Monofrax LLC, a company based in Falconer, New York, has agreed to pay nearly $2 million to settle allegations of improperly obtaining a Paycheck Protection Program (PPP) loan. The announcement was made by Acting United States Attorney Julie A. Beck.
The PPP was established in March 2020 as an emergency financial aid measure for American businesses affected by the COVID-19 pandemic. It offered forgivable loans guaranteed by the U.S. Small Business Administration (SBA) with specific eligibility requirements, including employee limits and restrictions on foreign-owned companies.
In 2021, Monofrax received a second draw PPP loan from a Michigan bank while being owned and controlled by a private equity firm registered in Germany. According to the U.S., Monofrax was not eligible for this loan because it exceeded the 300-employee limit when combined with its affiliates.
“PPP loans were intended to help small businesses in the United States, and not large companies owned by foreign entities,” said 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 handled this matter with assistance from the SBA’s Office of General Counsel.
The public is encouraged to report any suspected fraud related to COVID-19 relief funds by contacting the Department of Justice’s National Center for Disaster Fraud at 866-720-5721 or through their web complaint form.
It should be noted that the settlement resolves allegations only, without any determination of liability.
