States Attorney's Office for the Eastern District of Michigan with support from the SBA’s Office of General Counsel. The Justice Department continues to urge the public to report suspected COVID-19 fraud by calling the National Center for Disaster Fraud Hotline or by submitting a complaint through the NCDF Web Complaint Form.
