Attachment A – Statement of Facts, settlement agreement between the United States of America and HPM Corporation, Hollie P. Mooers and Grover Cleveland Mooers

Summary

Statement of Facts attached to a settlement agreement between the United States, through the United States Attorney's Office for the Eastern District of Washington for the Department of Energy and the Small Business Administration, and HPM Corporation, Hollie P. Mooers and Grover Cleveland Mooers. HPM Corporation, of Kennewick, Washington, provides occupational medicine under the Hanford Occupational Medicine Services prime contract at the Hanford Site. The statement covers March 1, 2020 to March 1, 2022. It states that the company, through Grover Cleveland Mooers, falsely certified that a $1,344,700 Paycheck Protection Program loan was used for covered expenses, leading the agency to forgive $1,358,184.35 with interest, and that the Mooers transferred the loan sum to a personal checking account.

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                       Attachment A – Statement of Facts

                            STATEMENT OF FACTS

      The following Statement of Facts is incorporated by reference as part of the

settlement agreement (the “Agreement”) between the United States of America,

acting through the United States Attorney’s Office for the Eastern District of

Washington and on behalf of the Department of Energy and the Small Business

Administration (collectively the “United States”); HPM Corporation (“HPMC”);

Hollie P. Mooers (“Ms. Mooers”) and Grover Cleveland Mooers (“Mr. Mooers”)

(HPMC, Ms. Mooers, and Mr. Mooers collectively referred to hereinafter as

“Defendants”). The United States and Defendants agree that the following facts are

true and correct. Nothing in this Statement of Facts, however, is or will be construed

to be an admission of criminal liability by the Defendants, except to the extent

provided by the separate Deferred Prosecution Agreement (DPA) between the

United States Attorney's Office for the Eastern District of Washington (the "USAO")

and HPMC, United States v. HPMC, ---- (E.D.WA). The relevant time period for

the Statement of Facts is March 1, 2020, to March 1, 2022.

                             RELEVANT ENTITIES

   1. Defendant HPMC is a Washington corporation with its principal place of

business in Kennewick, Washington, specializing in occupational medicine.

   2. Hollie P. Mooers (“Ms. Mooers”) is the registered agent for HPMC, and both

Ms. Mooers and Grover Cleveland Mooers (“Mr. Mooers”) serve as HPMC’s
                       Attachment A – Statement of Facts

governors. Additionally, Ms. Mooers serves as President and Chief Executive

Officer (CEO) of HPMC.

   3. The United States Department of Energy (“DOE”) oversees environmental

remediation efforts at the Hanford Site in southeastern Washington State. In 2012,

HPMC was awarded the Hanford Occupational Medicine Services prime contract to

provide occupational medical and health services to workers at the Hanford Site,

located in Southeastern Washington state. Most recently, in 2018, HPMC was

competitively re-awarded the Hanford Occupational Medicine Services contract,

under Department Contract No. 89303919DEM000005.

   4. The United States Small Business Administration (“SBA”) is a federal agency

dedicated to small businesses that provides counseling, capital, and contracting

expertise. Under the Coronavirus Aid, Relief, and Economic Security Act, enacted

on March 27, the SBA received authority to temporarily guarantee loans under a new

7(a) loan program.

         PAYCHECK PROTECTION PROGRAM BACKGROUND

   5. The Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act) was

enacted on March 27, 2020, to provide over $2 trillion of economic relief to workers,

families, small businesses, industry sectors, and other levels of government that have

been hit hard by the public health crisis created by the Coronavirus (COVID-19).

Among the provisions contained in the CARES Act are provisions authorizing the
                         Attachment A – Statement of Facts

Small Business Administration (SBA) to temporarily guarantee loans under a new

7(a) loan program titled Paycheck Protection Program (“PPP”).

   6. This SBA-backed loan program was designed to help businesses keep their

workforce employed during the COVID-19 crisis. Under the PPP, borrowers

received loans to cover payroll costs and certain eligible nonpayroll costs. A

borrower could apply for forgiveness once all loan proceeds for which the borrower was

requesting forgiveness have been used. Borrowers could apply for forgiveness at any

time up to the maturity date of the loan. If borrowers did not apply for forgiveness within

10 months after the last day of the covered period, then PPP loan payments were no

longer deferred, and borrowers would begin making loan payments to their PPP lender.

Loans guaranteed under the PPP were 100 percent guaranteed by SBA, and the full

principal amount of the loans could in some circumstances qualify for loan

forgiveness.

