Jerome F. Gorgon, Jr., U.S. Attorney’s Office for the Eastern District of Michigan | Department of Justice
LaFontaine Management, Inc., a company connected to the LaFontaine Automotive Group in Michigan, has agreed to pay $1.5 million to settle claims that it violated the False Claims Act by submitting false information to the U.S. Small Business Administration (SBA) in order to obtain a Paycheck Protection Program (PPP) loan.
The PPP was established by Congress in March 2020 to help American businesses facing financial difficulties due to the COVID-19 pandemic. The program allowed eligible small businesses to receive loans guaranteed by the SBA, which could be forgiven if certain conditions were met. Businesses applying for these loans had to certify that all information provided was accurate and truthful, and there were restrictions based on employee numbers and franchise status.
In April 2020, LaFontaine Management received a first draw PPP loan of $1 million. According to federal authorities, LaFontaine Management certified it was eligible for both the loan and forgiveness despite having more than 500 employees across its affiliates and not operating as a recognized franchise under SBA rules.
“Even though the PPP Program has ended, our mandate to investigate and redress the harm from fraudulent and improper PPP loans continues,” said U.S. Attorney Jerome F. Gorgon, Jr. for the Eastern District of Michigan. “We will continue to vigorously pursue allegations against companies and individuals who obtained COVID-19 relief funds that they didn’t deserve.”
“Investigations like this one reflect collaboration of the Small Business Administration, including SBA’s Office of General Counsel, and the U.S. Attorney’s Office, as well as the work of private individuals who uncover fraudulent conduct to recover funds obtained through fraud,” said SBA General Counsel Wendell Davis.
The settlement resolves a lawsuit originally filed under whistleblower provisions of the False Claims Act by Patricia Lesko and Bram Lesko. These provisions allow private citizens to sue on behalf of the government over false claims and share in any recovery; in this case, they will receive 15% of the settlement amount.
Assistant U.S. Attorney Anthony Gentner handled this matter with support from SBA’s Office of General Counsel.
Anyone with information about potential COVID-19-related fraud is encouraged to report it via phone or through an online complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Authorities clarified that these are only allegations at this stage; there has been no finding of liability.
