Stipulation and Order of Settlement and Dismissal — No. 1:23-cv-10084 (S.D.N.Y.)

Summary

Stipulation and Order of Settlement and Dismissal in the False Claims Act case United States ex rel. Daniel Foster v. TCC International LLC, Core Gravity LLC, and Core Club Members Corp., 23 Civ. 10084 (MKV). The Government alleges that the defendants falsely certified eligibility for two PPP loans and an RRF grant. The defendants admit that TCC International received PPP loans of $960,400 and $1,344,675.50, and that Core Club Members Corp. submitted an RRF grant application for $2,303,687.00. They agree to a consent judgment of $8,189,172.10, and the Government agrees to accept $360,000 in full satisfaction, paid in installments of $30,000. Jennie Enterprise executed a Guaranty Agreement personally guaranteeing the $360,000.

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“Stipulation and Order of Settlement and Dismissal — No. 1:23-cv-10084 (S.D.N.Y.).” Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/stipulation-and-order-of-settlement-and-dismissal-no-1-23-cv-10084-s-d-6a9a9fb8e8/, SHA-256 0a28f108d06218e2f2870f8076108a19b3b13eb0b4df24015bb2b29a591176ba.

Full text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA ex rel. DANIEL
FOSTER,

Plaintiff,

TCC INTERNATIONAL LLC d/b/a CORE: CLUB;
CORE CLUB MEMBERS CORP; and CORE:
GRAVITY LLC,

Defendants.
23 Civ. 10084 (MKV)

UNITED STATES OF AMERICA,

Plaintiff-Intervenor,

TCC INTERNATIONAL LLC, CORE GRAVITY
LLC, and CORE CLUB MEMBERS CORP.,

Defendants.

STIPULATION AND ORDER OF SETTLEMENT AND DISMISSAL

WHEREAS, this Stipulation and Order of Settlement and Dismissal (“Stipulation”) is

entered into by and among plaintiff the United States of America (the “United States” or

“Government”), by its attorney, Jay Clayton, United States Attorney for the Southern District of

New York, and on behalf of the United States Small Business Administration (the “SBA”); the

relator Daniel Foster (“Relator”), by his authorized representatives; and defendants TCC
International LLC, Core Gravity LLC, and Core Club Members Corp. (collectively, “Defendants,”

and together with the Government and Relator, the “Parties”), by their authorized representatives;

WHEREAS, TCC International LLC (“TCC International”) is a Delaware limited liability

corporation that was responsible for payroll costs associated with The Core Club 55th Street LLC

(“Core Club 55th”), a private Manhattan-based social club. At all times between April 2020 and

April 2022 (the “Covered Period”), TCC International and Core Club 55th had operations at 66 E.

55th Street, New York, New York 10022;

WHEREAS, Core Club Members Corp. is a New York not-for-profit corporation that

previously held Core Club 55th’s liquor license. During the Covered Period, Core Club Members

Corp. had operations at 66 E. 55th Street, New York, New York 10022;

WHEREAS, Core Gravity LLC (“Core Gravity”) is a Delaware limited liability company

that owns 100 percent of TCC International LLC. During the Covered Period, Core Gravity was

located at 66 E. 55th Street, New York, New York 10022 and operated Core Club 55th;

WHEREAS, in or about October 2023, Core Club 55th moved to 711 Fifth Avenue, New

York, New York 10022, and THE CORE CLUB: FIFTH AVE., INC., a New York not-for-profit

corporation (“Core Club 711”), became the successor-in-interest to Core Club 55th, taking over

the operations of Core Club 55th;

WHEREAS, there is currently litigation between several Core entities and Jennie

Enterprise, who controls the Core entities, and the landlord of 711 Fifth Avenue, New York, New

York 10022, captioned Jennie Enterprise, et al. v. Michael Shvo, et al., No. 653221/2024 (N.Y.

