Two companies from Pennsylvania and one from South Carolina have agreed to pay a total of $13 million to settle allegations that they violated the False Claims Act. The allegations involve receiving five Paycheck Protection Program (PPP) loans improperly, according to U.S. Attorney Alina Habba.
The PPP was established in March 2020 to provide financial aid during the COVID-19 pandemic. It offered forgivable loans guaranteed by the Small Business Administration (SBA) to eligible businesses, which had to meet specific criteria regarding employee numbers and revenue.
The settlement agreement details that Rema Tip Top of America, Inc., a holding company with various subsidiaries, was involved through its affiliates. C&J Welding & Construction, based in Pennsylvania, received one loan worth $341,848.78 with additional lender processing fees paid by the United States amounting to $11,652.00. Industrial Services Group, Inc., doing business as Universal Blastco in South Carolina, received two loans totaling $4,824,288.99 with lender processing fees of $87,828.50 covered by the United States. NexGen Industrial Services, Inc., also based in Pennsylvania, secured two loans for $3,688,618.89 with associated lender processing fees of $109,529.40.
C&J Welding, ISG, and NexGen were deemed ineligible for these loans and knowingly failed to disclose their affiliations fully on their applications. They falsely certified their eligibility for the loans and forgiveness they received. Due to their connections with other entities including Rema Tip Top of America Inc., these companies exceeded the employee or revenue-based limits set for PPP eligibility.
As part of the settlement terms under the whistleblower provision of the False Claims Act—which allows private parties known as relators to sue on behalf of the government—$2.34 million will be awarded to Scissors LLC as its share.
U.S Attorney Habba acknowledged assistance from SBA’s Office of General Counsel in this matter while Assistant U.S Attorney Susan J Pappy represented the government along with Christopher J McClintock from SBA.
Information about fraud related to COVID-19 can be reported via Department Of Justice’s National Center For Disaster Fraud Hotline at 866-720-5721 or online at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The case is titled United States ex rel Scissors LLC v Rema Tip Top Of America Inc et al Civil Action No 23-20790.
No liability has been determined as these claims remain allegations only.
Counsel for C&J Welding ISG and NexGen are Eric W Sitarchuk Steven Strauss Morgan Lewis & Bockius LLP while Eric Jaso Spiro Harrison & Nelson represent Scissors LLC
