United States’ Response to Defendants’ Motion to Dismiss — United States ex rel. Forsyth v. Kso Metalfab, Inc. (Dkt. 41, N.D. Ill.)

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The United States' Response to Defendants' Motion to Dismiss in United States of America ex rel. Aidan Forsyth v. KSO MetalFab, Inc., et al., No. 23 C 4875, in the U.S. District Court for the Northern District of Illinois, filed April 27, 2026. The government opposes the motion by KSO MetalFab, Inc. and its majority owner Dora Kuzelka, which argues that the complaint fails to allege causation or unjust enrichment and that the damages and penalties violate the excessive fines clause. It states that the complaint alleges Kuzelka falsely certified on the loan applications that she was not subject to criminal charges, when she was under a criminal complaint, and that the application warned the loans would not otherwise be made. It argues that treble damages and penalties are not excessive fines and asks that the motion be denied.

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Case: 1:23-cv-04875 Document #: 41 Filed: 04/27/26 Page 1 of 15 PageID #:252




                            UNITED STATES DISTRICT COURT
                            NORTHERN DISTRICT OF ILLINOIS
                                  EASTERN DIVISION

 UNITED STATES OF AMERICA, ex rel.,               )
 AIDAN FORSYTH,                                   )
                                                  )
                               Plaintiff,         )
                                                  )    No. 23 C 4875
                       v.                         )
                                                  )    Judge Shah
 KSO METALFAB, INC., et al.,                      )
                                                  )
                               Defendants.        )

       UNITED STATES’ RESPONSE TO DEFENDANTS’ MOTION TO DISMISS

                                            Introduction

       Defendants KSO MetalFab, Inc. and its majority owner, Dora Kuzelka, move to dismiss

this False Claims Act Paycheck Protection Program case on grounds that the complaint does not

properly allege causation or unjust enrichment, and that the alleged damages and penalties violate

the excessive fines clause. Their motion should be denied because, as the complaint alleges,

Kuzelka falsely certified on the loan applications that she was not subject to criminal charges at

the relevant time, when in fact she was under a criminal complaint for rehiring illegal aliens, and

the application even warns that the defendants would not have received the loans if Kuzelka had

not falsified the application. That is enough to allege causation and unjust enrichment. Also,

treble damages and penalties do not violate the excessive fines clause.

                                               Facts

       1.      The PPP Program

       On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES

Act), Pub. L. 116-136, was enacted to provide emergency assistance for individuals, families, and

businesses affected by the COVID-19 pandemic. Complaint (“Cpl.”), ¶ 10, Dkt. 26. Section 1102

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of the CARES Act temporarily permitted the SBA to guarantee 100 percent of loans made by

participating lenders under a new program known as the Paycheck Protection Program. The Act

stated that PPP lenders were deemed to have been delegated authority by the SBA to make and

approve PPP loans and section 1106 of the Act provided for forgiveness of loans guaranteed under

the PPP. Id. To obtain a PPP loan, a business, through its authorized representative, signed and

submitted a PPP loan application to a lender with delegated authority from the SBA, using a

specific or equivalent SBA loan application form. Id., ¶ 11. The form required the applicant to

acknowledge the PPP program rules and make certain affirmative certifications regarding program

eligibility, including as shown here (id.):




       Under the PPP, lenders could rely on borrowers’ certifications regarding program

eligibility and use of loan proceeds and rely on documents provided by the borrower to determine

loan amount and eligibility for loan forgiveness. Id., ¶ 12. If the lender approved the borrower’s

application, the lender submitted information from the borrower’s loan application form

electronically to the SBA. Id., ¶ 13. Based on the lender’s electronic submission, the loan was

assigned a loan number, and the SBA provided a loan guarantee to the lender. Id.

