2 Michigan non-profits ordered to pay fees in PPP loan suit

Published: Mar. 13, 2023 at 2:22 PM EDT
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WASHINGTON (WILX) - The Michigan Education Association (MEA) and the Michigan Education Special Services Association (MESSA) were fined for receiving Paycheck Protection Program (PPP) loans for which they were ineligible.

The organizations violated the False Claims Act (FCA) by applying for and obtaining the Coronavirus Aid, Relief, and Economic Security (CARES) Act loans.

In 2020, MEA, a 501(c)(5) nonprofit labor union organization, and MESSA, a 501(c)(9) voluntary employees’ beneficiary association, each applied for and obtained a PPP loan. The United States contended that these organizations knew or should have known they were ineligible to receive their PPP loans, and that they caused the Small Business Administration (SBA) to pay lender fees to the bank that processed the loans.

In connection with the settlements announced Monday, MEA will pay $115,265 and MESSA will pay $110,622 to the United States to resolve these allegations. MEA and MESSA repaid their loan proceeds in full in December 2020.

The settlement resolved a lawsuit filed under the whistleblower provision of the FCA, which permits 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 lawsuit was filed by the Mackinac Center for Public Policy and is captioned U.S. ex rel. Mackinac Center for Public Policy v. Michigan Education Association, et al., Dkt. No. 1:22-cv-00028-HYJ-PJG (W.D. Mich.). Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. The Mackinac Center for Public Policy’s share of the settlement has not been determined.

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