Eastern CT Company Slapped With $3 Million Pandemic Loan Fraud Payback Order

NORTH WINDHAM, CT — David X. Sullivan, United States attorney for the District of Connecticut, announced on Friday that the Affirmative Civil Enforcement Unit of the U.S. Attorney's Office for the District of Connecticut has recovered more than $3 million from an eastern Connecticut company through a settlement agreement that resolves allegations that it violated the False Claims Act by providing false information to obtain pandemic-related Paycheck Protection Program loans for which it was not eligible.

"PPP loans were intended to help eligible small businesses experiencing economic uncertainty caused by the COVID-19 pandemic," Sullivan said. "These settlements reflect our office's strong commitment to protecting government programs and American taxpayers from fraud. We will continue to aggressively pursue and hold accountable individuals and businesses that disregard federal program requirements."

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Congress created the PPP in March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The PPP was administered by the Small Business Administration, and was intended to support small businesses struggling to pay employees and other expenses during the COVID-19 pandemic. When applying for PPP loans, borrowers were required to certify that they were eligible for the requested loans and that the information they provided was true and accurate. In December 2020, Congress approved funding for a second round of forgivable PPP loans, which became available to borrowers beginning in January 2021. This "second-draw" loan program included additional eligibility requirements. Applicants for second-draw loans were required to certify, among other things, that they had fewer than 300 employees. Applicants were required to include the employees of any foreign and domestic affiliated entities.

The District of Connecticut has entered into a settlement agreement with United Abrasives Inc., which has paid $3,088,605.45 to resolve FCA allegations related to a second-draw PPP loan.

United Abrasives, a North Windham company, manufactures industrial-grade abrasives and accessories. It is a subsidiary of SAIT Finanziaria S.p.A., a company headquartered in Italy.

The government said that, in February 2021, United Abrasives applied for a second-draw PPP loan for $1,983,555, falsely certifying it had fewer than 300 employees. At the time, United Abrasives and its affiliates collectively employed more than 300 employees. The government contends that United Abrasives should have known that it did not satisfy the size standards for the second-draw loan.

The settlement resolves FCA allegations that were originally brought in a lawsuit filed in the U.S. District Court for the District of Connecticut under the qui tam provisions of the FCA, captioned U.S. ex rel. Daniel Foster. v. United Abrasives, Inc. (Docket No. 3:25cv1732). The relator, Daniel Foster, will receive $308,860 as its share of the recovery.