3rd Avenue Transit, Inc. and Y&M Transit Corporation have agreed to pay $4.4 million to settle allegations that they improperly obtained Paycheck Protection Program (PPP) loans from the U.S. Small Business Administration, according to an announcement by U.S. Attorney Michael DiGiacomo.
The PPP was created in March 2020 under the CARES Act and later expanded by the American Rescue Plan Act in 2021. The program allowed eligible businesses to receive loans for payroll and certain other expenses, with the possibility of loan forgiveness if used appropriately. Only businesses meeting specific criteria could apply, including a requirement that applicants and their affiliates have no more than 300 employees for second-draw loans.
According to the government, 3rd Avenue and Y&M received a total of $2,402,800 in second-draw PPP loans after certifying they had fewer than 300 employees. Authorities allege that these companies were affiliated with a third company, resulting in a combined employee count exceeding the eligibility threshold.
“Paycheck Protection Program loans were intended to help small businesses during the Covid-19 pandemic,” stated U.S. Attorney DiGiacomo. “Our office continues to invest time and resources to hold accountable those who obtained PPP funds for which they were not eligible.”
The settlement resolves claims filed under the qui tam provisions of the False Claims Act, which allow private individuals to bring actions on behalf of the United States and potentially share in any recovery.
The investigation was conducted by Assistant U.S. Attorney Jonathan W. Ferris and Investigator Margaret McFarland, with support from the SBA’s Office of General Counsel.
The Department of Justice encourages anyone with information about COVID-19-related fraud to report it through its National Center for Disaster Fraud Hotline at 866-720-5721 or via its online complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Officials emphasized that these are allegations only; there has been no determination of liability.