       A PPP borrower could later apply for loan forgiveness, which required the borrower to

certify that the loan had been used for authorized purposes and that other PPP requirements were

met. Id., ¶ 14. As with the initial loan applications, loan forgiveness applications would be

submitted through the lender to the SBA. Id. Most loan forgiveness applications were subject

only to automated screening by the SBA’s computer system, which would approve the application



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unless there were non-compliance issues identified by the screener. If there were no compliance

issues, forgiveness would be approved and the SBA would remit payment to the lender for the

principal amount of the loan, plus interest. Id.

       2.      PPP Eligibility Requirements

       Like SBA’s “section 7(a)” loan program, which has long limited eligibility for persons

with (or companies with owners with) pending criminal charges or other criminal histories, PPP

loans were subject to rules and eligibility restrictions, including restrictions relating to criminal

charges and criminal history. Id., ¶ 15. As relevant here, a company was ineligible for a PPP loan

if any individual owning 20% or more of the company’s equity was subject to an indictment,

criminal information, arraignment, or other means by which formal criminal charges are brought

or was presently incarcerated or on probation. Id., ¶ 16. These requirements were the subject of

a “Yes or No” question on the SBA application form, with a warning that if the answer was “Yes,”

the loan would not be approved, as shown here (id.):

If questions (1), (2), (5), or (6) are answered “Yes,” the loan will not be approved.




       An interim final rule also defined ineligibility if any “owner of 20 percent or more of the

equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment,

criminal information, arraignment, or other means by which formal criminal charges are brought

in any jurisdiction; or has been convicted of a felony within the last five years.” Id., ¶ 17; see 13

C.F.R. § 120.10; SOP 50 10 5(K), Subpart B, Chapter 2, § 3.A.13.

       A final eligibility provision that is relevant here relates to PPP “second draw” loans, which

were essentially a second round of loans authorized by Congress as part of the Economic Aid Act


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of 2021. Id., ¶ 18. An SBA interim final rule stated that “an entity that is ineligible to receive a

First Draw PPP Loan under CARES Act or Consolidated First Draw PPP [rule] is also ineligible

for a Second Draw PPP Loan,” with subsection (e)(1) of the interim final rule “ensur[ing] that a

borrower that received a First Draw PPP Loan despite being ineligible to receive the loan is not

eligible to receive a Second Draw PPP Loan.” Id.

       3.      The Defendants’ Fraudulent Conduct

       Defendant Kuzelka was a 51 percent owner and president of KSO at the relevant time.

Cpl., ¶ 9; Mem. at 2. In April 2017, the U.S. Department of Homeland Security Investigations

(“HSI”) issued a notice of inspection to Kuzelka’s son, Kenneth Kuzelka, another of KSO’s

managing owners. Id., ¶ 26. At the time of the notice, KSO’s workforce was comprised of

approximately 67 employees. Id. Based on HSI’s investigation, about 36 of the 67 employees

were aliens as defined by Section 1324a, meaning that they were without legal status or

authorization to work in the United States, and HSI provided to Kenneth Kuzelka, Dora Kuzelka,

and KSO’s human resources manager, a list identifying the 36 employees. Id. The 36 employees

were personally known by the Kuzelka family. Id.

       In May 2017, the Kuzelka family devised a scheme to rehire the 36 unauthorized aliens as

temporary workers through a staffing company, knowing that the aliens had come to the United

States in violation of law. Id., ¶ 27. Despite the rehiring scheme, Kuzelka signed a letter in

September 2017 to HSI listing the illegal alien employees and the date KSO supposedly terminated

their employment. Id., ¶ 28. She also met with HSI officials in March 2018 and falsely informed

them that all 36 employees had been terminated by KSO even though some of the illegal workers

had already been rehired by KSO through the staffing company and plans were in place to rehire

more undocumented employees. Id.



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        Kuzelka participated personally in the rehiring scheme by, inter alia, overseeing overtime

payments (Id., ¶ 29), and providing a KSO corporate credit card to one of the illegal alien

employees, in lieu of returning her to the KSO official payroll. Id. Kuzelka continued to own,

manage, and work at KSO and facilitate KSO’s continued employment of several undocumented

employees that she knew were in the United States illegally and remained and were employed in

the United States in violation of the law. Id., ¶ 30.

