Monofrax LLC, a company based in Falconer, New York, has agreed to pay $1,977,119 to address allegations of improperly obtaining a Paycheck Protection Program (PPP) loan from the U.S. Small Business Administration (SBA). The announcement was made by Acting United States Attorney Julie A. Beck.
The PPP was established in March 2020 as a financial aid initiative for American businesses affected by the COVID-19 pandemic. It allowed eligible small businesses to receive forgivable loans guaranteed by the SBA. Eligibility criteria included employee limits and restrictions on foreign-owned companies.
In 2021, Monofrax secured a second draw PPP loan through a Michigan bank. At that time, Monofrax was owned and controlled by a private equity firm registered in Germany and affiliated with several other global companies. The U.S. government asserts that Monofrax violated PPP rules due to its affiliation with more than 300 employees when it obtained the funds.
"PPP loans were intended to help small businesses in the United States, and not large companies owned by foreign entities," stated Acting U.S. Attorney Julie A. Beck for the Eastern District of Michigan. "This settlement demonstrates our office’s continued commitment to hold accountable those businesses and individuals who obtained COVID-19 relief funds that they didn’t deserve."
Assistant U.S. Attorney Anthony Gentner from the United States Attorney’s Office for the Eastern District of Michigan managed this case with assistance from the SBA’s Office of General Counsel.
People with information about COVID-19 fraud are encouraged to report it via the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or through their online complaint form.
It is important to note that the claims resolved by this settlement are merely allegations, and no liability has been determined.