Four Michigan Businesses Pay $1.9 Million To Settle Allegations That They Unlawfully Obtained Paycheck Protection Program Loans

DETROIT – United States Attorney Jerome F. Gorgon, Jr. announced today that the United States has reached civil agreements with four Michigan companies to collectively pay $1,933,448 to settle allegations that the businesses violated the False Claims Act (FCA) by making false statements to obtain Paycheck Protection Program (PPP) loans from the U.S. Small Business Administration (SBA) for which the businesses were ineligible.

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 SBA. Regulations imposed various eligibility requirements for the PPP, including exclusions for borrowers with certain types of criminal histories, particularly those related to financial felonies, such as tax evasion. In their loan applications, borrowers were required to certify that they were eligible for the PPP and that the information they provided was accurate.

Your Fantasy Warehouse, Inc., Ugly Christmas Sweater, Inc., and Costume Agent, Inc. collectively obtained four PPP loans and loan forgiveness totaling $504,482.00. The United States contended that these businesses falsely certified to the SBA that they were eligible for the loans because their owner, Firas Hajjar, failed to disclose that he had, within the preceding five years, pleaded guilty to felony tax evasion. https://www.justice.gov/archives/opa/pr/michigan-business-owner-pleads-guilty-tax-evasion-0

Separately, Delta Staffing LLC obtained two PPP loans and loan forgiveness totaling $462,241.92. The United States contended that these businesses falsely certified to the SBA that they were eligible for the PPP loans because their owner, Bradley McKouen, failed to disclosue that he had, within the preceding five years, been placed on supervised release as a result of his prior conviction for felony tax evasion. https://www.justice.gov/usao-edmi/pr/clarkston-man-sentenced-tax-evasion

“When you steal from the American taxpayer, we are going to make sure that you are the one who pays the price,” said U.S. Attorney Jerome F. Gorgon, Jr. for the Eastern District of Michigan.

The civil settlements resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which 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 qui tam lawsuit has been unsealed and is captioned U.S. ex rel. Forsyth v. Firas Hajjar, et al., No. 2:22-cv-11432. The whistleblower will receive 15% of the total settlement amount.

This matter was handled by Assistant U.S. Attorney Anthony Gentner from the United States Attorney’s Office for the Eastern District of Michigan, with assistance from the SBA’s Office of General Counsel.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

The claims resolved by the settlement are allegations only; there has been no determination of liability.