        In October 2019, the Kuzelkas were charged by criminal complaint with several counts of

criminal violations involving hiring illegal alien employees. Id., ¶ 31. In May 2022, Kenneth

Kuzelka, Kari Kuzelka, and Keith Kuzelka pleaded guilty to several of the charges, and Dora

Kuzelka signed a non-prosecution agreement to allow her to show good conduct during an 18-

month period. Id., ¶¶ 31–33.

        4.      The Loans

        On March 16, 2021, while the above referenced criminal charges were pending against

Kuzelka, she, on behalf of KSO, signed and submitted a PPP loan application to Itasca Bank and

Trust Company (“Itasca Bank”) (a delegated PPP lender) seeking a loan in the principal amount

of $416,727 (the First Draw Loan). Id., ¶ 35. Question number 5 on the application for the First

Draw Loan asked, “Is the Applicant (if an individual) or any individual owning 20% or more of

the equity of the Applicant subject to an indictment, criminal information, arraignment, or other

means by which formal criminal charges are brought in any jurisdiction, or presently incarcerated,

or on probation or parole?” Id., ¶ 36. The application also expressly stated, “If questions (5) or (6)

are answered ‘Yes,’ the loan will not approved.” Despite the pending criminal charges against

her, the “No” box was checked for question number 5, which was initialed by Kuzelka, as shown

here (id., ¶ 37):



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       The application that Kuzelka signed also required a certification that “[t]he Applicant is

eligible to receive a loan under the rules in effect at the time this application is submitted . . . .”

Id., ¶ 38. KSO was in fact not eligible under the PPP rules, due to the pending criminal charges

against Kuzelka. Kuzelka signed the certification anyway. Id. The application for the First Draw

Loan also required the applicant to list “all owners of 20% or more of the equity of the Applicant”

and to provide the percentage ownership of each. Id. KSO’s application disclosed Kuzelka’s

ownership interests as 51%. Id., ¶ 39. Based on KSO’s First Draw Loan application including the

eligibility certifications, Itasca Bank submitted information about the application to the SBA,

causing the assignment of an SBA loan number and a PPP loan guarantee, and disbursed the loan

in the amount of $416,727 to KSO. Id., ¶ 40.

       KSO later applied for forgiveness of its First Draw Loan. Id., ¶ 41. On this application,

Kuzelka, as KSO’s owner, certified that “[t]he information provided in this application and the

information provided in all supporting documents and forms is true and correct in all material

respects.” Id. On June 29, 2022, SBA approved forgiveness of KSO’s First Draw Loan and

remitted a payment of $422,121 (loan principal amount of $416,727 plus accrued interest and

processing fees) to Itasca Bank. Id., ¶¶ 40, 42.

       On April 6, 2021, KSO submitted a second PPP loan application to Itasca Bank seeking a

loan in the principal amount of $416,727 (the Second Draw Loan). Id., ¶ 43. The application for

the Second Draw Loan was also signed by Kuzelka, and required a certification that “[t]he

Applicant is eligible to receive a loan under the rules in effect at the time this application is


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submitted . . . .” Id., ¶ 44. KSO was in fact not eligible under the relevant PPP rules at the time,

because it had been ineligible for a First Draw Loan as discussed above. Nevertheless, Kuzelka

signed the certification. Id. Also, despite the pending criminal charges against Kuzelka discussed

above, the “No” box was checked for question number 4, which was initialed by Kuzelka, as shown

here (id., ¶ 45):




        The application for the Second Draw Loan also required the applicant to list “all owners of

20% or more of the equity of the Applicant” and to provide the percentage ownership of each. Id.,

¶ 46. KSO’s application disclosed Kuzelka’s ownership interest as 51%. Id. Based on KSO’s

Second Draw Loan application and the eligibility certifications, Itasca Bank disbursed the loan in

the amount of $416,727 to KSO and was paid a $12,501 processing fee by SBA. Id. KSO later

applied for forgiveness of the Second Draw Loan on June 22, 2022, and Kuzelka, as KSO’s Owner,

certified that “[t]he information provided in this application and the information provided in all

supporting documents and forms is true and correct in all material respects.” Id. On June 29,

2022, SBA approved forgiveness of KSO’s Second Draw Loan and remitted a payment of

$421,820 (loan principal amount of $416,727 plus accrued interest) to Itasca Bank. Id., ¶ 49.

