A South Bay nursing facilities chain and its owner have agreed to pay $18 million to resolve allegations that they lied on applications for loans intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic, officials announced Friday.
Unified Care Services, its affiliates and owner Emmanual David allegedly falsely certified they were small businesses with fewer than 500 employees when they submitted Paycheck Protection Program loan and loan forgiveness applications in 2020, according to the U.S. Attorney’s Office.
The applications allegedly failed to disclose that the entities applying were part of a larger chain of facilities that all shared common ownership and control — which rendered Unified Care and its affiliates ineligible for PPP loans and violated the False Claims Act.
“PPP loans were intended to assist eligible small businesses during the pandemic,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the U.S. Department of Justice’s civil division, said in a statement.
“When ineligible businesses improperly obtained loans, they harmed both the taxpayers who funded the program and the eligible businesses who were denied relief.”
The settlement resolves a lawsuit filed in L.A. federal court under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The whistleblower will receive $2 million in connection with the settlement, according to the U.S. Attorney’s Office.