Settlement Agreement (PPP): United States, The Energy Federation, Inc. and Wade Riner, Relator

Summary

Settlement Agreement among the United States (acting through the Department of Justice and the Small Business Administration), Relator Wade Riner and The Energy Federation, Inc. (EFI), concerning a qui tam action filed July 2, 2024, in the District of Massachusetts. Relator alleged that EFI, as a 501(c)(4) organization, was ineligible for the PPP loan it obtained on or about April 15, 2020. EFI agrees to pay $1,000,000, of which $750,000 is restitution, plus interest at four and one-eighth percent (4.125%) from March 31, 2025. The Relator's Share is $100,000 plus a pro rata share of the accrued interest, and EFI pays Relator $7,500 for expenses, attorneys' fees and costs.

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“Settlement Agreement (PPP): United States, The Energy Federation, Inc. and Wade Riner, Relator.” Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/settlement-agreement-united-states-and-the-energy-federation-ppp-60639c4bb3/, SHA-256 ffaac0f08894bac6bd77902f7a39abd0b11aaa9efac82bd55b832f73146936a3.

Full text

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made and entered into by and between the

United States of America, acting through the United States Depmiment of Justice, the United

States Small Business Administration ("SBA") (collectively, the "United States"); Wade Riner

("Relator"); and The Energy Federation, Inc., ("EFI") (hereinafter collectively referred to as the

"Pmiies"), through their authorized representatives.

RECITALS

A. EFI is a non-profit 50l(c)(4) organization that assists individuals with heat and

energy needs, including providing financial grants, technical assistance, education, and advice on

promoting energy efficiency. EFI is headquartered in, Norfolk County, MA. On or about April

15, 2020, EFI obtained a Paycheck Protection Program ("PPP") loan, which was subsequently

forgiven by the SBA.

B. The SBA is an independent agency of the United States government that provides

aid, counsel, and assistance to small businesses and entrepreneurs. The Coronavirus Aid,

Relief, and Economic Security Act ("CARES Act"), Section 1102, vested the SBA with the

responsibility of managing the PPP, under the SBA's 7(a) Loan Program. The PPP was a

federal program that provided emergency relief to small businesses affected by the COVID-19

pandemic. See 15 U.S.C. § 636(a)(36).

C. The SBA administered the PPP and guaranteed loans that were made according to

PPP rules. To apply for PPP funding, a business or entity had to certify that it met the

requirements of the program. Under the PPP's rules, 50l(c)(4) organizations were never

eligible for loans. As a 50l(c)(4), EFI was not eligible for a PPP loan.

D. On July 2, 2024, Relator filed a qui tam action in the United States District Cami

for the District of Massachusetts captioned United States ofAmerica ex rel. Wade Riner v.
Energy Federation Inc., et al., pursuant to the qui tam provisions of the False Claims Act, 31

U.S.C. § 3730(6) (the "Civil Action"). Relator alleged EFI violated the False Claims Act

because, as a 50l(c)(4) organization, EFI was ineligible for a PPP loan. Relator did not make

any allegations that EFI used the PPP loan funds for impermissible purposes.

E. In or about June 2024, EFI elected to sell its assets and use the proceeds from the

asset sale to engage in grant-making, technical assistance, education, and advocacy in the energy

efficiency sector. As required by law, the Massachusetts Supreme Judicial Court approved the

transaction on July 25, 2024. In August 2024, EFI sold substantially all of its assets to a third

party for financial reasons, unaware of the Civil Action. EFI currently plans to continue

operating as a non-profit, but it will change its name. When the United States issued a civil

investigative demand to EFI in September 2024, EFI voluntarily paused the transfer and use of

the proceeds from the asset sale pending the United States' investigation.

F. EFI admits, acknowledges, and accepts responsibility for the following facts:

1. On April 6, 2020, EFI engaged in discussions with its Lender regarding

when and how to apply for a PPP loan. An EFI employee emailed a

Senior Vice President ("SVP") with the Lender to inquire about PPP

eligibility requirements for 501(c)(4) organizations. The Lender's SVP

replied that "we will be notified when your application is being reviewed

so we can address that issue then if it comes up."

2. On April 15, 2020, EFI signed and submitted a PPP application to its

Lender. The application required applicants to identify its entity type by

checking one of a series of boxes and corresponding entity types. EFI

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selected the box indicating that its entity type was "Other." The

application did not have a box or entry for a 50l(c)(4) organization.

3. EFI included its taxpayer identification number on its PPP application.

4. In the PPP loan application, EFI certified that "[t]he Applicant is eligible

to receive a loan under the rules in effect at the time this application has

been submitted."

5. The Lender never followed up with EFI regarding the eligibility

requirements for 501(c)(4) organizations. On April 15, 2020, the Lender

approved EFI's application and informed EFI that it would disburse its

PPP loan.

6. On or around April 29, 2021, EFI signed and submitted a forgiveness

application for its PPP loan through its Lender. The SBA forgave the full

amount of EFI' s loan based on EFI' s certifications in its PPP loan

application and its loan forgiveness application.

