Westmoor Country Club Agrees to Pay $1.25 Million to Resolve Claim It Wrongfully Obtained Paycheck Protection Program Loan

The United States Attorney's Office for the Eastern District of Wisconsin has announced a settlement agreement with Westmoor Country Club, whereby the club will pay $1,250,000.00 to settle claims that it improperly obtained a loan through the Paycheck Protection Program ("PPP") administered by the United States Small Business Administration ("SBA").

The PPP loan program, enacted in March 2020, provided emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. The program allowed eligible small businesses and non-profits to receive loans guaranteed by the federal government and, if the borrower spent the funds on qualified expenses, the federal government would repay the loan on the borrower's behalf.

Congress directed the SBA to guarantee PPP loans "under the same terms, conditions, and processes" as ordinary small business loans administered by the agency. 15 U.S.C. § 636(a)(36)(B). With respect to loan eligibility, Congress expressly endorsed the SBA's regulation explaining what entities would be ineligible for loans. 15 U.S.C. § 636(a)(37)(A)(iv)(III)(aa). For decades, this regulation has explained that "[p]rivate clubs and businesses which limit the number of memberships for reasons other than capacity" are not eligible for loans through the SBA. 13 C.F.R. § 120.110(i).

Westmoor Country Club operates a private country club, which is open only to its members. According to the government, at the time Westmoor Country Club applied for a PPP loan and for loan forgiveness, the club limited its membership for reasons other than capacity and, therefore, was ineligible to participate in the PPP.

"The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney's Office and other federal law enforcement agencies to recover the product of this fraud as well as penalties," said SBA General Counsel Wendell Davis.

Assistant United States Attorney Aaron R. Wegrzyn represented the government in connection with this matter, in coordination with Kandace Zelaya in the SBA's Office of Litigation and Office of General Counsel. While the settlement resolves the government's allegations against Westmoor Country Club with respect to its PPP loan, the club does not admit liability and no court has made any determination as to liability.

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