Springfield Company Agrees to Pay $1.24 Million to Resolve Allegations of PPP Loan Fraud

BOSTON - Prefere Melamines LLC (Prefere), a company headquartered in Springfield, Mass., has agreed to pay $1,247,744 to resolve allegations that it violated the False Claims Act by obtaining a Paycheck Protection Program (PPP) loan for which it was not eligible.

Congress enacted the Coronavirus Aid, Relief, and the Economic Security Act (CARES Act) on March 29, 2020, to provide emergency financial assistance to the millions of Americans who were suffering the economic effects of the COVID-19 pandemic. The CARES Act authorized forgivable loans to small businesses for job retention and certain approved expenses through the PPP, which the Small Business Administration administered. The PPP provided for loans in two "draws"-first draw loans became available in March 2020, with a second draw announced in January 2021. To be eligible for a second draw loan, an entity, among other things, had to have fewer than 300 employees, including foreign or domestic affiliates' employees.

As part of the settlement, Prefere admitted that in 2021, it received a $799,025 second draw PPP loan. In its application for that loan, Prefere certified that it was eligible for the loan under the PPP regulations in effect at the time and represented that it had 36 employees, including affiliates' employees. Prefere later sought and received full loan forgiveness. When it applied for the loan, Prefere did not qualify because it had more than 300 employees when considering employees of its affiliates. During the relevant period, Prefere was a wholly-owned subsidiary of German company Prime MidCo GmbH (Prime MidCo). When it applied for the second draw loan, Prefere had more than 300 employees when considering Prime MidCo and Prime MidCo's affiliates.

The settlement credits Prefere for cooperation under the Department of Justice's Guidelines for Taking Voluntary Disclosure, Cooperation and Remediation into Account in False Claims Act Matters.

United States Attorney Leah B. Foley and the U.S. Small Business Administration made the announcement today. Assistant U.S. Attorney Olivia Benjamin of the Affirmative Civil Enforcement Unit handled the matter.