Source: Office of United States Attorneys
DETROIT – Acting United States Attorney Julie A. Beck announced today that a Sterling Heights, Michigan small business, Slifco Electric, LLC, which is wholly owned by John P. Slifco, has paid $1,460,062 to settle allegations that it violated the False Claims Act by falsely certifying to the U.S. Small Business Administration (SBA) that it was eligible for full loan forgiveness under the Paycheck Protection Program (PPP).
Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. When applying for PPP loan forgiveness, borrowers were required to certify the truthfulness and accuracy of information provided to the SBA, including disclosing whether the borrower had paid any dividends or other capital distributions to its owner(s) during the loan forgiveness covered period.
In April 2020, Slifco Electric obtained a first draw PPP loan for $2,633,170. The United States alleged that Slifco Electric falsely certified its eligibility for full forgiveness of that loan, given its failure to disclose that, from March 13, 2020, through the end of the loan forgiveness covered period, Slifco Electric paid $730,031 in capital distributions to its only owner, John P. Slifco, for Mr. Slifco’s personal expenses.
“When businesses and individuals obtained COVID-19 relief funds that they didn’t deserve, taxpayers were cheated,” said Acting U.S. Attorney Julie A. Beck for the Eastern District of Michigan. “This office is committed to addressing fraud perpetrated against government programs, and we will continue to hold accountable those who violate the law.”
“The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, SBA’s Office of Inspector General and other Federal law enforcement agencies, as well as private individuals who uncover fraudulent conduct to recover the product of this fraud as well as penalties,” said SBA General Counsel Wendell Davis.
This matter was handled by Assistant U.S. Attorney Anthony Gentner from the United States Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA’s Office of General Counsel.
Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at:
https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
The claims resolved by the settlement are allegations only; there has been no determination of liability.