A bankrupt internet retailer is the first borrower under the Paycheck Protection Program to settle civil Justice Department fraud allegations after the company falsely claimed it wasn’t bankrupt on a $350,000 loan application, The Wall Street Journal reports.
SlideBelts Inc., an e-commerce company selling apparel and wearable technology, and its chief executive, Brigham Taylor, agreed to pay $100,000 in damages and penalties to resolve civil fraud allegations, according to the U.S. attorney’s office in Sacramento, California. SlideBelts returned the $350,000 loan proceeds in July after multiple requests from the Small Business Administration, which administers the PPP.
Under SBA rules, companies under bankruptcy protection aren’t eligible to access the PPP, an enormously popular program of forgivable, government-guaranteed loans designed to keep checks flowing to Americans during the COVID-19 pandemic.
Nothing in the legislation that established the PPP last year prohibits businesses under bankruptcy protection from participating. But the SBA has shut them out, reasoning they pose a higher risk of spending the money in unauthorized ways or failing to repay unforgiven loans.
So far, the DOJ has charged 97 defendants in 68 criminal cases for allegedly defrauding the PPP, an agency spokesman said Wednesday. Read the full story.