Pasco auto dealer settles with feds on $9M ineligible PPP loan allegations

Victory Automotive Group of Port Richey agreed to pay $9 million to resolve allegations it violated the U.S. False Claims Act by knowingly providing false information in support of a Paycheck Protection Program loan forgiveness application it submitted, the U.S. Justice Department says in a Wednesday news release.

Congress created PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security Act to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic, the Justice Department says.

The CARES Act's loans were forgiven if funds were spent on eligible expenses, such as employment. Only small businesses were eligible for PPP loans.

The Justice Department says an applicant qualified as a small business depending on various factors, including the number of employees, amount of revenues and net worth of the applicant, "along with any other corporate affiliates that share common operational control. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications."

Victory's application for a PPP loan certified it was a small business with fewer than 500 employees, the Justice Department alleges in the agreement.

But Victory shared "common operational control" with dozens of automobile dealerships across the country, and that meant Victory and its affiliates had more than 3,000 employees in total.

"For that reason, Victory Automotive Group was not eligible for the $6,282,362 PPP loan it received, which was later forgiven in full," the Justice Department says.

"PPP loans were intended to help small businesses during the pandemic," says Brian Boynton, head of the Justice Department's Civil Division. "The department is committed to holding accountable those who undermined the purpose of the PPP program and knowingly obtained PPP funds for which they were not eligible."

The settlement resolved a lawsuit filed under a federal whistleblower provision, 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 whistleblower will receive a total of approximately $1.62 million in connection with the settlement.

The Justice Department says claims resolved by the settlement are allegations only. There has been no determination of liability.