                                            Argument

        Defendants’ argument that the complaint does not allege that the false loan certifications

caused a government loss should be rejected since, as the complaint makes clear, the loan

application itself clearly stated that if the applicant answered “Yes” to the relevant question, the

loan would not be approved such that the falsified application clearly caused the loan to be


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disbursed. Their argument that treble damages and penalties violate the excessive fines clause is

equally meritless since treble damages and a penalty for each application is mandatory under the

FCA and it is not grossly disproportional to the gravity of the defendants’ offense. Their

undeveloped argument that they were not unjustly enriched by receiving loans to which they were

not entitled should also be rejected, as set forth below.

I.     The Fraudulent Certifications Caused a Loss to the SBA.

       While the United States need not, at this stage, prove causation, the loan application itself

proves (and certainly adequately alleges) that the false certifications caused a loss to the SBA. On

a motion to dismiss, the court evaluates the sufficiency of the complaint, viewing it in the light

most favorable to the plaintiff, taking as true all well-pleaded factual allegations and making all

possible inferences from the allegations in the plaintiff’s favor. Wilson v. Price, 624 F.3d 389, 391

(7th Cir. 2010). The review of the sufficiency of a complaint is “necessarily a limited one. The

issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer

evidence to support the claims.” AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011).

“Although the bar to survive a motion to dismiss is not high, the complaint must contain sufficient

factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. citing

Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010); Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007). A claim is facially plausible when “the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint in this case easily surpasses this bar.

       The False Claims Act “is an anti-fraud statute and claims under it are subject to the

heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure.” United

States ex rel. Gross v. AIDS Rsch. All.-Chicago, 415 F.3d 601, 604 (7th Cir. 2005). Under Rule



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9(b), a plaintiff who is “alleging fraud or mistake . . . must state with particularity the circumstances

constituting fraud or mistake” (Fed. R. Civ. P. 9(b)), by describing the ‘who, what, when, where,

and how’ of the fraud – ‘the first paragraph of any newspaper story.’” United States ex rel.

Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 839 (7th Cir. 2018) (quoting United States ex

rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009)). However, “courts and litigants

should not take an overly rigid view of the formulation.” United States ex rel. Prose v. Molina

Healthcare of Illinois, Inc., 17 F.4th 732, 739 (7th Cir. 2021) (cleaned up). The particularity

requirement is designed to “discourage a ‘sue first, ask questions later’ philosophy.” Heard v.

Trax Recs., Inc., 2021 WL 3077668, at *3 (N.D. Ill. 2021) (quoting Pirelli Armstrong Tire Corp.

Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 441 (7th Cir. 2011)). The goal is to

minimize “strike suits” and “fishing expeditions,” and provide notice of the claim to the adverse

party. Jepson, Inc. v. Makita Corp., 34 F.3d 1321, 1327 (7th Cir. 1994) (citation omitted).

        Here, the complaint clearly meets the “who, what, when, where, and how’ of the fraud”

standard, as described above and in the complaint. Automation Aids, Inc., 896 F.3d 834, 839 (7th

Cir. 2018). Defendants’ argument (Mem. at 7) that the complaint “does not allege that [Kuzelka’s]

certifications caused any loss” contradicts the complaint that specifically alleges that, as the loan

application states, “[i]f questions (1), (2), (5) or (6) [or (1), (2), (4), or (5) for the second draw loan]

are answered “Yes,” the loan will not be approved.” Cpl., ¶¶ 37, 45. There is no dispute that

Kuzelka was subject to a criminal complaint for hiring illegal aliens when she completed and

signed the loan applications, as described above and in the complaint. Id. She should have checked

the “Yes” box, resulting in her loan application being denied, but instead, she falsely checked the

“No” box causing KSO to receive the loans. Id. That is all that is required to allege causation.

