Florida companies Kingwood Orlando Reunion Resort LLC (Orlando Reunion) and Kingwood Crystal River Resort Corp. (Crystal River) have agreed to settle allegations that they violated the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) by knowingly providing false information in support of a Paycheck Protection Program (PPP) loan forgiveness application submitted by Crystal River.
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized these businesses to seek forgiveness of the loans if they spent the loan funds on eligible expenses, such as payroll. When applying for forgiveness of PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their applications. A PPP recipient seeking loan forgiveness based on the payment of wages was only entitled to forgiveness for the amount of wages actually paid to its employees during the designated period.
Here, Orlando Reunion and Crystal River, which are related but operate separate resorts, both received separate PPP loans. The United States alleged that Crystal River sought forgiveness of its PPP loan, in-part, by certifying that it used a portion of its PPP loan to pay wages of Crystal River employees, when in fact, some of the employees to whom...
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