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Azumi Entities to Pay $3.6 Million to Settle Allegations of Misusing PPP Loans

Strategic Insights

— 1 min read

The U.S. Attorney's Office for the District of Massachusetts, on behalf of the Department of Justice, announced a settlement with Azumi, LLC, and its affiliates, regarding allegations that they misused Paycheck Protection Program (PPP) loans. The companies agreed to pay $3,602,423 to resolve claims that they obtained PPP loans for which they were not eligible. This incident highlights the importance of ensuring the integrity of the PPP program, which was designed to support small businesses during the COVID-19 pandemic.

Key Takeaways:

  • The Azumi Entities, which operate several restaurants in the United States, have agreed to pay $3,602,423 to settle allegations that they violated the False Claims Act by obtaining PPP loans for which they were not eligible.
  • The entities are accused of exceeding the corporate group limit for second-draw loans, which prevented large corporate groups from obtaining a disproportionate share of the limited funds available to assist small businesses.
  • The Paycheck Protection Program was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic, but some entities allegedly misused the funds.
  • The settlement includes claims brought under the whistleblower provisions of the False Claims Act, and the whistleblower, GNGH2, Inc., will receive approximately $360,000.
  • The Justice Department's Affirmative Civil Enforcement Unit, Fraud Section, SBA's Office of General Counsel, and Office of the Inspector General provided valuable assistance in the matter.

Statistics:

  • The Azumi Entities agreed to pay $3,602,423 to settle allegations that they misused PPP loans.
  • The PPP program was established in March 2020 and administered by the U.S. Small Business Administration (SBA).
  • The entities collectively received and were granted loan forgiveness for second-draw loans in total amount exceeding the applicable corporate group limit for second draw loans.
  • Whistleblower GNGH2, Inc. will receive approximately $360,000 as part of the settlement.

Sources:

  • United States Attorney's Office, Department of Justice
  • Department of Justice Press Release, dated [no date given]
  • United States ex rel. GNGH2, Inc. v. Azumi, LLC, et al., No. 22-cv-11822 (D. Mass. 2022)

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