Florida-based auto sales business settles PPP fraud allegations for $9 million

by Ben Vernia | October 12th, 2023

The Department of Justice announced on October 11 that Florida-based Victory Automotive Group, which controls dozens of car dealerships nationwide, had agreed to pay $9 million to settle False Claims Act allegations – initially brought by a whistleblower – that the company wrongfully obtained nearly $6.3 million in pandemic-related Paycheck Protection Program loans, which were ultimately forgiven. According to DOJ’s press release:

Port Richey, Florida-based automotive management company Victory Automotive Group Inc. (VAG) has agreed to pay $9 million to resolve allegations that it violated the False Claims Act (FCA) by knowingly providing false information in support of a Paycheck Protection Program (PPP) loan forgiveness application it submitted.

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. Only small businesses were eligible for PPP loans. Whether an applicant qualified as a small business depended on various factors, including the number of employees, amount of revenues and net worth of the applicant, along with any other corporate affiliates that share common operational control. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.

VAG’s application for a PPP loan certified it was a small business with fewer than 500 employees. However, VAG shared common operational control with dozens of automobile dealerships across the country, and VAG and its affiliates had more than 3,000 employees in total. For that reason, VAG was not eligible for the $6,282,362 PPP loan it received, which was later forgiven in full.

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The whistleblower will receive approximately $1.62 million of the settlement (and 18% relator’s share), the government announced.

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