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Delaware Powder Coating Firm Pays $2.9 Million to Settle Pandemic Relief Fraud Claims
A Delaware-based company operating in Fairfield, New Jersey, has agreed to pay nearly $2.9 million to resolve allegations that it improperly obtained federal pandemic relief funds, according to the U.S. Attorney’s Office.
Senior Counsel Philip Lamparello announced that Protech Powder Coatings, Inc. has entered into a settlement with the United States over claims it violated the False Claims Act by applying for and receiving a Paycheck Protection Program (PPP) loan for which it was ineligible.
Federal officials stated that Protech Powder, a subsidiary of the Canada-based Protech Group, applied for and received a second-draw PPP loan in March 2021. The company subsequently obtained loan forgiveness in January 2022, with the total amount, including interest, reaching approximately $2.02 million.
The government’s case centered on allegations that the company falsely certified its eligibility for the loan. Specifically, prosecutors contend that Protech Powder falsely claimed it met the program’s requirements despite exceeding the allowable employee size limits when including its affiliated companies.
“The company knowingly made false statements in its PPP application,” according to the government’s claims. These misrepresentations not only resulted in Protech receiving funds for which it didn’t qualify but also caused the government to pay approximately $60,000 in processing fees to the lender that facilitated the ineligible loan.
Under the settlement terms, Protech Powder will pay $2,907,643 to the federal government. The company has not admitted liability as part of the agreement.
The case originated from a lawsuit filed under the whistleblower provisions of the False Claims Act, which allows private citizens to bring actions on behalf of the government against parties believed to have submitted false claims for government funds. The individual who initiated the action will receive approximately $290,764 as their share of the recovery, representing about 10 percent of the settlement amount.
This case highlights the ongoing efforts by federal authorities to combat fraud related to COVID-19 relief programs. The PPP was established by Congress in March 2020 as part of the CARES Act to provide emergency financial assistance to businesses affected by the pandemic. The program offered potentially forgivable loans to help businesses maintain their workforce during the economic disruption caused by COVID-19.
The Small Business Administration (SBA) backed these loans, which required applicants to certify their eligibility and the accuracy of all information provided. Second-draw PPP loans, which became available in 2021, had specific eligibility criteria, including restrictions on company size.
This settlement is part of a broader crackdown on pandemic relief fraud. Since the inception of COVID-19 relief programs, the Justice Department has prioritized investigating and prosecuting cases of fraud related to these emergency funds. Federal agencies have recovered millions of dollars in improperly obtained assistance through civil settlements and criminal prosecutions.
The powder coating industry, in which Protech operates, experienced significant volatility during the pandemic as manufacturing and construction sectors faced disruptions. Protech Group, the parent company, is a multinational manufacturer of powder coatings and other industrial finishes with operations across North America and Europe.
The settlement underscores the government’s commitment to ensuring that pandemic relief funds reached their intended recipients—businesses that genuinely qualified for assistance under the program’s guidelines—and serves as a warning to companies that may have misrepresented their eligibility for COVID-19 relief programs.
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14 Comments
This is a disappointing development, but it’s good to see the authorities taking action. Fraudulently obtaining pandemic relief funds is a serious offense that undermines the purpose of these critical programs. Hopefully, this settlement will serve as a deterrent to others considering similar actions.
While the pandemic has created many challenges for businesses, that doesn’t justify fraudulent behavior. I hope this settlement sends a clear signal that the government will aggressively pursue any misuse of pandemic relief funds.
Disappointing to see another company taking advantage of pandemic relief programs. Fraud like this erodes public trust and takes funds away from those who genuinely need the support. Hopefully the settlement sends a strong message that this behavior won’t be tolerated.
Agreed. It’s critical that the government closely monitors these programs to root out any abuse and ensure the funds are used as intended.
This is a disappointing development, but I’m glad to see the government taking action. Applying for and receiving pandemic relief funds under false pretenses is a serious offense that undermines the intent of these critical programs.
Absolutely. Strict enforcement and stiff penalties are necessary to deter this type of fraud and maintain the public’s trust in these relief efforts.
It’s unfortunate to see a company abuse the pandemic relief system in this way. Misusing taxpayer money meant to support struggling businesses is unacceptable. I’m glad the government is holding this company accountable, and hope it sends a strong message to deter future fraud.
Absolutely. Strict enforcement and penalties are necessary to protect the integrity of these relief programs and ensure the funds reach those who truly need them.
While the pandemic has presented many challenges for businesses, fraud is never the answer. I’m glad the government is taking a firm stance against this type of abuse of taxpayer money. Hopefully, this case will discourage others from attempting similar schemes.
Agreed. Maintaining the integrity of these relief programs is crucial, and holding bad actors accountable is an important part of that process.
It’s disheartening to see a company abuse the system in this way. Pandemic relief funds should be reserved for those truly in need, not exploited for personal gain. I hope this settlement serves as a wake-up call to others considering similar fraudulent actions.
This is an unfortunate situation, but I’m glad the government is holding the company accountable. Misusing taxpayer money meant for struggling businesses is unacceptable. Hopefully the penalty serves as a deterrent for others considering similar fraudulent actions.
You’re right, it’s important to enforce the rules and protect the integrity of these relief programs. Oversight and consequences are key to preventing further abuse.
While the pandemic has presented significant challenges for many businesses, that doesn’t justify fraudulent behavior. I’m glad to see the government taking action to hold this company accountable for misusing pandemic relief funds. Hopefully, this case serves as a warning to others considering similar schemes.