United States v. Molina Healthcare of Illinois, Inc., 17 F.4th 732, 745 (7th Cir. 2021) (allegations



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that an applicant submitted falsified forms to receive government funds “is enough to satisfy the

pleading burden on causation.”).

       Even allegations “that permit an inference of causation meet the pleading requirement for

causation.” United States ex rel. Sibley v. Univ. of Chicago Med. Ctr., 44 F.4th 646, 663 (7th Cir.

2022). Here, the court can infer (if required) that if the loans were not approved, then there would

be no loss to the government but because Kuzelka falsely stated “No” to the question about whether

she was currently under criminal charges, she and KSO received loan funds to which they were

not entitled in violation of the FCA.

       Defendants’ reliance on United States v. Luce, 873 F.3d 999, 1011 (7th Cir. 2017), is

misplaced because in Luce, the Seventh Circuit redefined the causation element to be proven at

trial or summary judgment, not alleged in a complaint subject to a motion to dismiss. Besides, the

United States can prove that Kuzelka’s falsified answers on the loan applications were the

proximate cause of the loss since, as the application even states, had she truthfully checked the

“Yes” box, she would not have received the loan, and it is foreseeable that an applicant would

receive a loan if she falsely checked the “No” box even though the correct answer was “Yes.”

       While a full analysis of Luce is not warranted at this stage since the United States is not

required to prove causation, as set forth above, the defendants’ argument that “proximate cause of

foreseeable harm or loss to the Government is a necessary element of an FCA claim,” confuses

the terms and misstates the law. Mem. at 7. In Luce the court reversed its holding in United States

v. First National Bank of Cicero, 957 F.2d 1362 (7th Cir. 1992), and found, like other circuits, that

causation under the FCA requires proof of “proximate cause,” which, “encompasses both cause in

fact and legal cause.” Luce, 873 F.3d at 1012. “‘To establish cause in fact, the plaintiff must show

the defendant’s ‘conduct was a material element and a substantial factor in bringing about the



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injury.’ Legal cause on the other hand, ‘is essentially a question of foreseeability,’ and we must

determine ‘whether the injury is of a type that a reasonable person would see as a likely result of

his or her conduct.’” Id., quoting Blood v. VH-1 Music First, 668 F.3d 543, 546 (7th Cir. 2012);

see Stavropoulos v. United States, No. 18 C 1946, 2021 WL 3408502, at *7 (N.D. Ill. Aug. 4,

2021), aff’d, No. 21-2532, 2022 WL 899464 (7th Cir. Mar. 28, 2022) (defining elements of

proximate cause in negligence case) quoting Stanphill v. Ortberg, 129 N.E.3d 1167, 1176 (Ill.

2018). In other words, Luce1 simply added the legal cause requirement to the plaintiff’s burden of

proof such that a FCA plaintiff must now prove both “cause-in fact,” (“that but for the defendant’s

conduct, the injury would not have occurred,” (Stavropoulos, 2021 WL 3408502, at *7 quoting

Miranda v. Cnty. of Lake, 900 F.3d 335, 348 (7th Cir. 2018)), and “legal cause,” which is “a policy

question that ‘draws an outer limit of liability for the consequences of some acts that are the ‘causes

in fact’ of injury, but utterly unforeseeable to the reasonable person.’” Ojimba v. United States,

No. 21 CV 00351, 2026 WL 776261, at *16 (N.D. Ill. Mar. 16, 2026) quoting Scott v. Wendy’s

Props., LLC, 131 F.4th 815, 820 (7th Cir. 2025); Luce, 873 F.3d 999 at 1013.

