A San Fernando Valley rehab center and its owner have been ordered by a federal court to pay a hefty sum exceeding $1.5 million for violations of the False Claims Act related to improper Paycheck Protection Program (PPP) loans during the COVID-19 pandemic. JMG Investments Inc., based in Woodland Hills, and Jeffrey Schwartz, its owner, were found to have received and kept more than one PPP loan before the cutoff date of December 31, 2020, against the program's regulations.
According to the United States Attorney's Office for the Central District of California, U.S. District Judge Michael W. Fitzgerald ordered the repayment of damages and penalties totaling $1,565,294.38 on January 15. In a statement released, First Assistant United States Attorney Bill Essayli underscored the impact of such fraudulent actions, remarking, "Every pandemic relief dollar improperly used was money other businesses needed to stay afloat."
The Justice Department's Civil Division Assistant Attorney General Brett A. Shumate emphasized the critical nature of PPP loans as lifelines to struggling small businesses. The Department pledged to pursue entities that knowingly skirted the conditions of the PPP to obtain unentitled relief funds. The Small Business Administration (SBA) and other federal agencies have ramped up efforts to clamp down on such fraud and recuperate both lost funds and applicable penalties.
The wrongdoing came to light following a whistleblower's lawsuit under the qui tam provisions of the False Claims Act, which allows private individuals to sue on behalf of the government for fraudulent claims. The United States intervened in the action, resulting in the recent summary judgment. The exact portion of the government's recovery due to the whistleblower has not yet been determined.
To report suspected fraud relating to COVID-19 government relief programs, the public can contact the Civil Division's Fraud Section or call the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline. Ciaran McEvoy, Public Information Officer, provided contact details for those wishing to report potential fraud, emphasizing the importance of community vigilance in safeguarding vital public assistance resources.
