Four labor organizations have agreed to settle allegations that they violated the False Claims Act by applying for and obtaining loans under the Paycheck Protection Program (PPP) for which they were ineligible. The United States alleged that these organizations caused the Small Business Administration to pay loan forgiveness, interest, and processing fees to financial institutions that processed these loans.
The PPP was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March 2020. It aimed to provide financial assistance to small businesses affected by the COVID-19 pandemic. Eligible businesses could apply for forgivable loans for job retention and other expenses. However, some organizations certified their eligibility incorrectly and received loans that were forgiven.
The labor organizations involved in this settlement include:
- Local Union No. 3 of the International Brotherhood of Electrical Workers (IBEW Local 3), based in Flushing, New York, will pay $2,697,929.88.
- International Brotherhood of Electrical Workers Local Union 596 (IBEW Local 596), based in Clarksburg, West Virginia, will pay $269,995.83.
- United Association of Journeymen 598 (UA Local 598), based in Pasco, Washington, will pay $835,508.00.
- International Brotherhood of Teamsters Local 986 (Teamsters Local 986), based in Covina, California, will pay $1,356,832.50.
Acting United States Attorney Randolph J. Bernard commented on the situation: “By obtaining PPP loans for which they were ineligible, these organizations took advantage of the taxpayers and millions of American citizens who were hurting and suffering from the economic effects of the pandemic.” He added that his office would continue pursuing those who wrongfully enriched themselves at others' expense.
This case was handled by Assistant United States Attorneys Maximillian F. Nogay and Jordan V. Palmer from the Northern District of West Virginia's United States Attorneys’ Office.
