3rd Avenue Transit, Inc. and Y&M Transit Corporation have agreed to pay $4.4 million to resolve allegations that they improperly obtained Paycheck Protection Program (PPP) loans for which they were not eligible, according to an announcement from U.S. Attorney Michael DiGiacomo.
The PPP was created in March 2020 under the CARES Act and later expanded by the American Rescue Plan Act (ARPA) in 2021. The program provided loans guaranteed by the Small Business Administration (SBA) to help businesses cover payroll and certain other expenses during the COVID-19 pandemic. Only businesses meeting specific eligibility requirements could apply, including a rule that second-draw loan applicants and their affiliates must collectively have no more than 300 employees.
According to federal authorities, 3rd Avenue and Y&M received a total of $2,402,800 in second-draw PPP loans after certifying they had fewer than 300 employees. However, officials allege that both companies, along with a third affiliate, exceeded this employee limit and were therefore not eligible for the loans.
“Paycheck Protection Program loans were intended to help small businesses during the Covid-19 pandemic,” stated U.S. Attorney DiGiacomo. “Our office continues to invest time and resources to hold accountable those who obtained PPP funds for which they were not eligible.”
The settlement resolves claims brought under the qui tam provisions of the False Claims Act, which allow private individuals to file lawsuits on behalf of the government and potentially receive part of any recovery.
Individuals with information about COVID-19 related fraud are encouraged to report it through the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via its online complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Assistant U.S. Attorney Jonathan W. Ferris and Investigator Margaret McFarland handled this matter with support from SBA’s Office of General Counsel.
Authorities note that these claims are allegations only; there has been no determination of liability.
