News Summary
d&b audiotechnik Corporation has agreed to pay $2,130,185 to settle allegations of violating the False Claims Act pertaining to its Paycheck Protection Program loan application. The company falsely certified it had fewer than 300 employees, which led to wrongful payment from the program designed to assist small businesses during the COVID-19 pandemic. As part of the settlement, the company will repay the loan plus penalties, underscoring the significance of corporate accountability in federal assistance programs.
Asheville – d&b audiotechnik Corporation, a subsidiary of a German company located in Asheville, has agreed to pay a total of $2,130,185 to settle allegations of violating the False Claims Act. The announcement of the settlement was made by the U.S. Department of Justice (DOJ) on June 13.
The federal investigation revealed that d&b audiotechnik falsely certified, in its Paycheck Protection Program (PPP) loan application, that it had fewer than 300 employees. In truth, the company employed well over 300 individuals. The inconsistencies in the employment figures led to the company receiving funds from the PPP, which were intended for small businesses adversely affected by the COVID-19 pandemic.
The Paycheck Protection Program was established by Congress in March 2020 to provide forgivable loans to assist small businesses with payroll and other urgent expenses during the economic challenges posed by the pandemic. As part of the PPP guidelines, borrowers were obligated to certify their eligibility and confirm the accuracy of the information provided in their applications.
The settlement reached with d&b audiotechnik includes the repayment of the full loan amount along with associated penalties, effectively costing the company double the initial amount borrowed. The settlement signifies a resolution of the allegations but does not imply an admission of liability by the corporation. Importantly, the claims leading to the settlement were based solely on allegations.
The legal basis for this case arose from a whistleblower lawsuit filed under the qui tam provision of the False Claims Act. This provision allows private individuals to file suit on behalf of the government in instances of fraudulent claims. The whistleblower brought the case forward in what is known as United States ex rel GNGH2 Inc. v. D&B Audiotechnik Corporation. The legal proceedings were handled by Assistant U.S. Attorney Seth Johnson.
The PPP loan obtained by d&b audiotechnik was ultimately forgiven, meaning the U.S. government assumed the financial responsibility for the funds despite the misrepresentation by the company.
In light of this case, the DOJ continues to encourage anyone who possesses information about COVID-19-related fraud to reach out to their National Center for Disaster Fraud Hotline at 866-720-5721, or to submit information via the NCDF Web Complaint Form. The ongoing efforts to combat fraud during the pandemic remain a high priority for law enforcement agencies.
The settlement marks a significant instance of corporate accountability within the context of federal assistance programs and serves as a cautionary tale for businesses involved in similar applications.
As the financial implications of the COVID-19 pandemic continue to unfold, the enforcement actions taken by the DOJ aim to uphold the integrity of federal programs designed to support struggling businesses. Ensuring accurate applications to these vital assistance programs is paramount to prevent fraud and misuse of taxpayer funds.
With this settlement, d&b audiotechnik Corporation navigates through the legal repercussions of their actions, illustrating the rigorous scrutiny that accompanies federal relief initiatives in times of crisis.
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Additional Resources
- WLOS: Asheville Business Settles for PPP Loan Fraud
- Fox Carolina: DOJ – NC Company Pays After Wrongly Applying for COVID Relief Loan
- Hoodline: D&B Audiotechnik Agrees to $2.1 Million Settlement for PPP Loan Fraud
- Wikipedia: False Claims Act
- Google Search: Paycheck Protection Program
