Complaint-in-Intervention — United States ex rel. Devyn Taylor v. Stefano Maroni et al.

Summary

A Complaint-in-Intervention of the United States of America in United States of America ex rel. Devyn Taylor v. Stefano Maroni, GMI USA Corp., and Belovefine, Ltd., 23 Civ. 2159 (JHR), U.S. District Court, Southern District of New York, with a jury trial demanded. The United States states that it brings a civil fraud action to recover damages and civil penalties under the False Claims Act, 31 U.S.C. §§ 3729 et seq., in connection with fraudulent Paycheck Protection Program (PPP) loan and forgiveness applications. It alleges that Defendants obtained separate first-draw and second-draw PPP loans for GMI and Belovefine although the two entities operated essentially the same footwear business, and that the companies received more than $1 million in PPP loan funds, nearly all of which was forgiven.

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“Complaint-in-Intervention — United States ex rel. Devyn Taylor v. Stefano Maroni et al.” Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-1-23-cv-02159-s-d-n-y-4382f7cda6/, SHA-256 1b34bdab81a4b44c42270a9f3f10fbebc0993ede890476f43ac74d3cf463d54e.

Full text

DAMIAN WILLIAMS
United States Attorney for the
Southern District of New York
By: SAMUEL DOLINGER
Assistant United States Attorney
86 Chambers Street, 3rd Floor
New York, New York 10007
Tel.: (212) 637-2677
samuel.dolinger@usdoj.gov

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA ex rel.
DEVYN TAYLOR,

Plaintiff, 23 Civ. 2159 (JHR)

-v- COMPLAINT-IN-INTERVENTION
OF THE UNITED STATES OF
STEFANO MARONI, GMI USA CORP., and AMERICA
BELOVEFINE, LTD.,
JURY TRIAL DEMANDED
Defendants.

UNITED STATES OF AMERICA,

Plaintiff-Intervenor,

-v-

STEFANO MARONI, GMI USA CORP., and
BELOVEFINE, LTD.,

Defendants.

Plaintiff the United States of America (the “United States” or “Government”), by its

attorney, Damian Williams, United States Attorney for the Southern District of New York, files

this Complaint-in-Intervention against defendants Stefano Maroni (“Maroni”), GMI USA Corp.
(“GMI”), and Belovefine, Ltd. (“Belovefine,” and collectively with Maroni and GMI,

“Defendants”), alleging as follows:

PRELIMINARY STATEMENT

1. This is a civil fraud action brought by the United States against Defendants to

recover damages and civil penalties under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et

seq., in connection with their submission of fraudulent Paycheck Protection Program (“PPP”)

loan applications and loan forgiveness applications. The United States also seeks to recover

damages under the common law for payment by mistake of fact and unjust enrichment.

2. The PPP was a federal loan program overseen by the Small Business

Administration (“SBA”) to assist small businesses nationwide adversely impacted by the

COVID-19 emergency. Under the PPP, eligible businesses could obtain SBA-guaranteed loans

to spend on payroll costs, rent or mortgage expenses, and other specified business expenses.

3. Defendants improperly obtained separate first-draw and second-draw PPP loans

for both GMI and Belovefine despite the fact that the two entities in fact operated essentially the

same footwear design and importation business. Maroni was the sole owner and the Chief

Executive Officer of both companies. The companies shared an overlapping roster of

employees, used a single office space, and conducted the same business activities.

4. During the relevant time period, Maroni repeatedly transferred the employees of

the footwear business from one entity’s payroll to the other’s payroll. Despite this, Defendants

sought and received PPP loans on behalf of both Belovefine and GMI as though they were two

distinct businesses, each with its own separate employee payroll.

5. Moreover, although the loan applications submitted for GMI and Belovefine each

listed the same building address, the Belovefine application included a different and inaccurate

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suite number within the building, which gave the false impression that the entities were distinct

and operated in separate locations.

6. Maroni personally signed the PPP loan and forgiveness applications on behalf of

Belovefine and GMI. In total, the companies received more than $1 million in PPP loan funds,

nearly all of which was forgiven by the SBA.

