Ralph Caruso, a resident of Wenham, and five companies he partially owns have agreed to pay $1.065 million to settle allegations under the False Claims Act. The allegations involve falsely certifying eligibility for Paycheck Protection Program (PPP) loans provided by the United States Small Business Administration (SBA). The settlement includes an admission that the loan applications inaccurately stated that no owners had pleaded guilty to certain felonies, while Caruso had previously pleaded guilty to tax and mail fraud charges.
The CARES Act, enacted on March 29, 2020, was designed to provide financial assistance during the COVID-19 pandemic. It authorized forgivable loans through the PPP for small businesses. A second round of PPP loans, known as Second Draw PPP loans, was announced by SBA on January 8, 2021. Applicants for these loans were required to certify that no owner had pleaded guilty to any felony involving fraud.
According to the settlement agreement, Caruso pleaded guilty in federal court in Massachusetts on January 21, 2021, to seven counts of aiding and assisting in filing false tax returns and five counts of mail fraud. Between February 26 and April 1, 2021, five companies with at least a 20% ownership stake by Caruso applied for Second Draw PPP loans. These companies — Caruso Equipment Corp., Flush LLC, Above the Line LLC, LL Burlington LLC, and City Rentals LLC — received a total of $655,635 in loans and later obtained forgiveness from SBA.
The United States asserts that these companies were not eligible for Second Draw PPP loans due to Caruso’s felony convictions and ownership interests. Consequently, it contends that false claims were submitted or caused to be submitted for payment to SBA.
“Faced with potential economic catastrophe wrought by the pandemic, SBA made PPP loans available only to certain trusted recipients — not those with felony fraud convictions,” said United States Attorney Leah B. Foley. “The ink was barely dry on Caruso’s guilty plea when his companies unlawfully applied for these PPP. This office will continue to hold accountable those who took advantage of the PPP and other taxpayer-funded pandemic relief.”
“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 and other Federal law enforcement agencies to recover the product of this fraud as well as penalties,” said SBA General Counsel Wendell Davis.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to combat pandemic-related fraud more effectively. The Task Force works with various government agencies to investigate criminal actors involved in such schemes and assist agencies administering relief programs.
Individuals with information about attempted COVID-19-related fraud can report it via the Department of Justice’s National Center for Disaster Fraud Hotline or Web Complaint Form.
U.S. Attorney Foley and SBA General Counsel Davis announced this development today. Assistant U.S. Attorneys Andrew A. Caffrey III and Brian Sullivan handled this matter from the U.S. Attorney’s Office for the District of Massachusetts.