Supreme Ct. N.Y. Cty.), concerning, among other things, a lease agreement entered into by Core

5th Avenue LLC on or about July 28, 2021, for the premises located at 711 Fifth Avenue, New

York, New York 10022 (“Landlord Litigation”);

2
WHEREAS, the Paycheck Protection Program (“PPP”) was established pursuant to the

Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was enacted in March

2020 and was designed to provide emergency financial assistance to millions of Americans

suffering economic effects caused by the COVID-19 pandemic. One source of relief provided by

the CARES Act was the authorization of forgivable loans to small businesses for employee payroll

and certain other expenses through the PPP. SBA’s website contained information about the PPP’s

rules (the “PPP Rules”), including eligibility criteria and reference to 13 C.F.R. § 120.110, which

identified certain businesses that were ineligible for PPP loans. Among those businesses deemed

ineligible for PPP funding were “[p]rivate clubs and businesses which limit the number of

memberships for reasons other than capacity.” 13 C.F.R. § 120.110(i);

WHEREAS, to obtain a PPP loan, a qualifying business was required to submit a PPP loan

application, which is signed by an authorized representative of the business. The loan application

required the business—through its authorized representative—to acknowledge the PPP Rules and

make certain affirmative certifications regarding its eligibility to obtain the PPP loan. Following

the lender approvals of loan applications, the participating lenders funded the loans, which were

100 percent guaranteed by the SBA;

WHEREAS, the Restaurant Revitalization Fund (“RRF”) was established in March 2021

through the American Rescue Plan Act, to provide emergency assistance to qualifying restaurants

and bars impacted by the COVID-19 pandemic. The RRF was administered by the SBA and

allowed eligible entities funding equal to their pandemic-related loss, up to $10 million per

business and no more than $5 million per physical location. The RRF grant application required

the business, through its authorized representative, to acknowledge the RRF’s rules (the “RRF

Rules”) and make certain affirmative certifications regarding its eligibility to obtain the RRF grant.

3
The RRF Rules identified certain businesses that were ineligible for funding, including not-for-

profit entities and restaurants or bars where on-site sales to the public comprised less than 33

percent of gross receipts in 2019;

WHEREAS, on or about November 16, 2023, Relator filed a complaint under the qui tam

provisions of the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., against TCC International

LLC d/b/a Core Club, Core Club Members Corp., and Core: Gravity LLC, alleging, inter alia, that

these entities violated the FCA by fraudulently obtaining PPP loans and an RFF grant by falsely

certifying in their loan applications that they were eligible to receive these funds when, in fact,

they were not (the “Relator Complaint”);

WHEREAS, the Government alleges that during the Covered Period, Defendants violated

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

and statements in connection with their submission of PPP loan and forgiveness applications, and

an application for an RRF grant. Specifically, the United States alleges that (a) Defendants TCC

International and Core Gravity (collectively, the “PPP Defendants”) (i) falsely certified that they

were eligible for two PPP loans despite the fact that the PPP Defendants intended to use the loans

to operate a private club that limited membership for reasons other than capacity, and (ii)

improperly sought forgiveness for the two PPP loans despite having been ineligible to receive

those loans in the first instance; and (b) Core Club Members Corp. falsely certified its eligibility

for an RRF grant despite being ineligible for this grant because (i) on-site sales of food and

beverages to the public did not comprise at least 33 percent of its gross receipts in 2019, and (ii) it

was a not-for-profit entity. The conduct described in this paragraph is the “Covered Conduct” for

purposes of this Stipulation;

4
WHEREAS, on April 7, 2025, the Government filed a Notice of Election to Intervene in

this matter and, contemporaneous with the filing of this Stipulation, is filing a Complaint-in-

Intervention (“Government Complaint”), in which it is asserting claims against Defendants under

the FCA and common law for the Covered Conduct;

WHEREAS, the Parties have, through this Stipulation, reached a mutually agreeable

resolution addressing the claims asserted against Defendants in the Government Complaint and

the Relator Complaint, for the Covered Conduct;

NOW, THEREFORE, upon the Parties’ agreement IT IS HEREBY ORDERED that:

TERMS AND CONDITIONS

1. The Parties agree that this Court has subject matter jurisdiction over this action and

consent to this Court’s exercise of personal jurisdiction over each of them.

2. Defendants admit, acknowledge, and accept responsibility for the following

conduct:

a. Core Club 55th was a private, invitation-only members club based in New
York City that included, among other things, a restaurant, bar, theater, gym,
and library accessible only to fee-paying members and their guests.

b. On October 1, 2023, Core Club 711 became the successor-in-interest to
Core Club 55th at its current location at 711 Fifth Avenue, New York, New
York 10022.

c. Core Gravity LLC, a Delaware limited liability company, owns 100 percent
of TCC International LLC, a Delaware limited liability company that was
responsible for payroll for the employees of Core Club 55th and now for
Core Club 711.

d. On April 20, 2020, TCC International LLC d/b/a Core Gravity submitted,
through its authorized representative, Jennie Enterprise (“Authorized
Representative”), an application to a financial institution for a first-draw
PPP loan in the amount of $960,400 and received a PPP loan for the
requested amount that same day. On October 6, 2021, Core Gravity, through
its Authorized Representative, applied for and, on October 29, 2021,
received partial forgiveness for the loan, in the amount of $446,223.55.

