Empire Roofing, Inc., a commercial roofing contractor in Fort Worth, Texas, and its nationwide network of roofing and disposal companies have agreed to pay $9 million to settle allegations of violating the False Claims Act (FCA). The settlement resolves claims that the companies falsely certified eight affiliates as eligible for loans through the Small Business Administration’s Paycheck Protection Program (PPP).
U.S. Attorney for the Northern District of Texas Leigha Simonton announced the settlement, emphasizing that PPP loans were designed to aid small businesses during the COVID-19 pandemic. The PPP, part of the CARES Act, provided emergency loans to struggling businesses. Eligibility depended on factors such as the number of employees, with a maximum of 500 employees for qualification.
Empire Roofing, Inc., and its affiliates within the nationwide network received a total of $6,705,700 in PPP loans, all of which were later forgiven. Each applicant certified as a small business with fewer than 500 employees. However, according to SBA rules, eligibility consideration required including employees of all affiliated companies. The government argued that the Empire Roofing network, with its affiliates, surpassed the 500-employee limit, rendering them ineligible for PPP loans and forgiveness.
U.S. Attorney Leigha Simonton stated, "PPP loans were intended to help small businesses during the Covid-19 pandemic. Our office invests significant time and resources to hold accountable those who obtained PPP funds for which they were not eligible and will continue to do so going forward."
SBA General Counsel Therese Meers commended the joint efforts of the SBA and the Department of Justice in uncovering and responding to PPP misconduct. Meers stated, "The federal government is strongly committed to identifying and aggressively pursuing any instances of fraud or misconduct within the Paycheck Protection Program."
The settlement stems from a lawsuit filed under the qui tam or whistleblower provision of the FCA, allowing private parties to file suit on behalf of the United States for false claims. The qui tam lawsuit, titled United States ex rel. Sidesolve v. Empire Roofing, Inc., et al., No. 3:22-CV-2060-B (N.D. Tex.), resulted in a $9 million settlement. The relator, Sidesolve, Inc., will receive a $1 million share as part of the settlement.
