On January 12, 2021, the Department of Justice (“DOJ”) announced the first civil settlement to resolve allegations of fraud against the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. SlideBelts Inc. (“SlideBelts”) and its president and CEO, Brigham Taylor, have agreed to pay the United States $100,000 in damages and penalties for alleged violations of the False Claims Act (“FCA”) and the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”).

The CARES Act established PPP to provide emergency relief to small businesses experiencing economic hardship as a result of the coronavirus. PPP is administered by the Small Business Administration (“SBA”), which has instituted several threshold requirements businesses must meet to qualify for PPP funds. One such rule prohibits businesses that are in bankruptcy proceedings from receiving PPP funds. Accordingly, businesses must certify on their SBA loan applications that they are not “presently involved in any bankruptcy.”

SlideBelts, a California-based corporation that manufactures and sells fashion accessories on the internet, filed a voluntary petition for bankruptcy on August 25, 2020. However, the United States alleged that SlideBelts and Taylor, in an attempt to receive an SBA-guaranteed PPP loan, nonetheless knowingly made false statements to both federally-insured financial institutions and the SBA that SlideBelts was not involved in a bankruptcy proceeding at the time of its application.

Read the DOJ Press Release here.

Click here to learn more about G&G’s private economic crime unit to combat fraud related to COVID-19 stimulus funds.