   7. A company was eligible for a PPP loan if it has 500 or fewer employees whose

principal place of residence is in the United States or was a business that operates in

a certain industry and met the applicable SBA employee-based size standards for

that industry, and was in operation on February 15, 2020.

   8. In order to obtain a PPP loan, each applicant was required to provide

information about the subject business's operations, such as the date of opening,

number of employees, and past revenues. Each applicant was also required to certify
                         Attachment A – Statement of Facts

that all the information in the application was true and correct to the best of the

applicant's knowledge.

   9. Under the PPP loan program, the maximum loan amount is the lesser of $10

million or an amount calculated using a payroll-based formula specified in the Act.

The entire loan amount may be forgiven. However, for 100% forgiveness, at least

60% of loan must be used on payroll costs, and the remaining 40% may be spent on

interest on mortgages, rent, and utilities in the 24 weeks post loan disbursement.

   10. The PPP loans were not directly distributed through the SBA. Rather, the

SBA approved 7(a) lenders to make PPP loans on a delegated basis. If a PPP loan

application was approved, the participating lender funded the PPP loan using its own

monies, which were 100% guaranteed by the SBA. The SBA maintained the power

to exercise authority over PPP loan administration.

The Investigation

   11. In August 2021, the DOE OIG received a complaint from a Department

Official alleging that HPMC had applied for and received a PPP loan in the amount

of $1,344,700, and subsequently had the total loan amount fraudulently forgiven. An

investigation was initiated and revealed the following.

   12. On April 3, 2020, HPMC, through Grover Cleveland Mooers, applied for a

PPP loan through Community First Bank. This application was submitted through

the SBA “E-Tran server,” located in Sterling, VA.
                       Attachment A – Statement of Facts

   13. On the Borrower Application Form, Mr. Mooers certified, on behalf HPMC,

that the, “current economic uncertainty makes this loan request necessary to support

the ongoing operations of the Applicant” and that “the funds will be used to retain

workers and maintain payroll; or make payments for mortgage interest, rent,

utilities, covered operations expenditures, covered property damage costs, covered

supplier costs, and covered worker protection expenditures as specified under the

Paycheck Protection Program Rules; I understand that if the funds are knowingly

used for unauthorized purposes, the federal government may hold me legally liable,

such as for charges of fraud.”

   14. This loan was approved and the SBA assigned PPP loan number

“7352397001.” Community First Bank handled this loan on a delegated basis from

the SBA. Community First Bank submitted disbursement details for this loan into

the SBA E-Tran system located in Sterling, VA.

   15. On April 17, 2020, a PPP loan of $1,344,700 was deposited into HPMC’s

Business Bank Account. After deposit of the PPP loan was made, the same day an

inter-bank transfer of $1,344,700 was made from HPMC’s Business Bank Account

to HPMC’s Business Premium Money Market Account. The sum of $1,344,700

remained in the money market account until July 1, 2021.

   16. The coverage period of the loan, during which HPMC was required to use the

funds for authorized purposes in order to receive forgiveness, was from April 17,
                       Attachment A – Statement of Facts

2020, through September 30, 2020. However, HPMC did not use the PPP loan

proceeds to maintain payroll or for other covered business expenses during the loan

coverage period, or at any point after.

   17. On April 6, 2021, Mr. Mooers, on behalf of Ms. Mooers and HPMC,

submitted a PPP Loan Forgiveness Application, Form 3508EZ, to the SBA through

a SBA cloud-based platform (Summit) through the AWS GOVcloud server located

in Oregon, as well as to Community First Bank.

   18. On the loan forgiveness application, HPMC certified, through Mr. Mooers,

that “the dollar amount for which forgiveness is requested… was used to pay

business costs that are eligible for forgiveness (payroll costs to retain employees;

business mortgage interest payments; business rent or lease payments; business

utility payments; covered operations expenditures; covered property damage costs;

covered supplier costs; or covered worker protection expenditures).”

   19. HPMC further certified, through Mr. Mooers, that “[t]he Borrower has

accurately verified the payments for the eligible payroll and nonpayroll costs for

which the Borrower is requesting forgiveness.”

   20. HPMC also certified, through Mr. Mooers, 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. I understand that knowingly
                        Attachment A – Statement of Facts

making a false statement to obtain forgiveness of an SBA guaranteed loan is

punishable under the law....”

   21. HPMC also certified, through Mr. Mooers, that “I understand that if the funds

were knowingly used for unauthorized purposes, the federal government may pursue

recovery of loan amounts and/or civil or criminal fraud charges.”

