West Coast Dental Administrative Services LLC (formerly West Coast Dental Services Inc.), which operates a network of dental offices in Southern California, and its founders and former owners, Drs. Soleyman Cohen-Sedgh, Farid Pakravan, and Farhad Manavi, have paid $6.3 million to resolve allegations that they knowingly violated the False Claims Act in connection with seven improper loans that West Coast Dental Services Inc. (West Coast Dental) and affiliated dental offices received under the Paycheck Protection Program (PPP). Additionally, City Real Estate Holdings Inc., a real estate investment company owned by Dr. Manavi, has paid an additional $35,149.82 to resolve its potential liability under the False Claims Act in connection with a separate PPP loan.
The PPP, an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and administered by the Small Business Administration, was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic. Whether an applicant qualified for a PPP loan as a small business depended on various factors, including the type of business operated by the borrower and the number of employees of both the borrower and its corporate affiliates. In 2021, Congress offered a second round of forgivable loans through the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act. Under PPP rules, second draw loans were strictly limited to businesses with 300 employees or less. When applying for PPP loans and loan forgiveness, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
The United States alleged that West Coast Dental and six of its affiliated dental practices received seven improper second draw PPP loans and subsequent forgiveness of these loans based on false certifications that the companies qualified for the loans even though they were ineligible because the dental practices collectively employed more than 300 individuals. The United States further alleged that West Coast Dental and its affiliates failed to disclose common ownership of the affiliated dental offices in their separate PPP applications. The United States also alleged that City Real Estate Holdings Inc., which received a PPP loan, was ineligible to receive the loan under PPP rules because it is a passive business operated for investment purposes. City Real Estate Holdings Inc. sought and received forgiveness of its total loan amount.
“PPP loans were intended to support small businesses facing difficult economic times due to the COVID-19 pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will continue to hold borrowers who improperly received and sought forgiveness of PPP loans accountable for their actions.”
“Companies such as these that depleted crucial pandemic-assistance funding will be held accountable under the False Claims Act,” said U.S. Attorney Martin Estrada for the Central District of California. “This resolution evidences our office’s earnest commitment to ensure that companies act with utmost integrity.”
“This settlement sends a signal to wrongdoers that evidence of improper conduct will be brought to light,” said Special Agent in Charge Weston King for Small Business Administration’s Office of Inspector General (SBA OIG)’s Western Region. “Our office will remain relentless in pursuing those who seek to exploit SBA’s vital pandemic response programs."
The civil settlement includes resolving claims brought under qui tam or whistleblower provisions of the False Claims Act by Relator LLC, formed by California attorneys Anoush Hakimi and Peter Shahriari. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Relator LLC v. West Coast Dental Services Inc., et al., CV 22-3812-MCS (MARx) (C.D.Cal.). Relator LLC will receive approximately $507,000 as its share of the total settlement.
The resolution obtained was due to coordinated efforts between multiple entities including Justice Department’s Civil Division's Commercial Litigation Branch Fraud Section; U.S Attorney’s Office for Central District California; Small Business Administration's Office General Counsel; Office Inspector General.
Trial Attorney Allie Pang from Civil Division's Commercial Litigation Branch Fraud Section along with Assistant U.S Attorney Jack D Ross handled this matter supported by Paralegal Heather Beckler Investigator Maria Marsh Auditor John Powers from US Attorney's Office Central District California Special Agent Samuel Huynh SBA-OIG also provided investigative assistance.
On May 17th 2021 Attorney General established COVID-19 Fraud Enforcement Task Force marshalling resources across government enhancing efforts combating preventing pandemic-related fraud investigating prosecuting culpable domestic international actors committing civil criminal fraud assisting agencies tasked administering relief programs preventing fraud augmenting incorporating existing coordination mechanisms identifying resources techniques uncover fraudulent actors schemes sharing harnessing information insights gained prior enforcement efforts For more information department response pandemic visit www.justice.gov/coronavirus
Tips complaints potential fraud affecting COVID-19 government relief programs reported visiting webpage Civil Division Fraud Section Anyone information allegations attempted fraud involving COVID-19 report calling Justice Department National Center Disaster Fraud NCDF Hotline at 866-720-5721 via NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form
The claims resolved by settlement are allegations only There has been no determination liability