DETROIT, MI — Garber Management Group, Inc. has agreed to pay over $1.5 million to settle allegations that it violated the False Claims Act by making false statements to obtain a Paycheck Protection Program loan.
Saginaw-based Garber Management is affiliated with a network of auto dealerships and other related entities known as Garber Automotive Group.
U.S. Attorney Jerome F. Gorgon Jr. announced the settlement on Friday, Feb. 20, stating that Garber Management Group had made false statements to the U.S. Small Business Administration to obtain a PPP loan it was not eligible for.
Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic.
Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the Small Business Administration.
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 U.S. Attorney’s Office alleged that Garber Management falsely certified its eligibility. The PPP program established a 500-employee threshold for most businesses seeking loans. Garber Management, when aggregating with its affiliates, employed more than 500 people, Gorgon stated.
The management company was not exempt from aggregation requirements because it did not qualify as a franchise with a franchise identifier code issued by the Small Business Administration, the attorney said.
Garber Management has cooperated with the government investigation since its beginning, Gorgon said.
The civil settlement in this case resolves a sealed lawsuit originally filed under qui tam, or whistleblower provisions, of the False Claims Act. The provisions 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 whistleblower in this case, David Reed, will receive 10% of the settlement amount, the U.S Attorney’s office stated.
This matter was handled by Assistant U.S. Attorney Leslie Wizner from the U.S. Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA Office of General Counsel.
Individuals with information about allegations of fraud involving COVID-19 and PPP loans are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF web complaint form.
The claims resolved by the settlement are allegations only; there has been no determination of liability, Gorgon stated.
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