Management Company For Saginaw-Based Auto Dealer To Pay Over $1.5 Million To Settle Fraud Allegations Regarding Paycheck Protection Program Loan

DETROIT - United States Attorney Jerome F. Gorgon Jr. announced today that Garber Management Group, Inc. which is affiliated with the network of auto dealerships and other related entities in Michigan known as the Garber Automotive Group, has agreed to pay $1,513,281 to settle allegations that it violated the False Claims Act by making false statements to the U.S. Small Business Administration (SBA) to obtain a Paycheck Protection Program (PPP) loan for which Garber Management was ineligible.

Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations imposed various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for certain types of businesses operating as franchises, such as auto dealerships. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.

In May 2020, Garber Management obtained a first draw PPP loan for $864,732. The United States alleged that Garber Management falsely certified it was eligible for its first draw loan and loan forgiveness, even though, aggregated with its affiliates, it had more than 500 employees, in violation of the PPP rules. Garber Management was not exempt from the aggregation rules as the management company did not qualify as a franchise with a franchise identifier code from SBA. Garber Management has cooperated with the government investigation from its onset.

This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit 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 qui tam lawsuit has been unsealed and is captioned U.S. ex rel. David Reed v. Garber Management, Inc., Case No. 24-cv-13126. The whistleblower will receive 10% of the settlement amount.

This matter was handled by Assistant U.S. Attorney Leslie Wizner from the United States Attorney's Office for the Eastern District of Michigan, with assistance from the SBA's Office of General Counsel.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

The claims resolved by the settlement are allegations only; there has been no determination of liability.