The foregoing conduct described in this paragraph (F), including subparagraphs, is hereinafter

referred to as the "Covered Conduct."

G. The United States contends that it has certain claims against EFI based on the

Covered Conduct, such as unjust enrichment or payment by mistake, and for submitting or

causing the submission of false claims, among other potential claims. Specifically, the United

States contends that EFI was ineligible for a PPP loan because EFI is a 501(c)(4) organization,

and 50l(c)(4) organizations were never eligible for PPP loans.

H. EFI received credit under the Department of Justice's guidelines for taking

disclosure, cooperation, and remediation into account, Justice Manual § 4-4.112. Among other

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actions, EFI voluntarily produced materials, identified documents most relevant to the United

States' investigation, and voluntarily paused its organization restructuring pending resolution of

this matter.

In consideration of the mutual promises and obligations of this Agreement, the Parties

agree and covenant as follows:

TERMS AND CONDITIONS

1. EFI shall pay to the United States the sum of one million dollars

($1,000,000), of which $750,000 is restitution, plus interest at a rate of four and one-eighth

percent (4.125%) from March 31, 2025, and continuing through the date of payment (the

"Settlement Amount"), no later than thirty (30) days after the Effective date of this Agreement.

EFI shall pay the Settlement Amount pursuant to written instructions to be provided by the

Office of the United States Attorney for the District of Massachusetts, no later than thirty (30)

days after the Effective Date of this Agreement.

2. Conditioned upon the United States receiving the Settlement Amount and

as soon as feasible after receipt, the United States shall pay $100,000 plus a pro rata share of the

accrued interest at the rate set forth above to Relator by electronic funds transfer ("Relator's

Share").

3. Within thirty (30) days of the Effective Date of this agreement, and

pursuant to the terms of a separate agreement, EFI shall pay to Relator $7,500 for expenses and

attorneys' fees and costs pursuant to 31 U.S.C. § 3730(d). Immediately upon execution of this

agreement, Relator shall provide wire instructions to EFI in order to effectuate this payment.

4. Subject to the exceptions in Paragraph 5 (concerning reserved claims)

below, and upon the United States' receipt of the Settlement Amount, the United States releases

EFI from any civil monetary claim the United States has for the Covered Conduct under the

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False Claims Act§§ 3729-3729-3733, the Administrative Remedies for False Claims Act

§§ 3801-3812, or the common law, including without limitations theories of breach of contract,

payment by mistake, unjust enrichment, and Fraud.

5. Notwithstanding the release given in Paragraph 4 of this Agreement, or

any other term of this Agreement, the following claims and rights of the United States are

specifically reserved and are not released:

a. Any liability arising under Title 26, U.S . Code (Internal Revenue

Code);

b. Any criminal liability

c. Except as explicitly stated in this Agreement, any administrative

liability or enforcement right, or any administrative remedy,

including the suspension and debarment rights of any federal

agency;

d. Any liability to the United States (or its agencies) for any conduct

other than the Covered Conduct;

e. Any liability based upon obligations created by this Agreement;

and

f. Any liability of any individuals.

6. Relator and its heirs, successors, attorneys, agents, and assigns shall not

object to this Agreement but agree and confirm that this Agreement is fair, adequate, and

reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned

upon Relator's receipt of Relator's Share, Relator and its heirs, successors, attorneys, agents, and

assigns fully and finally release, waive, and forever discharge the United States, its agencies,

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officers, agents, employees, and servants, from any claims arising from the filing of the Civil

Action or under 31 U.S.C. § 3730, and from any claims to a share of the proceeds of this

Agreement and/or the Civil Action.

7. Conditioned upon its receipt of the payment from EFI described in

Paragraph 3, Relator, for itself and its heirs, successors, attorneys, agents, and assigns, releases

EFI from any civil monetary claim Relator has on behalf of the United States for the Covered

Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733, or under 31 U.S.C. § 3730(d) for

expenses or attorneys' fees and costs.

8. EFI waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

9. EFI fully and finally releases the United States and its agencies, officers,

agents, employees, and servants from any claims (including for attorneys' fees, costs, and

expenses of every kind and however denominated) that EFI has asserted, could have asserted, or

may assert in the future against the United States or its agencies, officers, agents, employees, or

servants, related to the Covered Conduct and the United States' investigation and prosecution

thereof.

10. EFI fully and finally releases Relator from any claims (including

attorneys' fees, costs, and expenses of every kind and however denominated) that EFI has

asserted, could have asserted, or may assert in the future against Relator, related to the Covered

Conduct and Relator's investigation and prosecution thereof.

