The owners and operators of The Detroit Club have agreed to pay $357,669 to settle allegations that they violated the False Claims Act. This announcement was made by Acting United States Attorney Julie A. Beck. The parties involved in the settlement include Detroit Management Corporation, Lynn Kassotis, Citi Investment Group Corporation, and Emre Uralli.
The Paycheck Protection Program (PPP) was established in March 2020 under the Coronavirus Aid, Relief, and Economic Security Act to assist American businesses affected by the COVID-19 pandemic. Administered by the United States Small Business Administration (SBA), PPP loans were provided by private lenders with SBA guarantees. Eligible small businesses could receive forgivable loans for expenses such as payroll and lease payments.
During the pandemic, The Detroit Club's operators applied for two PPP loans for their hotel, social club, and restaurant operations in Downtown Detroit. The first loan application on April 4, 2020, was for $348,400; the second on February 16, 2021, was for $410,546. Both loans were fully forgiven after Defendants certified spending on eligible expenses.
However, U.S. authorities allege that not all funds were used appropriately. Specifically noted is forgiveness of $167,040 claimed for building lease expenses deemed ineligible under program rules.
“The False Claims Act is an important tool to deter and hold accountable those who defraud the government,” stated Acting U.S. Attorney Julie A. Beck from Michigan's Eastern District office. She emphasized rigorous investigation of entities exploiting COVID-19 relief measures fraudulently.
This civil settlement resolves claims filed under qui tam provisions of the False Claims Act allowing private parties to sue on behalf of the government and share in recoveries. In this case titled United States ex rel. Decker v. Detroit Club Management Corporation et al., a whistleblower will receive $71,533.96 from this settlement.
Assistant United States Attorney John Postulka managed this matter from Michigan’s Eastern District U.S Attorney’s Office.
It should be noted that these resolved claims are only allegations without any liability determination.