St. Marys parts maker to pay $3M over PPP loan claims

Murotech Ohio Corporation, a St. Marys company that makes parts for the automotive industry, has agreed to pay more than $3 million to resolve allegations that it improperly obtained Paycheck Protection Program (PPP) loans. CashIn Startup, via CashIn One, reports that the U.S. Attorney's Office for the Northern District of Ohio announced the settlement on Wednesday, as reported by LimaOhio.com.

Settlement, not a fine

Local headlines have called the payment a fine. According to the report, it is a settlement resolving allegations under the False Claims Act, per the Justice Department. That federal law lets the government recover money from those accused of making false claims for federal funds.

These are allegations. CashIn Startup notes that the sources it reviewed do not include a response from Murotech Ohio.

What prosecutors allege

The PPP was run through the Small Business Administration (SBA) to give eligible companies support during the COVID-19 pandemic. CashIn Startup reports that borrowers had to certify that they were eligible and that the information they gave was true.

Per LimaOhio.com's account of the U.S. Attorney's press release, as relayed by CashIn Startup:

• A first application in May 2020 certified fewer than 500 employees. The company allegedly exceeded that number.
• A second application in January 2021 certified fewer than 300 employees. The company allegedly employed far more.
• The company then applied to have both loans forgiven, and allegedly again certified employee numbers below the program's limits.

How the case began

The settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, according to CashIn Startup's summary of LimaOhio.com. Those provisions let a private person, called a "relator," sue on the government's behalf and share in a portion of any recovery. Each relator received $151,980.75. Murotech Ohio is a subsidiary of Muro Corporation, located in Japan, the report says.

Other routes of enforcement

CashIn Startup also points to two other Ohio actions. In a separate Northern District of Ohio case, Daniel R. Hitlan, 34, of Huron, pleaded guilty to bank fraud and money laundering and was sentenced to 27 months in prison. Court documents say he obtained three fraudulent PPP loans in April and May of 2020, and he was ordered to pay $2,744,013.33 in restitution.

In June, the SBA said it suspended 27,486 Ohio borrowers tied to roughly $1.1 billion in suspected fraudulent PPP and COVID Economic Injury Disaster Loan activity, per the same report.

What it means for you

CashIn Startup's takeaway is plain: certifications on federal loan and forgiveness applications, including headcount, are checked and can be challenged years later. Anyone with questions about past applications should talk to a lawyer or accountant, the report advises.

Read more

The full story, with the details of each case, is at CashIn Startup, via CashIn One.