LOS ANGELES
Federal officials stated Thursday that Yosef Y. Manela, a Los Angeles businessman who runs an accounting, law, and consulting firm, has agreed to pay $802,341 to the U.S. to settle claims that he and his three companies violated the False Claims Act related to six Paycheck Protection Program (PPP) loans.
Authorities say Manela and his companies will also repay all outstanding PPP loans, relieving the Small Business Administration (SBA) of liability for a federal guarantee of about $728,000.
“Every taxpayer dollar lost to unscrupulous individuals during the COVID-19 pandemic is money that failed to reach businesses struggling for survival,” said United States Attorney Martin Estrada. “It is important that we uphold the integrity of pandemic-related assistance programs.”
The PPP, created by Congress in March 2020 under the CARES Act, aimed to support small businesses with employee wages and other expenses during the COVID-19 pandemic.
Borrowers had to certify their eligibility for the loan and confirm that the funds would be used for approved expenses, including payroll and utilities.
In December 2020, Congress authorized a “second draw” of PPP loans, available from January 2021.
The U.S. alleged that Manela and his companies received six PPP loans based on duplicate payroll expenses and non-existent employees. They also reportedly disguised capital distributions to family members as wages in loan and forgiveness applications, leading to losses for the SBA from processing fees and loan guarantees.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
“The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the Department of Justice, SBA’s Office of Inspector General and other Federal law enforcement agencies, to address fraud on the PPP,” said General Counsel Therese Meers of the SBA.