Two California Businesses and Their Owners Resolve Allegations They Misrepresented Businesses’ Size to Obtain Paycheck Protection Program Loans

JEV&B Services LLC and D4 Inc., two entities with their principal places of business in California, and their owners — William Nelson and Vicki Rollins — have agreed to pay $153,598.90 to resolve allegations that they violated the False Claims Act by submitting false statements and certifications to obtain Paycheck Protection Program (PPP) loans for which the entities were not eligible.

The PPP, an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and administered by the Small Business Administration (SBA), was intended to support small businesses struggling to pay employees and other businesses during the COVID-19 pandemic. Under the PPP, eligible businesses could receive forgivable loans guaranteed by the SBA. In addition to the SBA’s guarantee, the PPP protected and supported financial institutions by reimbursing the lender’s costs of processing PPP applications. Regulations and legislation passed by Congress set various eligibility requirements for the PPP, including limitations on the size of eligible businesses, so that the limited PPP funds would reach small businesses. In 2021, when Congress authorized a second round of PPP loans, it imposed even stricter size limits. The second-draw PPP loans were limited to businesses with 300 employees or less, including the employees of the applicant’s affiliated businesses.

On their PPP loan applications, borrowers were required to disclose their affiliated companies and to state the combined number of employees. Borrowers also certified that they were eligible for the PPP loan and that the information provided was accurate.

The United States alleged that JEV&B Services and D4 are companies that, through Nelson and Rollins, have common ownership and management with numerous other companies. Like several of Nelson’s and Rollins’ other businesses, JEV&B Services and D4 obtained first-draw PPP loans, which the SBA later forgave in full. JEV&B Services and D4 also obtained second-draw PPP loans. The United States alleged that JEV&B Services and D4 were not eligible for any second-draw PPP loans because they far exceeded the size limits that Congress placed on second-draw PPP loans. The United States further contended that JEV&B Services and D4 knowingly misled their lender to get the second-draw loans, including by under-reporting the total number of employees, not disclosing their affiliated companies to the lender, falsely certifying that they were eligible for the second-draw PPP funds, and certifying that the information on their applications was accurate when, in fact, it was not.

JEV&B Services, D4, Nelson, and Rollins will pay $153,598.90 to redress these allegations, including paying the SBA for the processing fees that the lender incurred and that were reimbursed by the SBA. The companies have also agreed to repay the loans in full, relieving the SBA of liability to the lender for the federal guaranty of the improper loans.  

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Ashwani Chawla. Under those provisions, private parties may initiate an action on behalf of the United States and receive a portion of any recovery. The lawsuit is captioned U.S. ex rel. Ashwani Chawla v. Agathos Support Service, Inc., et al., Civil No. LACV 22-2798 KK (JCx) (C.D. Cal.). Chawla will receive $11,519.92 in connection with this settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the SBA Office of the Inspector General, with assistance from the SBA’s Office of Capital Access.

Trial Attorney Christopher Belen of the Justice Department’s Civil Division handled the matter.

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