Miracle-Ear and its Foundation Agree to Pay over $6.4 Million to Resolve False Claims Allegations Concerning the Paycheck Protection Program
Summary
Brad D. Schimel, First Assistant United States Attorney for the Eastern District of Wisconsin, announced that Miracle-Ear, Inc. and the Miracle-Ear Foundation agreed to pay $6,473,222 to resolve claims that they improperly obtained three PPP loans. Miracle-Ear received first-draw and second-draw loans of $1,962,000 each, in June 2020 and February 2021, and the foundation a $58,100 loan in May 2020. The government alleges both were ineligible because they were affiliated with Amplifon S.p.A., an Italian public company with annual sales exceeding 1.5 billion euros, whose group employed too many people, and that Miracle-Ear gave false information to claim the franchise exemption to the SBA affiliation rules. The settlement resolves two qui tam cases filed by Blockquote, Inc. and Mary Denler, with Blockquote to receive $1,154,111.40, and the companies do not admit liability.
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Brad D. Schimel, First Assistant United States Attorney for the Eastern District of Wisconsin, announced a settlement with Miracle-Ear, Inc., and the Miracle-Ear Foundation to settle claims that they improperly obtained three loans through the Paycheck Protection Program (“PPP”). Miracle-Ear and its foundation agreed to pay $6,473,222 to resolve the government’s claims. Congress enacted the PPP in March 2020 to provide emergency assistance to small businesses suffering from the economic impact of the COVID-19 pandemic. The program was operated by the Small Business Administration (SBA) and allowed eligible small businesses and nonprofits to receive loans guaranteed by the federal government. If the borrower spent the funds on qualified expenses, the government repaid the loan on the borrower’s behalf. To qualify as a small business eligible for a PPP loan, a borrower and any affiliated companies generally could not employ more than 500 individuals. In its loan application, moreover, the borrower was required to certify that it was eligible for the PPP and that the information provided in the application was accurate. Miracle-Ear distributes and sells hearing aids and associated products through stores owned by Miracle-Ear as well as stores owned and operated by franchisees. Miracle-Ear Foundation is a nonprofit organization that provides free hearing aids to low-income individuals. Miracle-Ear received a first-draw PPP loan in the amount of $1,962,000 in June 2020 and a second-draw PPP loan in the amount of $1,962,000 in February 2021. Miracle-Ear Foundation received a single PPP loan in the amount of $58,100 in May 2020. Miracle-Ear is wholly owned by Amplifon (USA) Inc., which, in turn, is wholly owned by Amplifon S.p.A., an Italian public company with thousands of employees and annual sales exceeding 1.5 billion euros in 2020 and 2021. Miracle-Ear Foundation is likewise affiliated with Amplifon S.p.A. The government alleges that Miracle-Ear and its foundation falsely certified that they were eligible for the PPP loans. Specifically, the United States alleges that Miracle-Ear and its foundation were not eligible for their PPP loans because they were affiliated with Amplifon S.p.A. and that the Amplifon corporate group employed too many individuals for Miracle-Ear and its foundation to qualify for PPP loans. The United States further contends that Miracle-Ear provided false information in its loan applications to make it appear that Miracle-Ear was covered by an exemption to the SBA’s affiliation rules for “business concerns operating as a franchise.” That exemption only covered small businesses operating as a franchisee, not corporations like Miracle-Ear that issued franchises to small businesses. “Congress created the PPP to aid American small businesses during the pandemic. Miracle-Ear and its foundation, however, were part of a large multinational corporate group with billions in annual revenue,” said First Assistant Schimel. “Miracle-Ear and its foundation, moreover, allegedly provided false information to the SBA to obtain these taxpayer funds. This settlement is part of our office’s ongoing efforts to hold corporations accountable when they submit false claims to obtain tax dollars.” “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration, as part of the White House Task Force to Eliminate Fraud, working with the U.S. Attorney’s Office and other federal law enforcement agencies to recover the product of this fraud as well as penalties. When whistleblowers uncover potentially fraudulent conduct, we work to recover SBA funds improperly obtained,” said SBA General Counsel Jennifer Prescott. This civil settlement resolves claims brought in two cases under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file an action on behalf of the United States and receive a portion of any recovery. The lawsuits were filed by Blockquote, Inc., and Mary Denler and are pending in the Eastern District of Wisconsin. In connection with the settlement, Blockquote, Inc., will receive $1,154,111.40. Together with the SBA, Assistant United States Attorney Michael Carter represented the government in this matter. The settlement agreement states allegations only; Miracle-Ear, Inc. and Miracle-Ear Foundation do not admit liability for the allegations. ### For further information contact: Public Affairs Officer Steve Caballero (414) 297-1700 Follow us on X
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