Two companies from Pennsylvania and one from South Carolina have agreed to a settlement with the United States over allegations of violating the False Claims Act. The companies were accused of improperly obtaining five Paycheck Protection Program (PPP) loans, according to an announcement by U.S. Attorney Alina Habba.
The PPP was established in March 2020 as a response to the COVID-19 pandemic, aiming to provide financial aid to businesses. These loans were forgivable and backed by the Small Business Administration (SBA), with specific eligibility criteria such as employee count and revenue size limits.
In the settlement, it was alleged that Rema Tip Top of America, Inc., through its subsidiaries C&J Welding & Construction, Industrial Services Group, Inc., and NexGen Industrial Services, Inc., secured these loans without meeting eligibility requirements. These subsidiaries reportedly failed to disclose their affiliations with Rema on loan applications, which led them to exceed employee or revenue-based limits for receiving PPP funds.
C&J Welding received $341,848.78 in loan forgiveness and interest; ISG obtained $4,824,288.99; and NexGen secured $3,688,618.89. In total processing fees paid by the United States amounted to $209,009.90 for these loans.
The settlement agreement required C&J Welding, ISG, and NexGen to pay $13 million plus interest. This resolves a lawsuit under the whistleblower provision of the False Claims Act that allows private individuals known as relators to file suits on behalf of the government for false claims and potentially receive a share of any recovery. In this case, Scissors LLC acted as relator and will receive $2.34 million.
U.S. Attorney Habba acknowledged support from SBA’s Office of General Counsel in handling this matter. Assistant U.S. Attorney Susan J. Pappy represented the government with assistance from Christopher J. McClintock of the SBA.
Reports of COVID-19 related fraud can be made through the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or online via their complaint form.
The case is titled United States ex rel. Scissors LLC v. Rema Tip Top of America, Inc., et al., Civil Action No. 23-20790.
The allegations remain unproven without any liability determination.
