Sark Wire Corporation has agreed to pay $1.9 million to resolve allegations that it violated the False Claims Act by applying for a Paycheck Protection Program (PPP) loan for which it was not eligible, according to a March 19 announcement from the United States Attorney’s Office for the Northern District of New York.
The case highlights federal efforts to recover funds obtained through misrepresentations related to pandemic relief programs. The PPP, created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, provided forgivable loans to small businesses affected by COVID-19. For second-draw PPP loans, applicants were required to certify that they and their affiliates—including foreign affiliates—employed fewer than 300 employees.
First Assistant United States Attorney John A. Sarcone III said, “The False Claims Act allows the United States to recover funds obtained through material misrepresentations. PPP eligibility rules required counting employees of foreign affiliates. Sark Wire didn’t do that; if it had, it would not have been eligible for the PPP loan it received. I commend Sark Wire for promptly acknowledging its ineligibility and proactively initiating settlement discussions with the United States.”
As part of the settlement agreement, Sark Wire admitted that it did not meet the employee-count threshold when accounting for its foreign affiliates. The company also acknowledged failing to disclose in its applications that it was majority owned by a Turkish conglomerate and did not include employees of its foreign affiliates as required by program rules.
SBA General Counsel Wendell Davis said, “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration, including SBA’s Office of General Counsel, working with the U.S. Attorney’s Office and other federal law enforcement agencies to recover the proceeds of this fraud as well as penalties.”
This matter began with a qui tam complaint filed in federal court under provisions allowing private parties to sue on behalf of the government and share in any recovery. Under this agreement, the relator will receive $190,000 as their statutory share.
