Dawn N. Ison, U.S. Attorney | Department Of Justice Eastern District Of Michigan
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 as part of the Coronavirus Aid, Relief, and Economic Security Act to assist American businesses affected by the COVID-19 pandemic. Administered by the U.S. Small Business Administration (SBA), PPP loans were issued by private lenders with SBA guarantees. These forgivable loans aimed to cover expenses such as payroll and lease payments for eligible small businesses.
During the pandemic, Defendants applied for two PPP loans related to The Detroit Club's operations—a hotel, social club, and restaurant located in Downtown Detroit. The first loan of $348,400 was applied for on April 4, 2020, followed by a second loan of $410,546 on February 16, 2021. Both loans were certified as spent on eligible expenses and subsequently forgiven.
However, the United States contends that not all funds were used appropriately for eligible expenses. Specifically cited is forgiveness obtained for $167,040 related to 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 for the Eastern District of Michigan. "Entities who took advantage of the COVID-19 pandemic to commit fraud against the government will be vigorously investigated by our office."
This civil settlement also resolves claims under the qui tam or whistleblower provisions of the False Claims Act where a private party can file action on behalf of the United States and receive a portion of any recovery. In this case, a whistleblower will receive $71,533.96 from this settlement amount.
Assistant United States Attorney John Postulka from the U.S. Attorney’s Office for Eastern District of Michigan handled this matter.
It should be noted that these resolved claims are allegations only; no determination of liability has been made.