   22. On April 13, 2021, based in part on the certification that the dollar amount

for which forgiveness was being requested was used to pay business costs eligible

for forgiveness such as payroll, SBA forgave HPMC’s PPP loan of $1,358,184.35

principal of the loan ($1,344,700), plus the interest ($13,484.35) in full.

   23. The SBA issued a “Notice of Paycheck Protection Program Forgiveness

Payment,” and on April 14, 2021, the forgiven amount of $1,358,184.35 was

transmitted by the SBA from the Denver Finance Center in Denver, CO, and routed

through the Financial Management Service system located in Sterling, VA, before

proceeding to Community First Bank in Kennewick, WA. The SBA also paid a

lender fee to Community First Bank of $40,341.00.

   24. On April 14, 2021, the SBA Denver Finance Center located in Denver,

Colorado created and certified the payment file and transmitted the file to the U.S.

Treasury data processing site in Kansas City, Missouri (KROC). KROC sent the file

to the National Payment Center of Excellence (NPCE), also located in Kansas City,

Missouri. The NPCE then sent the payment authorization to the Federal Reserve
                       Attachment A – Statement of Facts

Bank (FRB) in East Rutherford, New Jersey. Finally, the FRB submitted an ACH

payment to Community First Bank in Kennewick, Washington.

   25. From the date of the loan application on April 3, 2020, to the date of the

forgiveness application on April 6, 2021, the Department maintained payments to

HPMC under the Contract No. 89303919DEM000005.

   26. HPMC, through Mr. Mooers, certified to the SBA that the PPP Loan funds

were used for authorized purposes and were thus eligible for forgiveness. This

certification was knowingly false. This false certification was material.

   27. On July 1, 2021, the sum of $1,344,700 was transferred from HPMC’s

Business Premium Money Market Account to Mr. and Ms. Mooers’ personal

Community Bank Checking Account.

   28. A subsequent OIG audit identified that HPMC had obtained a PPP loan and

OIG Audits contacted HPMC officials regarding the PPP loan. In a response

questioning from OIG Audit, an HPMC official confirmed on August 2, 2021, that

“the loan was never used to cover any business operations to include payroll or

other facility expenses.”

   29. On September 14, 2021, HPMC officials represented that a third-party

consultant, “Cornerstone Wealth Strategies,” was used to distribute the PPP loan

funds to various charities and that “the charities were not handled through HPMC

and were done as personal donations outside of HPMC. The full amount of the loan
                       Attachment A – Statement of Facts

was sent to Cornerstone Wealth Strategies to disburse to the charities directly. As

previously stated, at no time did HPMC use any of those funds to cover CARES Act

3610 related expenses.”

   30. On November 4, 2021, HPMC Employee Number 1 for HPMC further

confirmed to DOE OIG that HPMC applied for the PPP loan, the Department

continued to pay for contract services HPMC performed through the coronavirus

pandemic, the PPP loan proceeds were not used for payroll related expenses, the PPP

loan sat in the bank account and was not used until July 2021 when the loan proceeds

were transferred out of the HPMC bank account, and the PPP loan proceeds were

donated to charity through personal contributions by the Mr. and Ms. Mooers and

not HPMC.

   31. On November 4, 2021, HPMC Employee Number 2 for HPMC also

confirmed to DOE OIG that the PPP loan was not used for payroll related expenses,

the Department continued to pay HPMC for contract services performed, and the

PPP loan proceeds were donated to charity.

   32. HPMC continued to receive full payment under their preexisting prime

contract with the Department during the time in question. In fact, because HPMC is

the on-site Occupational Health provider for the Department’s Hanford Site,

HPMC’s business with the Department grew due to the coronavirus pandemic as
                       Attachment A – Statement of Facts

they were awarded additional contract task orders related to coronavirus testing and

vaccine administration.

   33. HPMC, through Mr. Mooers, knowingly provided materially false statements

to the SBA in support of HPMC’s application for loan forgiveness. HPMC, through

Mr. Mooers, falsely certified that the loan’s proceeds were utilized for covered

HPMC business-related expenses and that the loan was eligible for forgiveness when

it was not.

   34. These materially false representations made to the SBA caused the SBA to

forgive the $1,358,184.35, principal of the loan ($1,344,700) plus the interest of 1%

($13,484.35) PPP loan in its entirety. Furthermore, upon forgiveness of the PPP loan,

Mr. Mooers and Ms. Mooers transferred the sum value of the $1,344,700 PPP loan

into their personal checking account where they utilized the government funds for

non-covered PPP loan related expenses.


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