Azumi Limited Restaurants Agree to Pay $3.6M to Resolve False Claims Act Allegations Relating to PPP Loans

Strategic Insights -

The U.S. Department of Justice has reached a settlement with Azumi Limited Restaurants, agreeing to pay $3,602,423 to resolve allegations that they violated the False Claims Act by obtaining Paycheck Protection Program (PPP) loans for which they were not eligible. The PPP was established by Congress in March 2020 to support small businesses struggling during the COVID-19 pandemic. The Azumi Entities, a corporate group operating several restaurants, collectively received and were granted loan forgiveness for second-draw loans exceeding the applicable corporate group limit.

Key Takeaways:

  • The Azumi Entities, a group of limited liability companies operating several restaurants, agreed to pay $3.6 million to resolve allegations of violating the False Claims Act.
  • The allegations centered on the Entities' receipt of Paycheck Protection Program (PPP) loans for which they were not eligible, harming both taxpayers and eligible businesses who were denied relief.
  • The Entities admitted to exceeding the corporate group limit for second-draw loans, with claims resolved under the qui tam provisions of the False Claims Act.
  • Private party GNGH2 Inc. will receive approximately $360,000 as part of today's resolution.
  • The settlement was the result of a coordinated effort between the Justice Department's Civil Division, the U.S. Attorney's Office for the District of Massachusetts, and the SBA's Office of General Counsel and Office of the Inspector General.

Statistics:

  • $3,602,423: the amount agreed to be paid by Azumi Limited Restaurants to resolve False Claims Act allegations.
  • $360,000: the amount that private party GNGH2 Inc. will receive as part of the resolution.
  • 22-cv-11822: the case caption for United States ex rel. GNGH2 Inc. v. Azumi LLC et al., a qui tam case under the False Claims Act.
  • March 2020: the month in which Congress established the Paycheck Protection Program to support small businesses during the COVID-19 pandemic.
  • January 2021: the month in which SBA announced that certain parties that had previously received PPP loans were eligible to apply for a second loan.

Sources:

  • U.S. Department of Justice, "Azumi Limited Restaurants Agree to Pay $3.6M to Resolve False Claims Act Allegations Relating to Paycheck Protection Program Loans" (July 7).
  • SBA, "Paycheck Protection Program Frequently Asked Questions" (January 2021).
  • 15 U.S.C. § 6961 et seq., the False Claims Act.
  • U.S. Code, Title 31, Section 3729, the False Claims Act.