The Energy Federation, Inc. (EFI), a nonprofit based in Franklin, Massachusetts, has agreed to pay $1 million to resolve allegations that it improperly obtained a Paycheck Protection Program (PPP) loan despite being ineligible for the funds.
The PPP was established by Congress to help small businesses address financial challenges caused by the COVID-19 pandemic. The program was administered by the Small Business Administration (SBA) in two rounds, first in April 2020 and again in February 2021. While some nonprofit organizations were allowed to receive PPP loans, those classified as 501(c)(4), such as EFI, were not eligible.
According to the settlement agreement, EFI admitted that after discussing its eligibility with its bank, it submitted an application for a PPP loan without disclosing its status as a 501(c)(4) organization. In doing so, EFI certified on its application that it was eligible under existing rules at the time of submission. After receiving the loan, EFI also applied for and received forgiveness of the loan based on these certifications.
The case originated from a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act. These provisions allow private individuals to file lawsuits on behalf of the government and share in any recovery. The whistleblower will receive 10 percent of the settlement amount.
“United States Attorney Leah B. Foley and the U.S. Small Business Administration made the announcement today.”
“Assistant U.S. Attorney Julien M. Mundele of the Affirmative Civil Enforcement Unit handled the matter.”
