Segepo-FSM, Inc., a manufacturer based in Cold Spring, agreed on Mar. 23 to pay $887,234 to resolve allegations that it violated the False Claims Act by improperly obtaining and receiving forgiveness for a Paycheck Protection Program (PPP) loan.
The case highlights federal efforts to ensure that emergency financial assistance programs like the PPP are not abused. The PPP was created by Congress to help small businesses keep employees on payroll during the COVID-19 pandemic. Loans provided under this program were forgivable if certain conditions were met, including eligibility requirements such as limits on employee numbers.
According to the settlement, Segepo-FSM falsely certified in its application that it had fewer than 300 employees when applying for a second-draw PPP loan of $503,900. At the time of its application and request for forgiveness, Segepo-FSM was a subsidiary of Dentressangle and allegedly had more than 300 employees when combined with its foreign affiliates. This made the company ineligible for both receiving and having its loan forgiven under program rules.
The lawsuit was brought under the qui tam provisions of the False Claims Act by a private citizen who is now eligible to receive part of the settlement proceeds. These provisions allow individuals to file actions on behalf of the United States regarding alleged fraud against government programs.
The matter was handled by the Affirmative Civil Enforcement Section of the U.S. Attorney’s Office with support from the Small Business Administration’s Office of General Counsel. Authorities clarified that all claims resolved through this settlement are allegations only and there has been no determination of liability.
