Saginaw auto group to pay $1.5M to settle fraud claim over PPP pandemic loans

FOX 2 - A Saginaw auto group will be paying over $1.5 million to settle fraud allegations from improper Paycheck Protection Program loans during the pandemic.

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The Garber Management Group Inc., which is affiliated with the Garber Automotive Group including dealerships, has agreed to make the payment after making allegedly false statements to the US Small Business Administration for PPP loans, according to the US Attorney's Office for the Eastern District of Michigan.

Federal authorities said the Garber Management Group Inc. was ineligible to receive the assistance.

In May 2020, Garber Management obtained a PPP loan for $864,732. The US alleged that Garber Management falsely certified it was eligible for its first draw loan and loan forgiveness, even though, with its affiliates, it had more than 500 employees, in violation of the PPP rules.

The US Attorney's Office said Garber Management was not exempt from the aggregation rules as the management company did not qualify as a franchise with a franchise identifier code from SBA. Garber Management has cooperated with the government investigation from its onset.

Authorities say the civil settlement resolved a sealed lawsuit originally filed under the whistleblower provisions of the False Claims Act, which permit 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 has been unsealed and is captioned U.S. ex rel. David Reed v. Garber Management, Inc., Case No. 24-cv-13126. The whistleblower will receive 10% of the settlement amount.

The claims resolved by the settlement are allegations only; there has been no determination of liability.