U.S. ex rel. Mackinac Center for Public Policy v. Michigan Education Association, et al.

Case summary

In March 2023 two Michigan nonprofit organizations, the Michigan Education Association (MEA) and the Michigan Education Special Services Association (MESSA), agreed to settle allegations over their Paycheck Protection Program loans. They were alleged to have violated the False Claims Act by applying for and obtaining those loans when they knew or should have known they were ineligible to receive them. The claims are allegations only, and there has been no determination of liability.¹

According to the Justice Department, under the PPP rules in effect when both organizations applied in 2020, certain categories of nonprofit organizations were not eligible for the loans. MEA is a 501(c)(5) labor union; MESSA is a 501(c)(9) voluntary employees' beneficiary association. The United States contended that both organizations knew or should have known they did not qualify, and that their loans caused the Small Business Administration to pay lender processing fees to the bank that handled the applications. MEA agreed to pay $115,265 and MESSA agreed to pay $110,622, totaling $225,887. Both organizations had already repaid their loan proceeds in full in December 2020.¹

The settlement resolved a qui tam whistleblower lawsuit filed by the Mackinac Center for Public Policy, captioned U.S. ex rel. Mackinac Center for Public Policy v. Michigan Education Association, et al., Dkt. No. 1:22-cv-00028-HYJ-PJG (W.D. Mich.). Under the False Claims Act's qui tam provisions, private parties may sue on the government's behalf and share in any recovery; the Mackinac Center's share had not been determined as of the settlement announcement.¹

The matter was handled by Civil Division Trial Attorney Evan J. Ballan and Assistant U.S. Attorney Andrew J. Hull of the Western District of Michigan. The resolution was coordinated between the Civil Division's Commercial Litigation Branch, Fraud Section, the U.S. Attorney's Office for the Western District of Michigan, and the SBA's Office of General Counsel and Office of Inspector General.¹

Notes

1. U.S. Department of Justice, "Michigan Nonprofit Organizations Agree to Pay $225,887 to Settle False Claims Act Allegations Relating to Improper Receipt of Paycheck Protection Program Loans" (original), March 13, 2023. ↩₁ ↩₂ ↩₃ ↩₄

Summary written from the documents on this page; every sentence is sourced.