Fort Worth, Texas-based commercial roofing contractor Empire Roofing, Inc. and its nationwide network of roofing and disposal companies agreed to pay $9 million to resolve allegations that they violated the False Claims Act (FCA) by falsely certifying that eight of their affiliates were eligible to receive loans through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), announced U.S. Attorney for the Northern District of Texas Leigha Simonton.
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic. Whether an applicant qualified for a PPP loan as a small business depended on various factors, including the number of employees of both the applicant and corporate affiliates. Subject to limited exceptions, only businesses that employed 500 or fewer employees were eligible to receive a PPP loan. When applying for PPP loans and loan forgiveness, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.
Empire Roofing, Inc., along with affiliated businesses within its nationwide network, applied for and received a total of $6,705,700 in PPP loans. The loans were all later forgiven in full. Each applicant certified that they were a small business with fewer than 500 employees. Under applicable SBA rules, however, applicants were required to include employees of all affiliated companies when determining eligibility. The government contends that the Empire Roofing network of affiliated companies employed more than 500 employees and therefore that none of Empire Roofing’s affiliates were eligible to receive PPP loans or loan forgiveness under the CARES Act.
“PPP loans were intended to help small businesses during the Covid-19 pandemic,” said United States Attorney Leigha Simonton. “Our office invests significant time and resources to hold accountable those who obtained PPP funds for which they were not eligible and will continue to do so going forward.”
“The settlement in this matter demonstrates the excellent results achieved through the combined efforts of SBA and the Department of Justice to uncover and forcefully respond to PPP misconduct,” said SBA General Counsel Therese Meers. “The federal government is strongly committed to identifying and aggressively pursuing any instances of fraud or misconduct within the Paycheck Protection Program.”
The settlement resolved a lawsuit filed under the qui tam or whistleblower provision of the FCA, which permits 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 is captioned United States ex rel. Sidesolve v. Empire Roofing, Inc., et al., No. No. 3:22-CV-2060-B (N.D. Tex.). The relator, Sidesolve, Inc., will receive a $1 million share as part of the settlement.
This matter was handled by Assistant United States Attorneys William Admussen and Andrew Robbins, with assistance from Sandra Mazzoni of the SBA. The civil claims settled by this FCA agreement are allegations only; there has been no determination of civil liability.
