A group of affiliated companies controlled by a family office has agreed to pay $10,853,246.94 to settle allegations of fraudulent activity related to COVID-19 loans. The settlement addresses claims that the companies violated the False Claims Act by submitting false certifications for loans under the Paycheck Protection Program (PPP). The companies involved include Barrington Venture Holding Company LLC, The Club at Strawberry Creek LLC, The Garlands of Barrington LLC, Nuestro Queso, LLC, SSCO LLC, and Tire Profiles LLC.
The PPP was established in March 2020 through the CARES Act, designed to help small businesses impacted by the COVID-19 pandemic. Businesses that applied for these loans had to certify their eligibility and the accuracy of the information they provided. Congress restricted loan eligibility to businesses with fewer than 500 employees, requiring affiliated businesses under common control to combine their employee counts in determining their eligibility.
This settlement specifically addresses allegations against four affiliates—The Club at Strawberry Creek LLC, The Garlands of Barrington LLC, Nuestro Queso, LLC, and Tire Profiles LLC. These entities allegedly falsely claimed eligibility for the PPP loans they received, collectively securing over $5 million despite employing more than 500 individuals. It is alleged the businesses took deliberate measures to evade regulatory scrutiny.
Acting United States Attorney Richard G. Frohling commented, "When it passed the Paycheck Protection Program, Congress made policy decisions about what types of businesses would and would not be eligible for the pandemic-relief resources that it made available." He added, "The eight-figure settlement announced today reflects the continuing commitment of the Department of Justice and the Small Business Administration to hold accountable sophisticated businesses that abused this emergency program."
SBA General Counsel Wendell Davis stated, "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."
The United States government has encouraged individuals with information about potential COVID-19-related fraud to report it to the Department of Justice’s National Center for Disaster Fraud Hotline or through their web complaint form. Additionally, PPP recipients may voluntarily disclose any potential fraud they discover to the U.S. Attorney’s Office.
Assistant United States Attorney Aaron R. Wegrzyn represented the government in this case, with support from Kandace Zelaya from the SBA's Office of Litigation and Office of General Counsel. It should be noted that the settlement resolves allegations only, with no determination of liability made.