The Dashboard:
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PPP Fraud Settlement: Garber Management Group agreed to pay over $1.5 million to settle allegations of violating the False Claims Act by obtaining an ineligible Paycheck Protection Program (PPP) loan.
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The Eligibility Trap: The settlement centers on "aggregation rules"; the firm allegedly falsely certified eligibility despite having more than 500 employees when combined with its affiliated dealership network.
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Whistleblower Impact: The case originated from a qui tam (whistleblower) lawsuit filed by a private party, who will receive 10% ($151,328) of the total recovery as part of the unsealed federal case.
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United States Attorney Jerome F. Gorgon Jr. announced in February that Garber Management Group, Inc. which is affiliated with the network of auto dealerships and other related entities in Michigan known as the Garber Automotive Group, has agreed to pay $1,513,281 to settle allegations that it violated the False Claims Act by making false statements to the U.S. Small Business Administration (SBA) to obtain a Paycheck Protection Program (PPP) loan for which Garber Management was ineligible.
Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations imposed various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for certain types of businesses operating as franchises, such as auto dealerships. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
In May 2020, Garber Management obtained a first draw PPP loan for $864,732. The United States alleged that Garber Management falsely certified it was eligible for its first draw loan and loan forgiveness, even though, aggregated with its affiliates, it had more than 500 employees, in violation of the PPP rules. Garber Management was not exempt from the aggregation rules as the management company did not qualify as a franchise with a franchise identifier code from SBA. Garber Management has cooperated with the government investigation from its onset.
This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit has been unsealed and is captioned U.S. ex rel. David Reed v. Garber Management, Inc., Case No. 24-cv-13126. The whistleblower will receive 10% of the settlement amount.
