United States v. Amaleka McCall-Brathwaite, et al.

Press Release U.S. Attorney Announces $4.6 Million False Claims Act Settlement With Restaurants, Fur Apparel Companies, And Their Owners And Managers For Submitting False Information To Obtain Paycheck Protection Program Loans Thursday, June 20, 2024 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Four Restaurants, Two Fur Apparel Companies, and Five Individuals Admit Inflating Payroll and Employee Headcounts in Paycheck Protection Program Loan and Forgiveness Applications Damian Williams, the United States Attorney for the Southern District of New York, and Amaleka McCall-Brathwaite, the Special Agent in Charge of the Eastern Regional Office of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), announced today that the United States has settled a civil fraud lawsuit against CHRISTOS SPYROPOULOS; IOANNIS GEORGIADES; GALATIA ASPROU; ARISTOTELIS SPYROPOULOS; IORDANIS SPYROPOULOS; LIMANI 51, LLC; ESTIATORIO LIMANI LLC; LML HOSPITALITY LLC; ONIRO TAVERNA LLC; BC INTERNATIONAL GROUP, INC.; and BCI SERVICES LLC (collectively, the “Defendants”) for including false information in their applications for Paycheck Protection Program (“PPP”) loans, in violation of the False Claims Act. The PPP, administered by the SBA, was created to provide forgivable loans to small businesses struggling to fund payroll and certain other qualifying business expenses because of the effects of the COVID-19 pandemic. The settlement resolves claims that the Defendants—four restaurants located in New York, two companies based in New Jersey that distribute, sell, and service fur apparel, and five individuals who owned/managed these businesses—inflated payroll figures in their PPP loan and forgiveness applications by, among other things, misrepresenting that family members and an acquaintance of the owners/managers were employed by the businesses when they were not, and listing the same individuals as “full-time employees” of multiple businesses. Under the settlement approved today by U.S. District Judge Edgardo Ramos, the Defendants will pay the U.S. $4,646,700.21 and have admitted and accepted responsibility for conduct alleged in the Government’s Complaint. Specifically, the Defendants admitted that they misrepresented and inflated their payroll and employee headcounts in their PPP loan and forgiveness applications, and that they requested and received PPP loans for amounts that were substantially above what they were entitled to receive. U.S. Attorney Damian Williams said: “The Paycheck Protection Program was created to help struggling small businesses weather the worst moments of the COVID-19 pandemic. These defendants submitted false information to artificially inflate the PPP loans they received. This Office will continue to hold accountable those who engaged in fraud to secure pandemic relief funds for which they were not eligible.” SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite said: “This settlement reinforces our unwavering commitment to protecting the integrity of SBA’s programs. Wrongful practices, such as inflating payroll and employee numbers, divert essential funds from deserving businesses. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to pursuing justice in this case.” As alleged in the Complaint filed in Manhattan federal court: Under the PPP, eligible businesses could obtain SBA-guaranteed loans to spend on payroll costs, rent or mortgage, and other specified business expenses. The amount of PPP funds a business was eligible to receive was determined by the number of individuals employed by the business and their average payroll costs. Businesses applying for a PPP loan were required to provide documentation to confirm that they had in the past paid employees the compensation represented in the loan application. In addition, the PPP loan application required businesses (through their authorized representatives) to acknowledge the PPP Rules and make certain affirmative certifications in order to be eligible to obtain the PPP loan. The SBA also provided for forgiveness of PPP loans. To receive forgiveness, borrowers were required to submit signed loan forgiveness applications and documents containing certain information and certifications. The six defendant companies applied for and received six first-draw PPP loans and six second-draw PPP loans for a total of more than $11.9 million, nearly all of which was fully forgiven. The five individual defendants were involved in preparing the PPP loan and forgiveness applications and personally signed the applications on behalf of their companies. The Defendants improperly inflated the PPP loan amounts and the amounts forgiven by falsely claiming that six family members and one acquaintance of the individual defendants were bona fide employees of the businesses when, in fact, they were not (and distributing the PPP funds to these “no show” employees); falsely claiming that three of the individual defendants were full-time employees of LIMANI 51 when, in fact, they were not; falsely claiming that individuals were full-time employees of multiple businesses and including their full salaries in the calculation of the loan and forgiveness amounts for each of those businesses; and mispresenting that they were entitled to forgiveness for wages paid to certain owners and employees that exceeded the maximum amount permitted under the PPP Rules. As part of the settlement, the Defendants admit, acknowledge, and accept responsibility