Two California companies, JEV&B Services LLC and D4 Inc., along with their owners William Nelson and Vicki Rollins, have agreed to a settlement over accusations of misrepresentation to secure federal Paycheck Protection Program (PPP) loans. The Justice Department announced that the parties will pay a combined $153,598.90 to resolve the allegations that they falsely claimed eligibility for the loans designed to aid small businesses during the pandemic. This settlement includes the payment of the processing fees that were originally covered by the Small Business Administration (SBA), which in turn, were reimbursed by the lender.
According to a press release from the Justice Department, the businesses obtained first-draw PPP loans and were subsequently forgiven, but they weren't supposed to receive the second-draw loans due to the strict size limitations imposed by Congress. These funds were intended for businesses with a cap of 300 employees, including affiliated firms. The United States alleged that the companies and their owners, having excessive numbers of combined employees, knowingly under-reported their headcount and failed to disclose their affiliations to acquire the loans.
As part of the false statements provided, the owners certified their eligibility and the accuracy of information on their second-draw PPP loan applications. Despite their network of numerous businesses under common ownership and management, the necessary disclosures about affiliations were missing, leading to an improper obtainment of SBA-backed funds. This act has prompted the settlement wherein JEV&B Services, D4, and their owners will not only pay the aforementioned sum but also repay the loans in full, relieving the SBA of any liability.
A whistleblower, Ashwani Chawla, initiated the lawsuit under the qui tam provisions of the False Claims Act, which permits private individuals to sue on behalf of the government. For his role in bringing the allegations to light, Chawla is set to receive $11,519.92 as part of the resolution. The coordinated effort that led to this settlement involved the Justice Department's Civil Division, the SBA Office of the Inspector General, and the SBA’s Office of Capital Access.
It is important to note that the resolution does not equate to an admission of liability; the claims settled by the agreement remain allegations. The matter was handled by Trial Attorney Christopher Belen of the Justice Department’s Civil Division.
