Fashion and beauty companies agree to pay $6.7M to settle False Claims Act allegations involving Paycheck Protection Program loans

ALEXANDRIA, Va. - Puig USA, Inc. and Carolina Herrera, Ltd., both located in New York, have agreed to jointly pay $6.7 million to settle civil fraud allegations involving second-draw Paycheck Protection Program (PPP) loans. PPP loans were made possible by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Puig USA, Inc. received a second-draw PPP loan of $1,689,007 and Carolina Herrera received a second-draw PPP loan of $2,000,000. An entity could be eligible for a second-draw PPP loan if, among other requirements, the entity, including its international affiliates, employed fewer than 300 people at the time of application. Carolina Herrera, Ltd. and Puig USA, Inc., both owned by Puig Brands, S.A., had 5,213 employees at the end of 2019 and 4,785 employees at the end of 2020.

The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney's Office for the Eastern District of Virginia and the Small Business Administration.

The matter was investigated by former Assistant U.S. Attorney Gina H. Kim.

The settlement began with a lawsuit, United States ex rel. GNGH2 Inc. v. Carolina Herrera, Ltd. et al., that was filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. The whistleblower will receive a 10-percent share of the settlement.

A copy of this press release may be found on the website of the U.S. Attorney's Office for the Eastern District of Virginia. Case records may be found on PACER under case number 1:24-cv-1856.

The civil claims settled are allegations only; there has been no determination of civil liability.