for the following conduct: In their second-draw PPP loan application and first and second-draw PPP loan forgiveness applications, ESTIATORIO LIMANI, LIMANI 51, ONIRO TAVERNA, and LML HOSPITALITY misrepresented and inflated their payroll and employee headcounts by including wages attributable to six family members and an acquaintance of the individual defendants in the calculation of the PPP loan and PPP loan forgiveness amounts, even though the seven individuals were “no show” employees who never undertook any work for the corporate defendants and therefore were ineligible for consideration. In its second-draw PPP loan application and first and second-draw PPP loan forgiveness applications, LIMANI 51 misrepresented and inflated its payroll and employee headcounts by stating that three individual defendants were “full-time employees” of the entity when they were not. In their first-draw and second-draw PPP loan applications and PPP loan forgiveness applications, ESTIATORIO LIMANI, LIMANI 51, ONIRO TAVERNA, LML HOSPITALITY, BC INTERNATIONAL, and BCI SERVICES each misrepresented and inflated their payroll and headcounts by erroneously listing some of the same individuals as “full-time employees” of different companies and including their full wages in the PPP loan and forgiveness applications submitted for each of the companies. For example, in BC INTERNATIONAL and BCI SERVICES’ second-draw PPP loan forgiveness applications, they each simultaneously listed 13 individuals as “full-time employees” of both companies—and sought forgiveness for the employees’ full wages at both companies—resulting in $481,240.42 of loan proceeds being paid to these individuals, which was an improper use of funds. BC INTERNATIONAL and BCI SERVICES misrepresented in their loan forgiveness applications for their first-draw and second-draw PPP loans that they were entitled to forgiveness for wages paid to their owners and certain employees that exceeded the maximum amount permitted under the PPP Rules. As a result of the above-referenced conduct and misrepresentations, each of the six defendant companies requested and received PPP loans for amounts that were substantially above what they were entitled to receive. In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. * * * Mr. Williams praised the SBA-OIG for its assistance with this case. The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Adam M. Gitlin is in charge of the case. Contact Nicholas Biase, Lauren Scarff, Shelby Wratchford (212) 637-2600 Updated June 20, 2024 Attachments U.S. v. Spyropoulos et al Complaint in Intervention.pdf [PDF, 231 KB] U.S. v. Spyropoulos et al Settlement Agreement.pdf [PDF, 2 MB] Topic False Claims Act Component USAO - New York, Southern Press Release Number: 24-224

Press Release U.S. Attorney Announces $4.6 Million False Claims Act Settlement With Restaurants, Fur Apparel Companies, And Their Owners And Managers For Submitting False Information To Obtain Paycheck Protection Program Loans Thursday, June 20, 2024 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Four Restaurants, Two Fur Apparel Companies, and Five Individuals Admit Inflating Payroll and Employee Headcounts in Paycheck Protection Program Loan and Forgiveness Applications Damian Williams, the United States Attorney for the Southern District of New York, and Amaleka McCall-Brathwaite, the Special Agent in Charge of the Eastern Regional Office of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), announced today that the United States has settled a civil fraud lawsuit against CHRISTOS SPYROPOULOS; IOANNIS GEORGIADES; GALATIA ASPROU; ARISTOTELIS SPYROPOULOS; IORDANIS SPYROPOULOS; LIMANI 51, LLC; ESTIATORIO LIMANI LLC; LML HOSPITALITY LLC; ONIRO TAVERNA LLC; BC INTERNATIONAL GROUP, INC.; and BCI SERVICES LLC (collectively, the “Defendants”) for including false information in their applications for Paycheck Protection Program (“PPP”) loans, in violation of the False Claims Act. The PPP, administered by the SBA, was created to provide forgivable loans to small businesses struggling to fund payroll and certain other qualifying business expenses because of the effects of the COVID-19 pandemic. The settlement resolves claims that the Defendants—four restaurants located in New York, two companies based in New Jersey that distribute, sell, and service fur apparel, and five individuals who owned/managed these businesses—inflated payroll figures in their PPP loan and forgiveness applications by, among other things, misrepresenting that family members and an acquaintance of the owners/managers were employed by the businesses when they were not, and listing the same individuals as “full-time employees” of multiple businesses. Under the settlement approved today by U.S. District Judge Edgardo Ramos, the Defendants will pay the U.S. $4,646,700.21 and have admitted and accepted responsibility for conduct alleged in the Government’s Complaint. Specifically, the Defendants admitted that they misrepresented and inflated their payroll and employee headcounts in their PPP loan and forgiveness applications, and that they requested and received PPP loans for amounts that were substantially above what they were entitled to receive. U.S. Attorney Damian Williams said: “The Paycheck Protection Program was created to help struggling small businesses weather the worst moments of the COVID-19 pandemic. These defendants submitted false information to artificially inflate the PPP loans they received. This Office will continue to hold accountable those who engaged in fraud to secure pandemic relief funds for which they were not eligible.” SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite said: “This settlement reinforces our unwavering commitment to protecting the integrity of SBA’s programs. Wrongful practices, such as inflating payroll and employee numbers, divert essential funds from deserving businesses. