In a recent announcement, the U.S. Attorney's Office for the Southern District of New York shared the details of a settlement reached with TCC INTERNATIONAL LLC, CORE GRAVITY LLC, and CORE CLUB MEMBERS CORP. These entities, which collectively operate a members-only social club, have come under fire for deceitful behavior connected to the misuse of COVID relief funds. According to the U.S. Attorney's Office, Southern District of New York, the defendants have agreed to a $360,000 settlement after admitting to falsely certifying their eligibility for two Paycheck Protection Program (PPP) loans and a Restaurant Revitalization Fund (RRF) grant.
Jay Clayton, the U.S. Attorney, emphasized that these programs were designed to support small businesses hurt by the pandemic, but instead, the court found that the defendants acted against both the letter and spirit of the law, wrongfully obtaining and seeking forgiveness for loans when they were ineligible. Despite being ineligible, the SBA forgave nearly all of a $2.3 million loan to TCC International LLC and Core Gravity LLC, engaged in the running of a private club. Under the terms of the agreement, with its financial capabilities taken into account, the entities will pay back the government to resolve the fraud lawsuit.
Special Agent in Charge Amaleka McCall-Brathwaite from the SBA-OIG stated, "Falsely certifying eligibility for Paycheck Protection Program loans and Restaurant Revitalization Fund grants undermines critical relief programs designed to support small businesses and public-facing restaurants." Having broken the trust placed in them by the community, the defendants must now reconcile their actions with the legal consequences, as reported by the U.S. Attorney's Office.
Details in the complaint highlight how the defendants not only wrongfully secured the loans but also used them in complete disregard for the established eligibility criteria. A not-for-profit Core Club Members Corp. received an RRF grant when it was clear that they did not make any sales to the public. A Consent Judgment in the sum of $8,189,172.10 has been signed which may be enforced if the defendants default on their settlement payments. Moreover, the settlement is connected to a private whistleblower lawsuit that had been earlier filed under seal, demonstrating the critical role of vigilant citizens in uncovering fraud.
