Joshua S. Levy, U.S. Attorney | U.S. Attorney for the District of Massachusetts
Ralph Caruso 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 state that these companies falsely certified their eligibility for Paycheck Protection Program (PPP) loans from the United States Small Business Administration (SBA). As part of the settlement, Caruso and his companies admitted that their loan applications incorrectly claimed that none of the owners had pleaded guilty to certain felonies, despite Caruso's prior guilty plea 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 for small businesses through the PPP for job retention and approved expenses. On January 8, 2021, a second round of PPP loans was announced by SBA. Applicants 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 multiple counts of aiding false tax returns and mail fraud. Despite this, 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 $655,635 in total loans and later applied for forgiveness from SBA.
The U.S. government contends these companies were not eligible due to Caruso’s felony convictions and ownership interests. Thus they submitted false claims for payment.
"Faced with potential economic catastrophe wrought by the pandemic," stated United States Attorney Leah B. Foley, "SBA made PPP loans available only to certain trusted recipients — not those with felony fraud convictions." She emphasized accountability for those who misused taxpayer-funded relief programs.
Wendell Davis from SBA noted that "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."
In response to pandemic-related frauds like this one, a COVID-19 Fraud Enforcement Task Force was established on May 17, 2021. This task force aims to enhance efforts against domestic and international criminal actors involved in fraudulent activities related to relief programs.
Individuals with information about attempted COVID-19 related fraud can report it via DOJ's National Center for Disaster Fraud Hotline or online complaint form.
The announcement was made by U.S. Attorney Foley and SBA General Counsel Davis today. Assistant U.S. Attorneys Andrew A. Caffrey III and Brian Sullivan handled this matter.
