U.S. Attorney Jerome F. Gorgon Jr. announced this week that Energy Steel & Supply Co., and Hayward Tyler Inc., have agreed to pay $4,769,597 to settle allegations that they violated the False Claims Act by making false statements to the U.S. Small Business Administration (SBA) to obtain Paycheck Protection Program (PPP) loans for which they were ineligible.
Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations provided various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for foreign-owned companies. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
In February 2021, Energy Steel & Supply Co., obtained a second draw PPP loan for $890,060, while Hayward Tyler Inc., obtained a second draw PPP loan for $2,000,000. At the time, both companies were subsidiaries of Avingtrans, PLC, which is headquartered in the United Kingdom. The United States alleged that both Energy Steel & Supply Co. and Hayward Tyler Inc. falsely certified they were eligible for a second draw loan and loan forgiveness, even though, together with their Avingtrans affiliates, they both had more than 300 employees, in violation of the PPP rules.
This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit has been unsealed and is captioned United States ex rel. GNGH2, Inc. v. Energy Steel & Supply Co., et al, Case No. 2:24-cv-11617. The
whistleblower will receive a combined 10% of the settlement amount.
This matter was handled by Assistant U.S. Attorney Gregory Dickinson from the United States Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA’s Office of General Counsel.
Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations provided various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for foreign-owned companies. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
In February 2021, Energy Steel & Supply Co., obtained a second draw PPP loan for $890,060, while Hayward Tyler Inc., obtained a second draw PPP loan for $2,000,000. At the time, both companies were subsidiaries of Avingtrans, PLC, which is headquartered in the United Kingdom. The United States alleged that both Energy Steel & Supply Co. and Hayward Tyler Inc. falsely certified they were eligible for a second draw loan and loan forgiveness, even though, together with their Avingtrans affiliates, they both had more than 300 employees, in violation of the PPP rules.
This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit has been unsealed and is captioned United States ex rel. GNGH2, Inc. v. Energy Steel & Supply Co., et al, Case No. 2:24-cv-11617. The
whistleblower will receive a combined 10% of the settlement amount.
This matter was handled by Assistant U.S. Attorney Gregory Dickinson from the United States Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA’s Office of General Counsel.
Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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