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11. EFI agrees to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal

Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on

behalf of EFI, and its present or former officers, directors,

employees, shareholders, and agents in connection with:

(1) the matters covered by this Agreement;

(2) the United States' audit(s) and civil and any criminal

investigation(s) of the matters covered by this Agreement;

(3) EFI's investigation, defense, and corrective actions

undertaken in response to the United States' audit(s) and

civil and any criminal investigation(s) in connection with

the matters covered by this Agreement (including

attorneys' fees);

(4) the negotiation and performance of this Agreement; and

(5) the payment EFI makes to the United States and Relator

pursuant to this Agreement, are unallowable costs for

government contracting purposes (hereinafter referred to as

Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs will

be separately determined and accounted for by EFI, and EFI shall

not charge such Unallowable Costs directly or indirectly to any

contract with the United States.

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c. Treatment of Unallowable Costs Previously Submitted for

Payment: Within 90 days of the Effective Date of this Agreement,

EFI shall identify and repay by adjustment to future claims for

payment or othe1wise any Unallowable Costs included in payments

previously sought by EFI or any of its subsidiaries or affiliates

from the United States. EFI agrees that the United States, at a

minimum, shall be entitled to recoup from EFI any overpayment

plus applicable interest and penalties as a result of the inclusion of

such Unallowable Costs on previously-submitted requests for

payment. The United States, including the Department of Justice

and/or the affected agencies, reserves its rights to audit, examine,

or re-examine EFI' s books and records and to disagree with any

calculations submitted by EFI or any of its subsidiaries or affiliates

regarding any Unallowable Costs included in payments previously

sought by EFI, or the effect of any such Unallowable Costs on the

amount of such payments.

12. EFI agrees to cooperate fully and truthfully with the United States'

investigation of individuals and entities not released in this Agreement. Upon reasonable notice,

EFI shall encourage, and agrees not to impair, the cooperation of its directors, officers, and

employees, and shall use its best efforts to make available, and encourage, the cooperation of

former directors, officers, and employees for interviews and testimony, consistent with the rights

and privileges of such individuals. EFI further agrees to furnish to the United States, upon

request, complete and unredacted copies of all non-privileged documents, reports, memoranda of

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interviews, and records in its possession, custody, or control concerning any investigation of the

Covered Conduct that it has unde1iaken, or that has been performed by another on its behalf.

13. This Agreement is intended to be for the benefit of the Paiiies only.

14. Upon receipt of the payments described in Paragraphs 1 and 3, above, the

United States and Relator shall promptly sign and file in the Civil Action a Joint Stipulation of

Dismissal. The Joint Stipulation of Dismissal shall state that: (1) claims for the allegations

described in the Covered Conduct are dismissed with prejudice to the United States; (2) all other

claims in the Civil Action, including claims under 31 U.S.C. §§ 3729-3733, shall be dismissed

without prejudice to the United States; and (3) all claims in the Civil Action shall be dismissed

with prejudice as to Relator.

15. Subject to Paragraph 3, each Party shall bear its own legal and other costs

incurred in connection with this matter, including the preparation and performance of this

Agreement.

16. Each Paiiy and signatory to this Agreement represents that it freely and

voluntarily enters into this Agreement without any degree of duress or compulsion.

17. This Agreement is governed by the laws of the United States. The

exclusive jurisdiction and venue for any dispute relating to this Agreement is the United States

District Court for the District of Massachusetts. For purposes of construing this Agreement, this

Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not,

therefore, be construed against any Paiiy for that reason in any subsequent dispute.

18. This Agreement constitutes the complete agreement between the Parties.

This Agreement may not be amended except by written consent of the Parties.

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19. The undersigned counsel represent and warrant that they are fully

authorized to execute this Agreement on behalf of the persons and entities indicated below.

20. This Agreement may be executed in counterparts, each of which

constitutes an original and all of which constitute one and the same Agreement.

21. This Agreement is binding on EFI' s successors, transferees, heirs, and

assigns.

22. This Agreement is binding on Relator's successors, transferees, heirs, and

assigns.

23. All parties consent to the United States' disclosure of this Agreement, and

information about this Agreement, to the public.

24. This Agreement is effective on the date of signature of the last signatory to

the Agreement (Effective Date of this Agreement). Facsimiles and electronic transmissions of

signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

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THE UNITED STATES OF AMERICA

Digitally signed by
JULIEN JULIEN MUNDELE
Date: 2025.07.15
Dated: 7-15-2025 By: MUNDELE 14:45:07 -04'00'

Julien M. Mundele
Assistant U.S. Attorney
United States Attorney's Office
District of Massachusetts

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THE ENERGY FEDERATION, INC.

Dated: 7-14-2025 By: Paul Danehy
Paul Danehy
President and CEO ofEFI
Authorized Corporate Officer
The Energy Federation, Inc.

Dated: 7-15-2025
Michelle R. Peirce
Elizabeth R. Farrenkopf
Counsel for The Energy Federation, Inc.

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RELATOR WADE RINER

Dated: By: 4/ '
Wade Riner

Dated: -, / '-I / ;2 .s By: j2.. ~ (P. ~
Randall C. Owens
Michael Adams-Hurta
Wright Close & Barger LLP
Counsel for Wade Riner

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