7. Defendants made a number of false certifications and statements in their PPP loan

applications and forgiveness applications. In particular, Defendants (i) falsely certified in

Belovefine’s PPP loan applications that the company had employees for whom it paid salaries

and payroll taxes as of February 15, 2020, which was a PPP loan eligibility requirement;

(ii) inflated payroll figures in their PPP loan and forgiveness applications by double-counting the

salaries of shared employees of both GMI and Belovefine, when in fact only one of these entities

paid these employees’ salaries and payroll taxes at a given time; and (iii) improperly sought loan

forgiveness for certain payroll costs in excess of allowable forgiveness amounts, when

Defendants had reduced employee salaries by more than the amount permitted under the PPP

program’s rules (the “PPP Rules”).

8. Defendants made these misrepresentations despite certifying in both their loan

applications and forgiveness applications that the information provided was true and accurate.

9. By engaging in the above-referenced conduct, Defendants violated the FCA by

knowingly presenting and making, or causing to be presented and made, false claims and

statements to the SBA and the lenders acting on the SBA’s behalf, and improperly obtained PPP

funds for amounts substantially in excess of what they were entitled to receive.

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JURISDICTION AND VENUE

10. This Court has jurisdiction over the claims brought under the False Claims Act

pursuant to 31 U.S.C. § 3730(a) and 28 U.S.C. §§ 1331, 1345, and over the common law claims

pursuant to 28 U.S.C. § 1345.

11. This Court may exercise personal jurisdiction over Defendants pursuant to

31 U.S.C. § 3732(a), which provides for nationwide service of process. Maroni resided in

Manhattan during the time period relevant to the complaint, and GMI and Belovefine are New

York corporations that maintained an office in Manhattan during the time period relevant to the

complaint.

12. Venue is appropriate in this district pursuant to 31 U.S.C. § 3732(a) and 28 U.S.C.

§ 1391(b) and (c) because a substantial part of the events or omissions giving rise to the claims

occurred in this district, and Defendants resided in this district during the time period relevant to

the complaint.

PARTIES

13. Plaintiff is the United States of America, and is suing on its own behalf and on

behalf of the SBA, which, among other things, administered the PPP.

14. Defendant Stefano Maroni is an individual who resided at 985 Park Avenue, New

York, New York, during the relevant time period. Maroni was the owner and Chief Executive

Officer of both Belovefine and GMI.

15. Defendant GMI USA Corp. is a New York corporation. During the relevant time

period, GMI maintained an office at 3 Columbus Circle, Suite 2410, New York, New York.

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16. Defendant Belovefine, Ltd. is a New York corporation. During the relevant time

period, Belovefine maintained an office at 3 Columbus Circle, Suite 2410, New York, New

York.

17. Relator Devyn Taylor (“Relator”) is a former employee of Defendants. In March

2023, Relator filed a complaint under the qui tam provisions of the FCA alleging that Defendants

made numerous false representations in their applications for PPP loans and for the forgiveness

of those loans, and fraudulently secured separate PPP loans for GMI and Belovefine even though

the two companies were in fact one and the same business.

BACKGROUND

A. The Paycheck Protection Program

18. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act

(“the CARES Act”) (Pub. L. 116-136) became law and provided emergency assistance and

health care response for individuals, families, and businesses affected by the coronavirus

pandemic. The SBA received funding and authority through the CARES Act to modify existing

loan programs and establish a new loan program to assist small businesses nationwide adversely

impacted by the COVID-19 emergency.

19. The CARES Act authorized loans to eligible small businesses struggling to pay

employees and other business expenses as a result of the devastating effect of the COVID-19

pandemic.

20. Section 1102 of the CARES Act temporarily permitted the SBA to guarantee 100

percent of 7(a) loans under a new program titled the “Paycheck Protection Program,” or PPP. 1

1
The 7(a) Loan Program is SBA’s primary business loan program for providing financial assistance to
small businesses. See SBA, 7(a) loans, https://www.sba.gov/funding-programs/loans/7a-loans (last
accessed December 5, 2024). The program “provides loan guaranties to lenders that allow them to
provide financial help for small businesses with special requirements.” Id.

