Two transportation companies, 3rd Avenue Transit, Inc. and Y&M Transit Corporation, have agreed to pay $4.4 million to settle allegations that they improperly obtained Paycheck Protection Program (PPP) loans from the U.S. Small Business Administration (SBA). The announcement was made by U.S. Attorney Michael DiGiacomo for the Western District of New York.
The PPP was created in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act and later expanded by the American Rescue Plan Act in 2021. The program provided loans to businesses affected by the COVID-19 pandemic to cover payroll and other expenses, with loan forgiveness available if funds were used appropriately. Eligibility for second-draw PPP loans required applicants and their affiliates to have no more than 300 employees collectively.
According to federal authorities, 3rd Avenue Transit and Y&M Transit received a total of $2,402,800 in second-draw PPP loans after certifying that they met the employee threshold for small businesses. However, officials allege that both companies were affiliated with a third entity under PPP rules, which put their combined workforce above the eligibility limit.
“Paycheck Protection Program loans were intended to help small businesses during the Covid-19 pandemic,” stated U.S. Attorney DiGiacomo. “Our office continues to invest time and resources to hold accountable those who obtained PPP funds for which they were not eligible.”
The settlement resolves claims brought under the whistleblower provisions of the False Claims Act. Under these provisions, private individuals can file lawsuits on behalf of the government and may receive a portion of any recovered funds.
Individuals who suspect fraud related to COVID-19 relief programs are encouraged to report it through the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via its web complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Assistant U.S. Attorney Jonathan W. Ferris and Investigator Margaret McFarland handled this matter with support from SBA’s Office of General Counsel.
Authorities noted that all claims resolved by this settlement are allegations only; there has been no determination of liability.