5
Between October 2021 and August 2022, Core Gravity repaid the remaining
$514,176.45.

e. On March 31, 2021, TCC International LLC d/b/a The Core Club submitted,
through its Authorized Representative, an application to a financial
institution for a second-draw PPP loan in the amount of $1,344,675.50 and
received a PPP loan for the requested amount that same day. On March 25,
2022, TCC International, through its Authorized Representative, applied for
and, on April 1, 2022, received full forgiveness for the loan.

f. In both PPP loan applications, the Authorized Representative for TCC
International LLC d/b/a Core Gravity and TCC International LLC d/b/a The
Core Club certified, among other things, that the applicants were eligible
for PPP funding, that the funds would be used in accordance with the PPP
Rules, and that the information provided in the applications was true in all
material respects. In the PPP loan forgiveness applications, the Authorized
Representative for Core Gravity and TCC International certified, among
other things, that the funds as to which forgiveness was requested were used
to pay business costs that were eligible for forgiveness, and that the
information provided in the applications and supporting documents was true
and correct in all material respects.

g. However, TCC International and Core Gravity were ineligible for their PPP
loans because they intended to, and did, use the funds to fund payment of
employees who provided services to Core Club 55th, which was a members-
only club that was ineligible for PPP funds pursuant to 13 C.F.R.
§ 120.110(i). Accordingly, TCC International and Core Gravity (1)
misrepresented in their PPP applications that they were eligible for PPP
loans when, in fact, they were not; and (2) falsely certified in their loan
forgiveness applications that the funds were used to pay eligible business
expenses and that the information provided in their loan applications was
true and correct in all material respects.

h. On May 6, 2021, Core Club Members Corp. submitted an application to the
SBA to obtain a grant in the amount of $2,303,687.00 through the RRF. In
that application, Jennie Enterprise, Core Club Members Corp.’s authorized
representative, certified, among other things, that Core Club Members
Corp. was eligible for funding, that the funds would be used in accordance
with the RRF Rules, and that the information provided in the application
was true in all material respects.

i. However, Core Club Members Corp. was not eligible for its RRF grant;
specifically, both because it was a not-for-profit company, and because it
did not serve food and drink to the public.

* * *

6
j. As a result of the above-referenced conduct, TCC International and Core
Gravity improperly received $2,305,075.50 in PPP loans (of which they
have repaid $514,176.45 reflecting the unforgiven amount on the first-draw
loan), and Core Club Members Corp improperly received $2,303,687.00 in
an RRF grant.

3. Defendants shall execute and agree to the entry of a consent judgment in favor of

the Government and against Defendants in the amount of $8,189,172.10, a copy of which is

attached hereto as Exhibit A (the “Consent Judgment”). The Government may use the Consent

Judgment to obtain a security interest in any asset or property of Defendants but shall not engage

in other collection activity with respect to the Consent Judgment so long as Defendants fully

comply with the terms of this Stipulation. Pursuant to this Stipulation, Defendants, by and through

Core Club 711, the successor-in-interest to Core Club 55th, agrees to pay and the Government

agrees to accept $360,000 in full satisfaction of the Consent Judgment (the “Settlement Amount”).

Defendants, by and through Core Club 711, shall pay to the Government the Settlement Amount

in installments as set forth below. Defendants, by and through Core Club 711, shall make the

below-referenced payments in accordance with instructions to be provided by the Financial

Litigation Unit of the United States Attorney’s Office for the Southern District of New York. Of

the Settlement Amount, $360,000 constitutes restitution to the United States. Defendants and Core

Club 711 agree that they shall not seek indemnification from any source with respect to any portion

of the Settlement Amount. Jennie Enterprise, the Authorized Representative who signed the PPP

Defendants’ PPP loan applications and loan forgiveness applications, and Core Club Members

Corp.’s RRF grant application, has executed a Guaranty Agreement with the United States,

personally guaranteeing the Settlement Amount of $360,000, a copy of which is attached hereto

as Exhibit B.

7
a. Within fourteen (14) business days of the Effective Date (defined below in

Paragraph 29), Defendants, by and through Core Club 711, shall pay the

Government the sum of $30,000.

b. On or before 6 months from the Effective Date, Defendants, by and through

Core Club 711, shall pay the Government the sum of $30,000.

c. On or before 12 months from the Effective Date, Defendants, by and