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21. On April 24, 2020, the Paycheck Protection Program and Health Care

Enhancement Act (Pub. L. 116-139) became law and provided additional funding and authority

for the PPP. On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020

(Flexibility Act) (Pub. L. 116-142) became law and changed key provisions of the PPP,

including provisions relating to the maturity of PPP loans, the deferral of PPP loan payments,

and the forgiveness of PPP loans.

22. On December 27, 2020, certain provisions of the Consolidated Appropriations

Act, 2020 (Pub. L. 116-260), further modified the PPP, including with respect to the ineligibility

of businesses not in operation as of February 15, 2020.

23. Under the PPP, businesses were required to spend loan proceeds for employee

compensation, rent or mortgage, and other specified expenses and, if they used the loan proceeds

as required, could qualify for loan forgiveness, up to the full amount of the loan.

24. The SBA delegated authority to third-party lenders to underwrite and approve the

PPP loans. In order to obtain a PPP loan, a qualifying business (through its authorized

representative) was required to sign and submit a PPP loan application online through the

lender’s application platform.

25. The PPP loan application required the business (through its authorized

representative) to acknowledge the PPP Rules and make certain affirmative certifications in

order to be eligible to obtain the PPP loan.

26. For example, applicants for PPP loans were required to certify in their PPP

applications, among other things, that:

a. “The Applicant is eligible to receive a loan under the rules in effect at the time

this application is submitted that have been issued by the Small Business

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Administration (SBA) implementing the Paycheck Protection Program under

Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act

(CARES Act) (the Paycheck Protection Program Rule)”;

b. “All SBA loan proceeds will be used only for business-related purposes as

specified in the loan application and consistent with the Paycheck Protection

Program Rule”;

c. “The Applicant was in operation on February 15, 2020 and had employees for

whom it paid salaries and payroll taxes or paid independent contractors, as

reported on Form(s) 1099-MISC”;

d. “The funds will be used to retain workers and maintain payroll or make

mortgage interest payments, lease payments, and utility payments, as specified

under the Paycheck Protection Program Rule”;

e. “[I]f the funds are knowingly used for unauthorized purposes, the federal

government may hold [the Applicant] legally liable, such as for charges of

fraud”;

f. “The Applicant will provide to the Lender documentation verifying the

number of full-time equivalent employees on the Applicant’s payroll as well

as the dollar amounts of” eligible expenses; and

g. “[T]he information provided in this application and the information provided

in all supporting documents and forms is true and accurate in all material

respects.”

27. Once the borrower submitted its PPP loan application to a lender, the participating

lender processed the PPP loan application. If a PPP loan application was approved by the

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participating lender, it thereafter funded the PPP loan using its own monies, which were 100%

guaranteed by the SBA.

28. Qualifying borrowers who exhausted the entirety of their first PPP loan on

authorized uses were permitted to apply for a second-draw PPP loan. Like first-draw PPP loans,

second-draw loans were calculated based on the applicant’s average monthly payroll costs. As

part of their second-draw applications, applicants were required to make affirmative

certifications similar to those set forth in ¶¶ 25-26, above.

29. Pursuant to the CARES Act, the amount of PPP funds a business was eligible to

receive for both first-draw and second-draw loans was determined by the number of employees

employed by the business and their average payroll costs. Any employee salary in excess of

$100,000 annually was excluded from the calculation. Businesses applying for a PPP loan had

to provide documentation to confirm that they had in the past paid employees the compensation

represented in the loan application.

30. After the lender processed and approved a borrower’s PPP loan application, the

lender submitted to the SBA the “Lender’s Application – Paycheck Protection Program Loan

Guaranty” applying for a guarantee on the loan. In that application, the lender certified that the

borrower had made the required certifications regarding its eligibility. Therefore, if a borrower

made misrepresentations on its PPP loan application, the borrower’s false certifications caused

the lender to submit a loan guarantee application to the SBA that contained the borrower’s false

statements.

31. The SBA provided for forgiveness of first-draw and second-draw PPP loans. In

order to receive forgiveness, borrowers were required to submit signed loan forgiveness

applications and documents containing the information and certifications in SBA Form 3508,

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3508EZ, or a third-party lender equivalent. The PPP loan forgiveness application required the

business (through its authorized representative) to make certain other certifications in order to be

eligible to obtain forgiveness for a PPP loan.

