Lancaster Medical LLC agrees to pay $500,000 to resolve allegations related to Paycheck Protection Program eligibility

BUFFALO, N.Y. - The U.S. Attorney's Office announced today that Lancaster Medical LLC, a former medical practice located in Depew, NY, has agreed to pay $500,000 to resolve allegations arising under the False Claims Act (FCA), that it fraudulently obtained a Paycheck Protection Program (PPP) loan from the U.S. Small Business Administration (SBA), which it was not eligible to receive. This action is part of the Trump Administration's Task Force to Eliminate Fraud.

Lancaster Medical LLC applied for and received a PPP loan in April of 2020, which was fully guaranteed by the SBA in the amount of $249,290. The United States alleges that Lancaster Medical LLC violated the FCA by falsely certifying its eligibility for the PPP loan. Lancaster Medical LLC was not eligible for the PPP loan because its assets had been sold pursuant to an asset sale in 2019-months before it applied for the PPP loan. The United States further contends that the PPP loan proceeds were used for impermissible purposes, such as personal expenses for Lancaster Medical LLC's former owners. The United States further contends that after being informed that the PPP loan was not approved for forgiveness, Lancaster Medical LLC did not repay the loan.

The civil settlement also resolves pending civil forfeiture litigation in the United States District Court for the Western District of New York, United States of America v. One 2020 BMW X5, Vin: 5UXCR6C00L9C83972, Titled and Registered to Kevin G. Cleary, 23-cv-272. In that action, the United States was seeking the forfeiture of a vehicle that it contends was proceeds of and traceable to the proceeds of Lancaster Medical LLC's PPP loan.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (Fraud Division). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department's work to combat fraud supports President Trump's Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.

The case was investigated by the U.S. Postal Inspection Service, Boston Division, under the direction of Acting Inspector-in-Charge Jason Buckley, the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-in-Charge Harry T. Chavis, Jr., and the United States Attorney's Office. The FCA matter was handled by Assistant U.S. Attorneys David M. Coriell and Jonathan W. Ferris, and Investigator Peggy McFarland. The Civil Forfeiture matter was handled by Assistant U.S. Attorney Mary Clare Kane.

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 or admission of liability.

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