Two New York-based transportation companies have agreed to pay $4.4 million to settle allegations they improperly obtained federal COVID relief loans meant for small businesses.
3rd Avenue Transit, Inc. and Y&M Transit Corporation were accused of violating the False Claims Act by securing Paycheck Protection Program (PPP) loans despite having too many employees to qualify. U.S. Attorney Michael DiGiacomo announced the settlement Monday in Buffalo.
“These loans were meant to help small businesses stay afloat during the pandemic,” DiGiacomo said. “We’re holding accountable those who took funds they weren’t entitled to.”
The companies received over $2.4 million in second-draw PPP loans, certifying that they had fewer than 300 employees. But the government alleges the two companies — along with a third affiliate — collectively exceeded that limit, making them ineligible under the rules.
Settlement includes whistleblower claims
The case was brought under the False Claims Act’s “qui tam” provision, which allows private individuals to report fraud on behalf of the government and potentially receive a share of any recovery.
There was no finding of liability as part of the civil settlement, and the companies have not admitted wrongdoing.
The case was handled by Assistant U.S. Attorney Jonathan W. Ferris and Investigator Margaret McFarland, with support from the SBA’s Office of General Counsel.
Federal officials continue to encourage the public to report suspected COVID relief fraud through the National Center for Disaster Fraud.
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