32. For example, applicants for PPP loan forgiveness were required to certify in their

PPP loan forgiveness applications, among other things, that:

a. “The dollar amount for which forgiveness is requested . . . was used to pay

business costs that are eligible for forgiveness”;

b. “The Borrower did not reduce salaries or hourly wages of any employee by

more than 25 percent for any employee during the Covered Period compared

to the most recent quarter before the Covered Period. For purposes of this

certification, the term ‘employee’ includes only those employees that did not

receive, during any single period during 2019, wages or salary at an

annualized rate of pay in an amount more than $100,000”; 2

c. “[I]f the funds were knowingly used for unauthorized purposes, the federal

government may pursue recovery of loan amounts and/or civil or criminal

fraud charges”;

d. “The Borrower has accurately verified the payments for the eligible payroll

and nonpayroll costs for which the Borrower is requesting forgiveness”; and

e. “The information provided in this application and the information provided in

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

2For purposes of PPP loan forgiveness, the “covered period” is the period beginning on the date of the
origination of a PPP loan and ending on a date selected by the borrower between 8 and 24 weeks after the
date of origination. See 15 U.S.C. § 636m(a)(4). In general, payroll costs paid or incurred by the
borrower during the covered period were eligible for forgiveness, within limitations imposed by statute
and the PPP Rules. See id. § 636m(b), (d).

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respects.”

B. The False Claims Act

33. The FCA establishes treble damages liability to the United States for an individual

who, or entity that, “knowingly presents, or causes to be presented, a false or fraudulent claim for

payment or approval,” 31 U.S.C. § 3729(a)(1)(A), or “knowingly makes, uses, or causes to be

made or used, a false record or statement material to a false or fraudulent claim,” id.

§ 3729(a)(1)(B).

34. “Knowingly” is defined to include actual knowledge, reckless disregard, and

deliberate ignorance. Id. § 3729(b)(1). No proof of specific intent to defraud is required. Id.

35. In addition to treble damages, the FCA also provides for assessment of a civil

penalty for each violation or each false claim. Id. § 3729(a)(1).

FACTUAL ALLEGATIONS

36. Between 2020 and 2022, Maroni operated a footwear design and importation

business. At various times, Maroni alternately used Belovefine or GMI as the corporate entity

performing certain business functions.

37. Belovefine and GMI operated essentially the same footwear business from the

same office space in Manhattan. The footwear business’s total employee roster ranged between

approximately 10 and 20 employees at various times during the relevant period.

38. During the relevant period, Maroni repeatedly transferred employees of the

footwear business from GMI’s payroll to Belovefine’s payroll, or the reverse, even though there

was no material difference in employees’ job functions when they were paid by one company as

opposed to the other.

39. In particular:

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a. Between January and April 2020, Maroni paid all employees of the footwear

business through GMI’s payroll. Belovefine had no employee payroll during this

period. Maroni falsely certified in Belovefine’s PPP loan applications that the

company had employees for whom it paid salaries and payroll taxes as of

February 15, 2020, which was a PPP loan eligibility requirement.

b. From May 2020 through August 2020, Maroni transferred all employees of the

footwear business to Belovefine’s payroll. GMI had no employee payroll during

this period.

c. From September 2020 through mid-March 2021, Maroni transferred all

employees of the footwear business to GMI’s payroll. Belovefine had no

employee payroll during this period.

d. From mid-March 2021 through February 2022, Maroni transferred all employees

of the footwear business to Belovefine’s payroll. GMI had no employee payroll

during this period.

e. From mid-March 2022 through September 2022, Maroni transferred all

employees of the footwear business to GMI’s payroll. Belovefine had no

employee payroll during this period.

40. Despite this, Defendants sought and received first-draw and second-draw PPP

loans on behalf of both Belovefine and GMI as though they were two separate businesses, each

with its own employee payroll.

