Click Here to View the Original U.S. Department of Justice (DOJ) Press Release
Defendants Agree to Pay $360,000 and Admit to Falsely Certifying Eligibility for Two Paycheck Protection Program Loans and a Restaurant Revitalization Fund Grant
United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the Eastern Regional Office of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), Amaleka McCall-Brathwaite, announced today that the United States has settled a civil fraud lawsuit against TCC INTERNATIONAL LLC, CORE GRAVITY LLC, and CORE CLUB MEMBERS CORP. (collectively, the “Defendants”), for falsely certifying to the SBA that they were eligible to receive two Paycheck Protection Program (“PPP”) loans and have those loans forgiven, as well as a Restaurant Revitalization Fund (“RRF”) grant in violation of the False Claims Act.
Under SBA rules and regulations, private clubs were ineligible for PPP loans and restaurants that were either not-for-profits or did not primarily serve the public (such as restaurants operating within private clubs) were ineligible for RRF grants. The settlement resolves claims that TCC International LLC and Core Gravity LLC falsely certified that they were eligible to receive and have forgiven two PPP loans despite being ineligible because TCC International LLC and Core Gravity LLC intended to, and did, use the PPP funds to operate a private club; and Core Club Members Corp. falsely certified that it was eligible to receive a RRF grant despite being ineligible because it was a not-for-profit organization with no food or beverage sales to the public.
Under the settlement approved today by U.S. District Judge Mary Kay Vyskocil, the Defendants will pay the United States a total sum of $360,000. The settlement amount is based on the Office’s assessment of the Defendants’ ability to pay, as reflected in financial information they provided. The Defendants have also executed a Consent Judgment in the amount of $8,189,172.10, which may be enforced if they do not make the payments required under the settlement agreement. Additionally, the Defendants have admitted and accepted responsibility for conduct alleged in the Government’s Complaint.
“The Paycheck Protection Program and Restaurant Revitalization Fund were intended to assist small businesses suffering the financial impacts of a pandemic-related lockdown,” said U.S. Attorney Jay Clayton. “New Yorkers supported these programs to protect their neighbors and their community. New Yorkers also want those who abused the programs held accountable. Our Office and the SBA are committed to doing so.”
“Falsely certifying eligibility for Paycheck Protection Program loans and Restaurant Revitalization Fund grants undermines critical relief programs designed to support small businesses and public-facing restaurants,” said SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite. “OIG remains dedicated to protecting the integrity of SBA’s programs and holding accountable those who exploit them for personal gain.”
As alleged in the Complaint filed in Manhattan federal court:
Under the PPP, eligible businesses could obtain SBA-guaranteed loans; however, before receiving a PPP loan, businesses were required to certify that they were, in fact, eligible for the loan. By regulation, certain businesses, such as private clubs, were ineligible for PPP loans. The SBA also allowed for forgiveness of PPP loans. To receive forgiveness, businesses were required to submit signed loan forgiveness applications in which they certified that the PPP funds were used for eligible expenses.
Under the RRF, qualifying bars and restaurants could apply for grants to offset pandemic-related revenue losses. Per the RRF rules, certain businesses were ineligible for funding, including not-for-profit entities and restaurants and bars where on-site sales to the public comprised less than 33% of gross receipts in 2019.
TCC International LLC and Core Gravity LLC applied for and received two PPP loans totaling approximately $2.3 million and the SBA ultimately forgave all but $514,176.45 of those funds. Core Club Members Corp. received an RRF grant of more than $2.3 million and did not repay any of that amount. However, TCC International LLC and Core Gravity LLC were ineligible to receive their PPP loans or have them forgiven because they intended to, and did, use the funds for the benefit of a private club. Additionally, Core Club Members Corp. was ineligible to receive its RRF grant because none of its gross receipts in 2019 were derived from on-site sales to the public and it was not-for-profit.
As part of the settlement, the Defendants admit, acknowledge, and accept responsibility for the following conduct:
- TCC International LLC d/b/a Core Gravity, through its authorized representative, certified in a first-draw PPP loan application seeking $960,400 that it was eligible for funding and that the funds would be used in accordance with PPP rules. However, TCC International LLC d/b/a Core Gravity was not eligible for a PPP loan, as it intended to, and did, use the funds to fund payment of employees of a members-only club.
- Core Gravity LLC sought and obtained partial forgiveness for the first-draw PPP loan in the amount of $446,223.55, after its authorized representative falsely certified in a loan forgiveness application that the funds as to which forgiveness was sought were used to pay business costs that were eligible for forgiveness.
- TCC International LLC d/b/a The Core Club, through its authorized representative, certified in a second-draw PPP loan application seeking $1,344,675.50 that it was eligible for funding and that the funds would be used in accordance with PPP rules. However, TCC International LLC d/b/a The Core Club was not eligible for a PPP loan, as it intended to, and did, use the funds to fund payment of employees of a members-only club.
- TCC International LLC sought and obtained full forgiveness for the second-draw PPP loan, after its authorized representative falsely certified in the forgiveness application that the funds as to which forgiveness was requested were used to pay business costs that were eligible for forgiveness.
- Core Club Members Corp. submitted an application to SBA to obtain a grant of $2,303,687.00 through the RRF, in which its authorized representative certified the applicant’s eligibility for funding and that the funds would be used in accordance with RRF rules. However, Core Club Members Corp., a not-for-profit company that did not serve food or drink to the public, was not eligible for an RRF grant.
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.
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Mr. Clayton thanked the SBA-OIG for its assistance with this case.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Jessica F. Rosenbaum is in charge of the case.
u.s._v_tcc_international_llc_et_al_complaint_in_intervention.pdf