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to pursuing justice in this case.” As alleged in the Complaint filed in Manhattan federal court: Under the PPP, eligible businesses could obtain SBA-guaranteed loans to spend on payroll costs, rent or mortgage, and other specified business expenses. The amount of PPP funds a business was eligible to receive was determined by the number of individuals employed by the business and their average payroll costs. Businesses applying for a PPP loan were required to provide documentation to confirm that they had in the past paid employees the compensation represented in the loan application. In addition, the PPP loan application required businesses (through their authorized representatives) to acknowledge the PPP Rules and make certain affirmative certifications in order to be eligible to obtain the PPP loan. The SBA also provided for forgiveness of PPP loans. To receive forgiveness, borrowers were required to submit signed loan forgiveness applications and documents containing certain information and certifications. The six defendant companies applied for and received six first-draw PPP loans and six second-draw PPP loans for a total of more than $11.9 million, nearly all of which was fully forgiven. The five individual defendants were involved in preparing the PPP loan and forgiveness applications and personally signed the applications on behalf of their companies. The Defendants improperly inflated the PPP loan amounts and the amounts forgiven by falsely claiming that six family members and one acquaintance of the individual defendants were bona fide employees of the businesses when, in fact, they were not (and distributing the PPP funds to these “no show” employees); falsely claiming that three of the individual defendants were full-time employees of LIMANI 51 when, in fact, they were not; falsely claiming that individuals were full-time employees of multiple businesses and including their full salaries in the calculation of the loan and forgiveness amounts for each of those businesses; and mispresenting that they were entitled to forgiveness for wages paid to certain owners and employees that exceeded the maximum amount permitted under the PPP Rules. As part of the settlement, the Defendants admit, acknowledge, and accept responsibility for the following conduct: In their second-draw PPP loan application and first and second-draw PPP loan forgiveness applications, ESTIATORIO LIMANI, LIMANI 51, ONIRO TAVERNA, and LML HOSPITALITY misrepresented and inflated their payroll and employee headcounts by including wages attributable to six family members and an acquaintance of the individual defendants in the calculation of the PPP loan and PPP loan forgiveness amounts, even though the seven individuals were “no show” employees who never undertook any work for the corporate defendants and therefore were ineligible for consideration. In its second-draw PPP loan application and first and second-draw PPP loan forgiveness applications, LIMANI 51 misrepresented and inflated its payroll and employee headcounts by stating that three individual defendants were “full-time employees” of the entity when they were not. In their first-draw and second-draw PPP loan applications and PPP loan forgiveness applications, ESTIATORIO LIMANI, LIMANI 51, ONIRO TAVERNA, LML HOSPITALITY, BC INTERNATIONAL, and BCI SERVICES each misrepresented and inflated their payroll and headcounts by erroneously listing some of the same individuals as “full-time employees” of different companies and including their full wages in the PPP loan and forgiveness applications submitted for each of the companies. For example, in BC INTERNATIONAL and BCI SERVICES’ second-draw PPP loan forgiveness applications, they each simultaneously listed 13 individuals as “full-time employees” of both companies—and sought forgiveness for the employees’ full wages at both companies—resulting in $481,240.42 of loan proceeds being paid to these individuals, which was an improper use of funds. BC INTERNATIONAL and BCI SERVICES misrepresented in their loan forgiveness applications for their first-draw and second-draw PPP loans that they were entitled to forgiveness for wages paid to their owners and certain employees that exceeded the maximum amount permitted under the PPP Rules. As a result of the above-referenced conduct and misrepresentations, each of the six defendant companies requested and received PPP loans for amounts that were substantially above what they were entitled to receive. In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. * * * Mr. Williams praised the SBA-OIG for its assistance with this case. The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Adam M. Gitlin is in charge of the case. Contact Nicholas Biase, Lauren Scarff, Shelby Wratchford (212) 637-2600 Updated June 20, 2024 Attachments U.S. v. Spyropoulos et al Complaint in Intervention.pdf [PDF, 231 KB] U.S. v. Spyropoulos et al Settlement Agreement.pdf [PDF, 2 MB] Topic False Claims Act Component USAO - New York, Southern Press Release Number: 24-224