Eurecat Agrees to Repay $3.25M Over Alleged CARES Act PPP Fraud
By the Constantine Cannon Whistleblower Team
On April 14, U.S. Attorney Clint Johnson announced a civil settlement with Eurecat U.S. Incorporated for $3.25 million after Eurecat allegedly received funds they were ineligible for from the COVID-era CARES Act Paycheck Protection Program.[1]
What Is the CARES Act and How Did It Help Businesses?
In 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, known as the “CARES Act.” It allowed eligible businesses to secure forgivable disaster loans to maintain their employees in sectors affected by COVID-19. A later amendment to the Act permitted a second round of disaster relief funding, with special restrictions on single corporations. Additionally, corporations applying for a second disbursement were limited to companies with less than 300 employees.
Eurecat’s PPP Loans
According to the announcement, Eurecat, a New Jersey corporation, applied for Paycheck Protection Program (PPP) loans despite not meeting the program’s eligibility requirements. First, in May 2020, Eurecat allegedly applied for a PPP loan from the Small Business Administration and received $2,736,400. That amount was forgiven. Then, in February 2021, Eurecat applied for a second PPP loan and received an extra $2,000,000. Eurecat also sought loan forgiveness for the second loan, which was forgiven in August 2021.[2]
Eurecat’s PPP loans allegedly violated the False Claims Act. The company employed over 9,000 individuals and is a subsidiary of a large publicly traded company, Albemarle Corporation, and admitted to surpassing the employee threshold eligibility for a second-draw PPP loan. The company agreed to pay $3,250,000 to resolve these alleged False Claims Act violations.[3]
Was This Case Initiated by Whistleblowers?
As with most pandemic fraud cases, this case was initiated by whistleblowers under the qui tam (or whistleblower) provisions of the False Claims Act, which allow private parties to file an action on behalf of the government and receive a monetary portion of any recovery.
This case was filed by GNGH2, Inc. in March 2024. GNGH2, Inc. will receive $325,000 as its whistleblower award under the False Claims Act for bringing the suit.[4]
What Role Do Whistleblowers Play in Fighting COVID-19 Era Fraud?
Whistleblowers are critical to exposing pandemic-related fraud like falsely certifying eligibility for PPP loans and misusing emergency relief funds.
Constantine Cannon attorney Ginger Buck commented: “The government is dedicated to protecting emergency relief funds and ensuring accountability for those who attempted to misuse pandemic-related assistance. It continues to pursue enforcement actions against COVID-19-related relief fraud and relies on whistleblowers to come forward with information about any wrongdoing.”
Our Firm Helps COVID-19 Fraud Whistleblowers
Our firm has extensive experience representing whistleblowers under the False Claims Act, cases related to COVID-19 fraud, and other whistleblower rewards programs. If you believe you have a case, please contact us and we will connect you with an experienced whistleblower attorney.
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Sources:
[1] See https://www.justice.gov/usao-ndok/pr/new-jersey-company-agrees-repay-325-million-cares-act-funding
[2] Id.
[3] Id.
[4] Id.
Tagged in: False Claims Act,