A Lackawanna steel-tube manufacturer has agreed to pay $1.5 million to resolve federal allegations that it received a pandemic-era Paycheck Protection Program loan despite exceeding the employee limit for a second-round loan. The settlement is a civil resolution, not an admission of liability.
The U.S. Attorney’s Office for the Western District of New York announced the agreement Wednesday. Federal officials say Welded Tube USA was a subsidiary of a Canadian company in 2021 and that the parent and its affiliates together employed more than 300 people. Second-draw PPP applicants generally had to have no more than 300 employees, including affiliates.
Welded Tube received forgiveness of about $1.03 million on its second-draw loan in September 2022, according to the 10-page settlement agreement. The government contends that the company was not eligible for the loan or its forgiveness because of the combined employee count.
The agreement requires Welded Tube to pay $1.5 million within 30 days of its effective date, provided the government gives timely payment instructions. Interest at 4% a year would begin after that period if payment is late. The document says the settlement does not establish that the company violated the law, and Welded Tube does not admit liability.
A private party, Proferre LLC, filed a False Claims Act lawsuit in February. The United States intervened in September. Once the payment is received, the federal government is to pay Proferre $150,000 from the settlement proceeds; the agreement separately requires Welded Tube to pay about $5,447 in the party’s expenses and legal costs.
The release describes the resolution as part of federal efforts to recover money obtained through pandemic assistance. U.S. Attorney Michael DiGiacomo said his office recovered more than $10 million related to PPP fraud in federal fiscal 2026. That districtwide total is not the amount attributed to Welded Tube.
The agreement leaves open potential tax, criminal and other administrative claims, and it does not release claims concerning conduct outside the specified loan. The parties agreed to dismiss the civil case after the settlement payment is received.
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