41. Defendants misrepresented and inflated the total payroll and employee

headcounts of Belovefine and GMI in their first- and second-draw PPP applications and loan

forgiveness applications, which increased the amount of the PPP loans received and the amounts

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forgiven. Defendants essentially double-counted the salaries of shared employees of both GMI

and Belovefine, when in fact only one of these entities paid these employees’ salaries and payroll

taxes at a given time.

42. Defendants also inaccurately represented in their PPP applications that Belovefine

and GMI were located at different addresses. GMI’s first-draw and second-draw PPP loan

applications listed its address as Suite 2410 at 3 Columbus Circle, New York, New York, while

Belovefine’s PPP loan applications inaccurately listed a different suite number, which was not

used by either company during the relevant period. This misrepresentation gave the impression

that the entities were distinct and operated in separate locations, when in fact they used the same

office space.

43. In addition, Defendants sought loan forgiveness for certain payroll costs in excess

of allowable forgiveness amounts, when Defendants had reduced employee salaries by more than

the amount permitted under PPP Rules.

44. Had the lenders known of Defendants’ misrepresentations set forth above, and

that GMI and Belovefine essentially operated the same business and shared the same employees

who were paid by each company at different points in time, the lenders would not have approved

the PPP loan amounts requested. In addition, had the SBA known of Defendants’

misrepresentations, the SBA would not have forgiven these PPP loans in full or substantial part.

Thus, as a result of Defendants’ fraud, Defendants obtained PPP loans for amounts substantially

in excess of what they were entitled to receive.

A. Belovefine’s PPP Loans

45. On or about April 8, 2020, Maroni submitted a first-draw PPP application to a

lending bank (“Bank 1”) on behalf of Belovefine seeking a PPP loan of $379,562. Maroni

electronically signed the application as the Owner and Authorized Representative of Belovefine.

12
46. In Belovefine’s first-draw PPP application, Maroni certified (among other things)

that Belovefine was eligible to receive a loan under the PPP Rules; that Belovefine was in

operation on February 15, 2020, and had employees for whom it paid salaries and payroll taxes;

and that the information provided in the application and supporting documents was true and

accurate in all material respects.

47. On or about May 1, 2020, Belovefine received $379,562 in loan proceeds from

Bank 1 as a result of its first-draw PPP application.

48. On or about February 4, 2021, Maroni submitted a second-draw PPP application

to Bank 1 on behalf of Belovefine seeking a PPP loan of $306,535. Maroni electronically

signed the application as the Owner and Authorized Representative of Belovefine.

49. In Belovefine’s second-draw PPP application, Maroni certified (among other

things) that Belovefine was eligible to receive a loan under the PPP rules; that Belovefine was in

operation on February 15, 2020, and had employees for whom it paid salaries and payroll taxes;

and that the information provided in the application and supporting documents was true and

accurate in all material respects.

50. On or about February 9, 2021, Belovefine received $306,535 in loan proceeds

from Bank 1 as a result of its second-draw PPP application.

51. On or about July 27, 2021, Maroni submitted a forgiveness application to Bank 1

on behalf of Belovefine for its first-draw PPP loan. In that application, Maroni sought

forgiveness of Belovefine’s full $379,562 first-draw PPP loan. Maroni certified that the

information provided in the application and supporting documents was true and accurate in all

material respects. Maroni electronically signed the application as the Authorized Representative

of Belovefine.

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52. On or about August 4, 2021, the SBA forgave the entirety of Belovefine’s first-

draw PPP loan and remitted a forgiveness amount of $379,562 in principal and $4,752.96 in

interest to Bank 1.

53. On or about March 3, 2022, Maroni submitted a forgiveness application to Bank 1

on behalf of Belovefine for its second-draw PPP loan. In that application, Maroni sought

forgiveness of Belovefine’s full $306,535 second-draw PPP loan. Maroni certified that the

information provided in the application and supporting documents was true and accurate in all

material respects. Maroni electronically signed the application as the President and Authorized

Representative of Belovefine.

54. On or about March 14, 2022, the SBA forgave the entirety of Belovefine’s

second-draw PPP loan and remitted a forgiveness amount of $306,535 in principal and $3,321.14

in interest to Bank 1.

55. Maroni and Belovefine knowingly made misrepresentations in Belovefine’s PPP

loan applications and forgiveness applications that resulted in its receiving PPP loan funds and

forgiveness that Belovefine was not entitled to receive.