       Here, the United States can show “cause in fact;” namely that “but for” the falsified loan

application, the defendants would not have received the loans, i.e. defendants’ “conduct was a

material element and a substantial factor in bringing about the” loss. Luce, 873 F.3d at 1012; Cpl.,

¶¶ 37, 45. As the application even states, the loan would not have been approved if Kuzelka

truthfully checked the “Yes,” box. Id.

       As for “legal cause,” it is entirely foreseeable that a PPP loan applicant, such as Kuzelka

and KSO, would receive a loan to which they were not entitled if they falsely checked the “No”

box, especially when the application even states that a “Yes” answer will result in no loan, unlike


       1
         Luce was remanded to allow the district court to consider the new standard of proximate
causation, which includes the foreseeability analysis. Luce, 873 F.3d 999 at 1012, 1014.
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in Luce, where a reasonable person may not foresee that a mortgage broker’s falsified annual

certification would result in third-party borrowers defaulting on mortgages. Cpl., ¶¶ 37, 45. And

it is certainly not “utterly unforeseeable to the reasonable person” that falsely checking the “No”

box would result in an approved loan resulting in a loss to the government. Ojimba, 2026 WL

776261, at *16 quoting Scott, 131 F.4th at 820.

       Defendants’ argument (Mem. at 6) that a different question on the application regarding

prior criminal conduct that was modified by SBA (86 Fed. Reg. 43, 13154-55 (March 8, 2021),

when read together with the question regarding current criminal charges, “create ambiguity as to

whether all pending felony charges were disqualifying,” is not a defense or even plausible. There

is nothing confusing about the question that Kuzelka answered falsely, and it is unrelated to the

question concerning prior criminal conduct. Cpl., ¶¶ 37, 45. Besides, as the interim final rule

stated, while the definitions changed for prior criminal conduct affecting question number 6 on

the first draw loan and number 5 on the second draw loan, “the remaining restrictions on eligibility

related to an applicant or owner’s criminal history [such as pending criminal charges] will help

mitigate the risk of default, fraud, or misuse of PPP loan funds that are intended to benefit small

business employees.” 86 Fed. Reg. 43, 13154-55 (March 8, 2021). In other words, the rule change

did not affect the question at issue here because SBA considered applicants like the defendants to

be a “risk of default, fraud, or misuse of PPP loan funds.” Id. Regardless, the United States need

not prove causation at this stage, and the allegations meet the pleading requirements, as set forth

above. Molina Healthcare of Illinois, Inc., 17 F.4th at 745. However, should the court find any

pleading defect, it should grant the United States leave to replead. Rule 15 requires that leave to

amend “shall be freely given,” and the “sound discretion” of the trial court to grant such leave

“must be exercised keeping in mind that the mandate to freely permit amendments “is to be



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heeded.” Olech v. Vill. of Willowbrook, 138 F. Supp. 2d 1036, 1040 (N.D. Ill. 2000) citing Foman

v. Davis, 371 U.S. 178, 182 (1962).

II.      The Damages and Penalties Do Not Violate the Excessive Fines Clause.

         Treble damages and no more than four separate FCA penalties do not violate the excessive

fines clause of the Eighth Amendment. The Eighth Amendment is violated only “if the fine is

‘grossly disproportional to the gravity of a defendant’s offense.’” United States v. Dolphin Mortg.

Corp., No. 06-CV-499, 2009 WL 153190, at *16 (N.D. Ill. Jan. 22, 2009) quoting United States v.

