Charles Smith, Jr. of Sharon, Massachusetts, and SMI Demolition, Inc., based in Norwood, have agreed to pay $2.01 million to settle allegations that the company falsely claimed eligibility for federal pandemic relief loans.
Smith previously pleaded guilty in 2018 to two counts of mail fraud in federal court. Despite this conviction, Smith maintained a 51% ownership stake in SMI Demolition when the company applied for its first Paycheck Protection Program (PPP) loan on April 7, 2020. The application certified that no owner had pleaded guilty to a felony involving fraud. Around this time, an agreement was prepared to transfer part of Smith’s ownership to another individual; however, the transfer was never completed.
Following this initial PPP loan application, SMI Demolition received two additional loans from the Small Business Administration (SBA): an Economic Injury Disaster Loan (EIDL) and a second PPP loan. In total, these loans amounted to $1,448,402. Of that sum, all but $150,000 was forgiven by the SBA.
Smith and SMI Demolition admitted that their loan applications falsely stated there were no owners with certain felony convictions when Smith had already pleaded guilty to mail fraud charges in 2018. As a result of these misrepresentations and Smith’s ownership interest at the time of application, authorities contend that both parties caused false claims for payment from the SBA.
The settlement also resolves claims brought under the whistleblower provisions of the False Claims Act. This law allows private individuals to file actions on behalf of the United States and receive part of any recovery obtained by the government through such lawsuits. In this case—United States ex rel. Forsyth v. SMI Demolition, Inc. and Charles Smith, Jr., No. 23-cv-10091-NMG (D. Mass.)—the whistleblower will receive approximately $200,000 as part of today’s resolution.
“United States Attorney Leah B. Foley and Kelly Loeffler, Administrator of the U.S. Small Business Administration made the announcement today.” The matter was handled by Assistant U.S. Attorneys Andrew A. Caffrey III and Brian Sullivan.