56. Specifically, and contrary to Maroni’s certification, on February 15, 2020,

Belovefine had no employees on its payroll and, as a result, did not have “employees for whom it

paid salaries and payroll taxes.” In fact, Belovefine had no employee payroll during the period

from January 1, 2020, through April 30, 2020, and did not file a Form 941, Employer’s Quarterly

Federal Tax Return, for the first quarter of 2020. As a result, Belovefine was ineligible to

receive a first-draw PPP loan or a second-draw PPP loan.

B. GMI’s PPP Loans

57. On or about May 7, 2020, Maroni submitted a first-draw PPP application on

behalf of GMI to another lending bank (“Bank 2”) seeking a PPP loan of $379,562. Notably,

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this is the same loan amount (based on the same claimed number of employees and average

monthly payroll) that was requested on behalf of Belovefine in its first-draw PPP application.

Maroni certified that the information provided in the application and supporting documents was

true and accurate in all material respects. Maroni electronically signed the application as the

CEO and Authorized Representative of GMI.

58. On or about May 12, 2020, GMI received $223,400 in loan proceeds from Bank 2

as a result of its first-draw PPP loan application, after Bank 2 determined that GMI was not

eligible for the full loan amount that Maroni initially requested.

59. On or about February 4, 2021, Maroni submitted a second-draw PPP application

to Bank 2 on behalf of GMI seeking a PPP loan of $133,825. Maroni certified that the

information provided in the application and supporting documents was true and accurate in all

material respects. Maroni electronically signed the application as the CEO and Authorized

Representative of GMI.

60. On or about February 8, 2021, GMI received $133,825 in loan proceeds from

Bank 2 as a result of its second-draw PPP application.

61. On or about October 20, 2021, Maroni submitted a forgiveness application to

Bank 2 on behalf of GMI for its first-draw PPP loan. In that application, Maroni sought

forgiveness of $192,320 of GMI’s $223,400 first-draw PPP loan. Maroni electronically signed

the application as the CEO and Authorized Representative of GMI.

62. In GMI’s first-draw PPP forgiveness application, Maroni certified (among other

things) that GMI did not reduce salaries or hourly wages of any employee, as defined by PPP

Rules, by more than 25 percent compared to the most recent quarter before the period covered by

15
the loan, and that the information provided in the application and supporting documents was true

and accurate in all material respects.

63. On or about October 26, 2021, the SBA forgave the majority of GMI’s first-draw

PPP loan and remitted a forgiveness amount of $192,320 in principal and $2,808.40 in interest to

Bank 2.

64. On or about February 28, 2022, Maroni submitted a forgiveness application to

Bank 2 on behalf of GMI for its second-draw PPP loan. In that application, Maroni sought

forgiveness of GMI’s full $133,825 second-draw PPP loan. Maroni certified that the information

provided in the application and supporting documents was true and accurate in all material

respects. Maroni electronically signed the application as the CEO and Authorized

Representative of GMI.

65. On or about March 7, 2022, the SBA forgave the entirety of GMI’s second-draw

PPP loan and remitted a forgiveness amount of $133,825 in principal and $1,448.24 in interest to

Bank 2.

66. Maroni and GMI knowingly made misrepresentations in GMI’s PPP loan

applications and forgiveness applications that resulted in its receiving PPP loan funds and

forgiveness in excess of what it was entitled to receive.

67. In GMI’s first-draw and second-draw PPP applications and first-draw and second-

draw loan forgiveness applications, Maroni and GMI misrepresented and inflated the total

payroll and employee headcounts in order to increase the amount of the PPP loans received.

Maroni included the wages of the same employees in GMI’s PPP loan and forgiveness

applications that were included in Belovefine’s applications, when in fact only one entity was

16
paying salaries and payroll taxes to employees of the footwear business at a given time during

the relevant time period.