Bajakajian, 524 U.S. 321, 336 (1998)). In evaluating proportionality, courts “focus on four

factors: (1) the essence of the offense and its relation to other criminal activity; (2) whether the

defendant fits into the class of persons for whom the statute was principally designed; (3) the

maximum sentence and fine that could have been imposed; and (4) the nature of the harm caused

by the defendant’s conduct. Stop Illinois Health Care Fraud, LLC v. Sayeed, 100 F.4th 899, 907

(7th Cir.), reh’g denied, No. 22-3295, 2024 WL 2785312 (7th Cir. May 30, 2024), and cert. denied,

145 S. Ct. 381 (2024) citing United States v. Malewicka, 664 F.3d 1099, 1104 (7th Cir. 2011).

         Here, the relationship between the offense and other crimes is significant and Kuzelka and

KSO are within the class of people for whom the statute was principally designed. When Kuzelka

falsified the loan applications, criminal charges were pending against her for planning and

implementing a scheme to rehire illegal aliens through a staffing agency after she had already been

warned by HSI that her conduct was illegal. Cpl., ¶¶ 26–49. And it’s not as if she was a passive

participant in the criminal activity; rather, she personally represented to HSI that the employees

that were identified in the audit were terminated when she knew that they were in fact rehired

through a staffing agency. Id., ¶ 28. Kuzelka knew her representations to HIS were false, as she

was personally involved in the rehiring scheme, she oversaw the payments to the rehired illegal



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alien employees, and she even provided at least one employee with a KSO credit card instead of

putting the employee on the payroll to conceal that the employee was working for KSO. Id., ¶¶

29–30. Kuzelka was obviously aware of the pending criminal charges against her when she

falsified the loan applications since she negotiated a non-prosecution agreement shortly after she

applied for the loans. Id., ¶ 33. The defendants took advantage of the SBA’s need for speed in

approving loans due to the emergency nature of the pandemic by falsifying an application so they

could obtain a loan with minimal or no review. Id., ¶ 12–14; 86 Fed. Reg. 43, 13154-55 (March

8, 2021); Mem. at 3. These facts do not weigh in favor of a lower penalty, damages, or fine.

        Also, the false answers to the questions regarding current criminal charges were significant

to the loan program: “In light of the unique, emergency nature of the PPP and the higher fraud

risk that exists due to the PPP’s emphasis on speed in loan approvals and disbursements, the

remaining restrictions on eligibility related to an applicant or owner’s criminal history [pending

criminal charges] will help mitigate the risk of default, fraud, or misuse of PPP loan funds that are

intended to benefit small business employees.” 86 Fed. Reg. 43, 13154-55 (March 8, 2021).

Furthermore, treble damages and penalties for each falsified application “falls squarely within the

boundaries set by Congress,” and is in line “with the damages formula in 31 U.S.C. § 3729(a).”

Sayeed, 100 F.4th at 907-08. The single damage claim is the amount of the loans, plus interest

and processing fees, and Congress provided that treble damages are mandatory under the FCA.

Cpl., ¶ 3; 31 U.S.C. § 3729(a); United States v. Williams, No. 02 C 4990, 2003 WL 21384640, at

*5 (N.D. Ill. June 12, 2003) (“[J]udgments about the appropriate punishment for an offense belong

in the first instance to the legislature . . . . Reviewing courts . . . should grant substantial deference

to the broad authority that legislatures necessarily possess in determining the types and limits of




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   Case: 1:23-cv-04875 Document #: 41 Filed: 04/27/26 Page 15 of 15 PageID #:266




punishments for crimes . . . . Whatever views may be entertained regarding severity of punishment

. . . these are peculiarly questions of legislative policy.”) quoting Bajakajian, 524 U.S. at 336.

III.   The Defendants Were Unjustly Enriched.

       As alleged in the complaint, the actions described above caused the defendants to be

unjustly enriched by receiving PPP loans, and forgiveness of those loans, for which they were not

entitled due to the false certifications and statements on the loan applications. Defendants provide

no argument that they were not unjustly enriched besides the arguments addressed above.

                                            Conclusion

       For the foregoing reasons, this court should deny defendants’ motion to dismiss.

                                               Respectfully submitted,

                                               ANDREW S. BOUTROS
                                               United States Attorney

                                               By: s/ Kurt N. Lindland
                                                  KURT N. LINDLAND
                                                  Assistant United States Attorney
                                                  219 South Dearborn Street
                                                  Chicago, Illinois 60604
                                                  (312) 353-4163
                                                  kurt.lindland@usdoj.gov




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