68. Moreover, in GMI’s first-draw PPP loan forgiveness application, Maroni and

GMI misrepresented and inflated the total payroll amounts eligible for forgiveness because GMI

had reduced covered employees’ total wages by amounts in excess of 25 percent of the total

salary or wages of the employee during the most recent full quarter that preceded the relevant

period covered by the loan. In fact, during part of the covered period for the forgiveness

application, GMI reduced the salaries of multiple covered employees by 50%, rendering

Maroni’s certification that GMI had not reduced salaries by more than 25% false.

CLAIMS FOR RELIEF

FIRST CLAIM

Violations of the False Claims Act: Presenting False or
Fraudulent Claims (31 U.S.C. § 3729(a)(1)(A))

69. The Government incorporates by reference each of the preceding paragraphs as if

fully set forth herein.

70. Through the acts set forth above, Defendants knowingly presented, or caused to

be presented, false or fraudulent claims for payment or approval, in violation of the FCA, 31

U.S.C. § 3729(a)(1)(A). Specifically, Defendants requested, received, and obtained PPP loans

and forgiveness for PPP loans in excess of the amount that they were entitled to by making

material misrepresentations in PPP loan applications and PPP loan forgiveness applications.

71. Defendants presented or caused to be presented these claims with actual

knowledge of their falsity, or in deliberate ignorance or reckless disregard of whether or not they

were false.

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72. By reason of these false or fraudulent claims, the Government has been damaged

in a substantial amount to be determined at trial, and is entitled to recover treble damages plus a

civil monetary penalty for each false claim.

SECOND CLAIM

Violations of the False Claims Act: Use of False
Statements (31 U.S.C. § 3729(a)(1)(B))

73. The Government incorporates by reference each of the preceding paragraphs as if

fully set forth herein.

74. Through the acts set forth above, Defendants made and used, or caused to be

made and used, false records and statements material to the payment of false or fraudulent claims

by the SBA in violation of 31 U.S.C. § 3729(a)(1)(B). These false records and statements

included the misrepresentations in the PPP loan applications and PPP loan forgiveness

applications and the false certifications in these applications.

75. Defendants made, used, or caused to be made and used, these false records and

statements with actual knowledge of their falsity, or in deliberate ignorance or reckless disregard

of whether or not they were false.

76. By reason of the false records or statements, the Government has been damaged

in a substantial amount to be determined at trial, and is entitled to recover treble damages plus a

civil monetary penalty for each violation.

THIRD CLAIM

Payment by Mistake of Fact

77. The Government incorporates by reference each of the preceding paragraphs as if

fully set forth herein.

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78. The Government seeks relief against Defendants to recover monies paid under

mistake of fact.

79. The lenders acting on behalf of the SBA and the United States made payments

based on the mistaken and erroneous belief that the PPP loan applications included accurate

information and complied with PPP Rules. The PPP loans were also forgiven based on the

mistaken and erroneous belief that the PPP loan forgiveness applications included accurate

information and complied with PPP Rules.

80. By reason of the foregoing, the Government has sustained damages in a

substantial amount to be determined at trial.

FOURTH CLAIM

Unjust Enrichment

81. The Government incorporates by reference each of the preceding paragraphs as if

fully set forth herein.

82. Through the acts set forth above, Defendants received PPP funds to which they

were not entitled and therefore were unjustly enriched. The circumstances are such that, in

equity and good conscience, Defendants should not retain those payments, the amount of which

is to be determined at trial.

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PRAYER FOR RELIEF

WHEREFORE, the United States respectfully requests that judgment be entered in its

favor and against Defendants as follows:

(1) On the First and Second Claims (violations of the False Claims Act, 31 U.S.C.

§§ 3729(a)(l)(A), 3729(a)(l)(B)), for a sum equal to treble the United States'

damages and civil penalties to the maximum amount allowed by law;

(2) On the Third and Fourth Claims (Payment by Mistake of Fact and Unjust

Enrichment), for a sum equal to the damages to the extent allowed by law; and

(3) Granting the United States costs and such further relief as the Court may deem

proper.

Dated: December 6, 2024
New York, New York

DAMIAN WILLIAMS
United States Attorney for the
Southe District of New York

By:
SA
Assistant United States Attorney
86 Chambers Street, Third Floor
New York, New York 10007
Tel. : (212) 637-2677
samuel.dolinger@usdoj.gov

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